As filed with the Securities and Exchange Commission on November 15, 2000
1933 Act Reg. No. 33-39519
1940 Act Reg. No. 811-5686
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
----- [ ]
Post-Effective Amendment No. 14 [X]
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
(Check appropriate box or boxes.)
Registrant's Telephone Number, including Area Code (713) 626-1919
Robert H. Graham
Copy to:
Jim Coppedge, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP 11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599 |
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on November 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph a(ii)
[ ] on (date) pursuant to paragraph (a)(ii) 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.
Title of Securities Being Registered: Shares of Beneficial Interest
AIM HIGH YIELD FUND
AIM High Yield Fund seeks to achieve a high level of current income.
AIM--Registered Trademark--
PROSPECTUS
NOVEMBER 28, 2000
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve a high level of current income. The fund will attempt to achieve its objective by investing primarily in publicly traded non-investment grade securities. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet this objective by investing at least 65% of the value of its assets in lower-quality debt securities, i.e., "junk bonds." The fund will principally invest in junk bonds rated B or above by Moody's Investors Service, Inc. or Standard & Poor's Ratings Services or deemed by the portfolio managers to be of comparable quality. The fund will invest at least 80% of its total assets in debt securities, including convertible debt securities and/or cash or cash equivalents. The fund may also invest in preferred stock. The fund may invest up to 25% of its total assets in foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
Although the portfolio managers focus on debt securities that they believe have favorable prospects for high current income, they also consider the possibility of growth of capital of the security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease; junk bonds are less sensitive to this risk than are higher-quality bonds. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer and because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about issuers, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990 ................................... -9.04%
1991 ................................... 42.50%
1992 ................................... 18.34%
1993 ................................... 18.40%
1994 ................................... -1.68%
1995 ................................... 16.86%
1996 ................................... 15.44%
1997 ................................... 12.52%
1998 ................................... -5.10%
1999 ................................... 2.08%
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* The Class A shares' year-to-date total return as of September 30, 2000 was -11.53%.
During the periods shown in the bar chart, the highest quarterly return was 14.35% (quarter ended March 31, 1991) and the lowest quarterly return was -9.71% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE ---------------------------------------------------------------------------------- Class A -2.80% 6.96% 9.60% 10.24% 07/11/78 Class B -3.14% 6.96% -- 5.90% 09/01/93 Class C 0.54% -- -- -0.11% 08/04/97 Lehman Bros. High Yield Index(1) 2.39% 9.31% 10.72% 10.88%(2) 06/30/83(2) ---------------------------------------------------------------------------------- |
(1) The Lehman Bros. High Yield Index is an index that includes all fixed-income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100mm, and at least one year to maturity.
(2) The average annual total return given is since the earliest date the index became available.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------------ Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------------ |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------------- Management Fees 0.48% 0.48% 0.48% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.20 0.21 0.21 Total Annual Fund Operating Expenses 0.93 1.69 1.69 ------------------------------------------------------------ |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $565 $757 $ 965 $1,564
Class B 672 833 1,118 1,796
Class C 272 533 918 1,998
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $565 $757 $965 $1,564
Class B 172 533 918 1,796
Class C 172 533 918 1,998
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.48% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
SALES CHARGES
Purchases of Class A shares of AIM High Yield Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares any dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
----------------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------------
JULY 31, 2000 1999 1998 1997 1996 1995
------------- ---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43 $ 8.93
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income 0.47 0.85 0.92 0.90 0.92 0.93
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both
realized and unrealized) (1.03) (0.66) (1.40) 0.28 0.46 0.52
================================================ ========== ========== ========== ========== ========== ========
Total from investment operations (0.56) 0.19 (0.48) 1.18 1.38 1.45
================================================ ========== ========== ========== ========== ========== ========
Less distributions:
Dividends from net investment income (0.49) (0.87) (0.91) (0.90) (0.93) (0.95)
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) (0.02) -- -- -- --
================================================ ========== ========== ========== ========== ========== ========
Total distributions (0.51) (0.89) (0.91) (0.90) (0.93) (0.95)
================================================ ========== ========== ========== ========== ========== ========
Net asset value, end of period $ 7.00 $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Total return(a) (7.12)% 2.21% (5.10)% 12.52% 15.44% 16.86%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,056,453 $1,364,502 $1,670,863 $1,786,352 $1,272,974 $886,106
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratio of expenses to average net assets 0.93%(b) 0.92% 0.85% 0.90% 0.97% 0.96%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratio of net investment income to average net
assets 10.79%(b) 10.06% 9.45% 9.08% 9.67% 9.95%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 79% 76% 80% 77% 61%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
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(a) Does not deduct sales charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,193,177,640.
CLASS B
---------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31,
JULY 31, ------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.92
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income 0.44 0.79 0.84 0.83 0.85 0.85
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both
realized and unrealized) (1.03) (0.66) (1.40) 0.28 0.47 0.52
================================================ ========== ========== ========== ========== ========== ========
Total from investment operations (0.59) 0.13 (0.56) 1.11 1.32 1.37
================================================ ========== ========== ========== ========== ========== ========
Less distributions:
Dividends from net investment income (0.45) (0.80) (0.84) (0.83) (0.86) (0.87)
------------------------------------------------ ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) (0.02) -- -- -- --
================================================ ========== ========== ========== ========== ========== ========
Total distributions (0.47) (0.82) (0.84) (0.83) (0.86) (0.87)
================================================ ========== ========== ========== ========== ========== ========
Net asset value, end of period $ 7.01 $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Total return(a) (7.49)% 1.46% (5.90)% 11.71% 14.68% 15.91%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,206,737 $1,559,864 $1,820,899 $1,647,801 $1,068,060 $557,926
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratio of expenses to average net assets 1.69%(b) 1.68% 1.61% 1.65% 1.68% 1.73%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Ratio of net investment income to average net
assets 10.03%(b) 9.30% 8.69% 8.33% 8.95% 9.18%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 79% 76% 80% 77% 61%
________________________________________________ __________ __________ __________ __________ __________ ________
================================================ ========== ========== ========== ========== ========== ========
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(a) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,364,593,065.
CLASS C
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SEVEN MONTHS YEAR ENDED AUGUST 4, 1997
ENDED DECEMBER 31, (DATE SALES
JULY 31, ------------------- COMMENCED)
2000 1999 1998(a) TO 1997
------------ -------- -------- --------------
Net asset value, beginning of period $ 8.05 $ 8.74 $ 10.14 $ 10.04
------------------------------------------------ -------- -------- -------- -------
Income from investment operations:
Net investment income 0.44 0.78 0.82 0.35
------------------------------------------------ -------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) (1.03) (0.65) (1.38) 0.10
================================================ ======== ======== ======== =======
Total from investment operations (0.59) 0.13 (0.56) 0.45
================================================ ======== ======== ======== =======
Less distributions:
Dividends from net investment income (0.45) (0.80) (0.84) (0.35)
------------------------------------------------ -------- -------- -------- -------
Return of capital (0.02) (0.02) -- --
================================================ ======== ======== ======== =======
Total distributions (0.47) (0.82) (0.84) (0.35)
================================================ ======== ======== ======== =======
Net asset value, end of period $ 6.99 $ 8.05 $ 8.74 $ 10.14
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
Total return(b) (7.51)% 1.46% (5.92)% 4.49%
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,297 $129,675 $113,246 $26,177
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
Ratio of expenses to average net assets 1.69%(c) 1.68% 1.61% 1.68%(d)
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
Ratio of net investment income to average net
assets 10.03%(c) 9.30% 8.69% 8.30%(d)
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
Portfolio turnover rate 23% 79% 76% 80%
________________________________________________ ________ ________ ________ _______
================================================ ======== ======== ======== =======
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(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $120,417,254.
(d) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
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DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
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CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
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Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
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HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
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OPENING AN ACCOUNT ADDING TO AN ACCOUNT
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Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- www.aimfunds.com HYI-PRO-1 --Registered Trademark--
[AIM LOGO APPEARS HERE]
PROSPECTUS --Registered Trademark--
NOVEMBER 28, 2000
This prospectus contains important
information about the
Class A, B and C shares of the fund.
Please read it before
investing and keep it for future
reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information in
this prospectus is adequate or
accurate. Anyone who tells you otherwise
is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve a high level of current income. The fund will attempt to achieve its objective by investing primarily in publicly traded non-investment grade debt securities. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing at least 80% of the value of the fund's total assets in non-investment grade debt securities, i.e., "junk bonds." The fund will invest principally in junk bonds rated B or above by Moody's Investors Service, Inc. or Standard & Poor's Rating Services, or those deemed by the portfolio managers to be of comparable quality. The fund will invest at least 80% of the value of the fund's total assets in debt securities, including convertible debt securities and/or cash or cash equivalents. The fund may invest up to 15% of the value of its total assets in equity securities. The fund also may invest up to 25% of its total assets in foreign securities, including up to 10% of the fund's total assets in securities of issuers located in developing markets, i.e., those that are in the initial stages of their industrial cycles. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
Although the portfolio managers focus on debt securities that they believe have favorable prospects for high current income, they also consider the possibility of capital growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease; junk bonds are less sensitive to this risk than are higher-quality bonds. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer and because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about issuers, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The following bar chart shows the performance of the fund's Class A shares. The bar chart does not reflect sales loads. If it did, the annual total return shown would be lower.
[GRAPH]
Annual
Year Ended Total
December 31 Return
----------- -------
1999 ................................. 19.88%
|
* The Class A shares' year-to-date total return as of September 30, 2000 was -7.91%.
During the period shown in the bar chart, the highest quarterly return was 7.94% (quarter ended December 31, 1999) and the lowest quarterly return was -0.37% (quarter ended September 30, 1999).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR INCEPTION DATE --------------------------------------------------------------------- Class A 14.14% 18.65% 09/30/98 Class B 13.90% 14.07% 11/20/98 Class C 17.69% 17.52% 11/20/98 Lehman Bros. High Yield Index(1) 2.39% 3.64%(2) 09/30/98(2) --------------------------------------------------------------------- |
(1) The Lehman Bros. High Yield Index is an index that includes all fixed-income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum amount outstanding of $100mm, and at least one year to maturity.
(2) The average annual total return given is since inception of fund's oldest share class (Class A).
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.63% 0.63% 0.63% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.37 0.37 0.37 Total Annual Fund Operating Expenses(2) 1.25 2.00 2.00 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has agreed to waive fees and reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and indirect expenses resulting from expense offset arrangements, if any) for Class A, Class B and Class C shares to the extent necessary to limit the total operating expenses of Class A Shares to 1.00% (e.g. if AIM waives 0.25% of Class A expenses, AIM will also waive 0.25% of Class B and Class C expenses). This agreement can be terminated at any time. Fund operating expenses net of this agreement are 1.00%, 1.75% and 1.75% for Class A, Class B and Class C, respectively.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $596 $853 $1,129 $1,915
Class B 703 927 1,278 2,134
Class C 303 627 1,078 2,327
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $596 $853 $1,129 $1,915
Class B 203 627 1,078 2,134
Class C 203 627 1,078 2,327
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal period ended July 31, 2000, the advisor received compensation of 0.38% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
SALES CHARGES
Purchases of Class A shares of AIM High Yield Fund II are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
-----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1998
JULY 31, (DATE OPERATIONS COMMENCED)
2000 TO JULY 31, 1999
---------------------- ----------------------------------------
Net asset value, beginning of year $ 11.25 $ 10.00
------------------------------------------------ ------- -------
Income from investment operations:
Net investment income 1.12 0.90
------------------------------------------------ ------- -------
Net gains on securities (both realized and
unrealized) (1.00) 1.26
================================================ ======= =======
Total from investment operations 0.12 2.16
================================================ ======= =======
Less distributions:
Dividends from net investment income (1.12) (0.90)
------------------------------------------------ ------- -------
Distributions from net realized gains (0.23) (0.01)
================================================ ======= =======
Total distributions (1.35) (0.91)
================================================
Net asset value, end of year $ 10.02 $ 11.25
________________________________________________ _______ _______
================================================ ======= =======
Total return(a) 0.77% 22.39%
________________________________________________ _______ _______
================================================ ======= =======
Ratios/supplemental data:
Net assets, end of year (000s omitted) $59,932 $34,992
________________________________________________ _______ _______
================================================ ======= =======
Ratio of expenses to average net assets:
With fee waivers 1.00%(b) 1.00%(c)
________________________________________________ _______ _______
================================================ ======= =======
Without fee waivers 1.25%(b) 1.58%(c)
________________________________________________ _______ _______
================================================ ======= =======
Ratio of net investment income to average net
assets 10.51%(b) 9.74%(c)
________________________________________________ _______ _______
================================================ ======= =======
Portfolio turnover rate 94% 223%
________________________________________________ _______ _______
================================================ ======= =======
|
(a) Does not deduct sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average net assets of $46,717,368.
(c) Annualized.
CLASS B
-------------------------------------------------------------
YEAR ENDED NOVEMBER 20, 1998
JULY 31, (DATE SALES COMMENCED)
2000 TO JULY 31, 1999
---------------------- ------------------------------------
Net asset value, beginning of year $ 11.23 $ 10.59
------------------------------------------------ ------- -------
Income from investment operations:
Net investment income 1.03 0.68
------------------------------------------------ ------- -------
Net gains on securities
(both realized and unrealized) (1.00) 0.65
================================================ ======= =======
Total from investment operations 0.03 1.33
================================================ ======= =======
Less distributions:
Dividends from net investment income (1.03) (0.68)
------------------------------------------------ ------- -------
Distributions from net realized gains (0.23) (0.01)
================================================ ======= =======
Total distributions (1.26) (0.69)
================================================ ======= =======
Net asset value, end of year $ 10.00 $ 11.23
________________________________________________ _______ _______
================================================ ======= =======
Total return(a) (0.03)% 13.03%
________________________________________________ _______ _______
================================================ ======= =======
Ratios/supplemental data:
Net assets, end of year (000s omitted) $67,140 $20,994
________________________________________________ _______ _______
================================================ ======= =======
Ratio of expenses to average net assets:
With fee waivers 1.75%(b) 1.75%(c)
________________________________________________ _______ _______
================================================ ======= =======
Without fee waivers 2.00%(b) 2.33%(c)
________________________________________________ _______ _______
================================================ ======= =======
Ratio of net investment income to average net
assets 9.76%(b) 8.99%(c)
________________________________________________ _______ _______
================================================ ======= =======
Portfolio turnover rate 94% 223%
________________________________________________ _______ _______
================================================ ======= =======
|
(a) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average net assets of $45,124,885.
(c) Annualized.
CLASS C
-------------------------------------------------------------
YEAR ENDED NOVEMBER 20, 1998
JULY 31, (DATE SALES COMMENCED)
2000 TO JULY 31, 1999
---------------------- ------------------------------------
Net asset value, beginning of year $ 11.22 $ 10.59
------------------------------------------------ ------- -------
Income from investment operations:
Net investment income 1.03 0.68
------------------------------------------------ ------- -------
Net gains on securities (both realized and
unrealized) (0.99) 0.64
================================================ ======= =======
Total from investment operations 0.04 1.32
================================================ ======= =======
Less distributions:
Dividends from net investment income (1.03) (0.68)
------------------------------------------------ ------- -------
Distributions from net realized gains (0.23) (0.01)
================================================ ======= =======
Total distributions (1.26) (0.69)
================================================ ======= =======
Net asset value, end of year $ 10.00 $ 11.22
________________________________________________ _______ _______
================================================ ======= =======
Total return(a) 0.08% 12.93%
________________________________________________ _______ _______
================================================ ======= =======
Ratios/supplemental data:
Net assets, end of year (000s omitted) $11,471 $ 3,139
________________________________________________ _______ _______
================================================ ======= =======
Ratio of expenses to average net assets:
With fee waivers 1.75%(b) 1.75%(c)
________________________________________________ _______ _______
================================================ ======= =======
Without fee waivers 2.00%(b) 2.33%(c)
________________________________________________ _______ _______
================================================ ======= =======
Ratio of net investment income to average net
assets 9.76%(b) 8.99%(c)
________________________________________________ _______ _______
================================================ ======= =======
Portfolio turnover rate 94% 223%
________________________________________________ _______ _______
================================================ ======= =======
|
(a) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are based on average net assets of $7,090,552.
(c) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
-----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------
|
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.0. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com HYI2-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM INCOME FUND
|
AIM Income Fund seeks to achieve a high level of current income consistent with reasonable concern for safety of principal.
PROSPECTUS AIM--Registered Trademark--
NOVEMBER 28, 2000
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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---------------
AIM INCOME FUND
---------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, sales person or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal. The fund will attempt to achieve its objective by investing primarily in fixed-rate corporate debt and U.S. and non-U.S. Government obligations. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund may invest up to 40% of its total assets in foreign securities. The
fund may invest up to 35% of its net assets in lower-quality debt securities,
i.e., "junk bonds," and unrated debt securities deemed by the portfolio managers
to be of comparable quality. The fund may also invest in preferred stock issues
and convertible corporate debt. Any percentage limitations with respect to
assets of the fund are applied at the time of purchase.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concerns for safety of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are valued.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
Compared to higher-quality debt securities, junk bonds involve a greater risk of default or price changes due to changes in the credit quality of the issuer and because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds debt securities often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990.................................... 3.65%
1991.................................... 18.01%
1992.................................... 7.28%
1993.................................... 15.38%
1994.................................... -7.65%
1995.................................... 22.77%
1996.................................... 8.58%
1997.................................... 11.92%
1998.................................... 4.94%
1999.................................... -2.92%
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* The Class A share's year-to-date total return as of September 30, 2000 was -0.99%.
During the periods shown in the bar chart, the highest quarterly return was 6.92% (quarter ended March 31, 1993) and the lowest quarterly return was -5.88% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------------------------------------ Class A -7.55% 7.68% 7.31% 7.45% 05/03/68 Class B -8.25% 7.58% -- 4.32% 09/07/93 Class C -4.62% -- -- 2.17% 08/04/97 Lehman Bros. Aggregate Bond Index(1) -0.82% 7.73% 7.70% 9.24%(2) 12/31/75(2) ------------------------------------------------------------------------------------------------------------------------ |
(1) The Lehman Bros. Aggregate Bond Index is an unmanaged index generally considered representative of treasury issues, agency issues, corporate bond issues and mortgage-backed securities.
(2) The average annual total return given is since the date closest to the earliest date the index became available.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.42% 0.42% 0.42% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.30 0.31 0.31 Total Annual Fund Operating Expenses 0.97 1.73 1.73 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $569 $769 $ 986 $1,608
Class B 676 845 1,139 1,840
Class C 276 545 939 2,041
----------------------------------------------
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You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $569 $769 $986 $1,608
Class B 176 545 939 1,840
Class C 176 545 939 2,041
----------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.42% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992.
SALES CHARGES
Purchases of Class A shares of AIM Income Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
--------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
JULY 31, 2000 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20
------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.34 0.57 0.57 0.55 0.57 0.58
------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.47) (0.81) (0.16) 0.39 0.09 1.00
================================================ ======== ======== ======== ======== ======== ========
Total from investment operations (0.13) (0.24) 0.41 0.94 0.66 1.58
================================================ ======== ======== ======== ======== ======== ========
Less distributions:
Dividends from net investment income (0.25) (0.55) (0.55) (0.52) (0.59) (0.61)
------------------------------------------------ -------- -------- -------- -------- -------- --------
Distributions from net realized gains -- -- (0.05) (0.09) -- --
------------------------------------------------ -------- -------- -------- -------- -------- --------
Return of capital (0.07) -- -- -- -- --
================================================ ======== ======== ======== ======== ======== ========
Total distributions (0.32) (0.55) (0.60) (0.61) (0.59) (0.61)
================================================ ======== ======== ======== ======== ======== ========
Net asset value, end of period $ 7.14 $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Total return(a) (1.70)% (2.92)% 4.94% 11.92% 8.58% 22.77%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $346,482 $393,414 $399,701 $340,608 $286,183 $251,280
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.97%(b) 0.91% 0.91% 0.94% 0.98% 0.98%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 8.03%(b) 7.11% 6.69% 6.55% 7.13% 7.52%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 43% 78% 41% 54% 80% 227%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
|
(a)Does not deduct sales charges and is not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $364,052,981.
CLASS B
------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------------------------
JULY 31, 2000 1999 1998 1997 1996 1995
------------- -------- -------- -------- ------- -------
Net asset value, beginning of period $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18
------------------------------------------------ -------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.31 0.50 0.50 0.48 0.50 0.53
------------------------------------------------ -------- -------- -------- -------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) (0.47) (0.80) (0.15) 0.38 0.11 0.98
================================================ ======== ======== ======== ======== ======= =======
Total from investment operations (0.16) (0.30) 0.35 0.86 0.61 1.51
================================================ ======== ======== ======== ======== ======= =======
Less distributions:
Dividends from net investment income (0.21) (0.49) (0.48) (0.45) (0.53) (0.54)
------------------------------------------------ -------- -------- -------- -------- ------- -------
Distributions from net realized gains -- -- (0.05) (0.09) -- --
------------------------------------------------ -------- -------- -------- -------- ------- -------
Return of capital (0.07) -- -- -- -- --
================================================ ======== ======== ======== ======== ======= =======
Total distributions (0.28) (0.49) (0.53) (0.54) (0.53) (0.54)
================================================ ======== ======== ======== ======== ======= =======
Net asset value, end of period $ 7.14 $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
Total return(a) (2.09)% (3.72)% 4.20% 10.89% 7.87% 21.72%
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $213,926 $244,713 $219,033 $125,871 $85,343 $44,304
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
Ratio of expenses to average net assets 1.73%(b) 1.66% 1.66% 1.69% 1.80% 1.79%
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets 7.28%(b) 6.36% 5.94% 5.80% 6.30% 6.71%
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
Portfolio turnover rate 43% 78% 41% 54% 80% 227%
________________________________________________ ________ ________ ________ ________ ________ _______
================================================ ======== ======== ======== ======== ======== =======
|
(a)Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $223,264,239.
CLASS C
---------------------------------------------------
AUGUST 4, 1997
YEAR ENDED (DATE SALES
SEVEN MONTHS DECEMBER 31, COMMENCED)
ENDED ----------------- TO DECEMBER 31,
JULY 31, 2000 1999 1998 1997
------------- ------- ------- ---------------
Net asset value, beginning of period $ 7.57 $ 8.36 $ 8.54 $ 8.38
------------------------------------------------ ------- ------- ------- ------
Income from investment operations:
Net investment income 0.31 0.50 0.50 0.19
------------------------------------------------ ------- ------- ------- ------
Net gains (losses) on securities (both
realized and unrealized) (0.47) (0.80) (0.15) 0.22
================================================ ======= ======= ======= ======
Total from investment operations (0.16) (0.30) 0.35 0.41
================================================ ======= ======= ======= ======
Less distributions:
Dividends from net investment income (0.21) (0.49) (0.48) (0.16)
------------------------------------------------ ------- ------- ------- ------
Distributions from net realized gains -- -- (0.05) (0.09)
------------------------------------------------ ------- ------- ------- ------
Return of capital (0.07) -- -- --
================================================ ======= ======= ======= ======
Total distributions (0.28) (0.49) (0.53) (0.25)
================================================ ======= ======= ======= ======
Net asset value, end of period $ 7.13 $ 7.57 $ 8.36 $ 8.54
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Total return(a) (2.09)% (3.71)% 4.21% 4.96%
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,821 $28,202 $19,332 $2,552
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of expenses to average net assets 1.73%(b) 1.66% 1.66% 1.69%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of net investment income to average net
assets 7.28%(b) 6.36% 5.94% 5.80%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Portfolio turnover rate 43% 78% 41% 54%
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
|
(a)Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $26,828,719.
(c)Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
-----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------
|
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
-----------------------------------
AIM Income Fund
SEC 1940 Act file number: 811-5686
-----------------------------------
[AIM LOGO APPEARS HERE]
--Registered Trademark-- www.aimfunds.com INC-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
|
AIM INTERMEDIATE
GOVERNMENT FUND
|
AIM Intermediate Government Fund seeks to achieve a high level of current income consistent with reasonable concern for safety of principal.
AIM--Registered Trademark--
PROSPECTUS
NOVEMBER 28, 2000
This prospectus contains important
information about Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
---------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representation other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal. The fund will attempt to achieve its objective by investing in debt securities issued, guaranteed or otherwise backed by the U.S. Government. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 65% of
its total assets in debt securities issued, guaranteed or otherwise backed by
the U.S. Government. The fund may invest in securities of all maturities issued
or guaranteed by the U.S. Government or its agencies and instrumentalities,
including: (1) U.S. Treasury obligations, and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities and supported by
(a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer
to borrow from the U.S. Treasury, or (c) the credit of the agency or
instrumentality. The fund will maintain a dollar-weighted average portfolio
maturity of between three and ten years. The fund invests primarily in
fixed-rate securities such as high-coupon U.S. Government agency mortgage-backed
securities, which consist of interests in underlying mortgages with maturities
of up to thirty years. Any percentage limitations with respect to assets of the
fund are applied at the time of purchase.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their reasonable concern for safety of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of traditional fixed-rate securities. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing a security may default or otherwise be unable to honor a financial obligation.
If the seller of a repurchase agreement in which the fund invests defaults on its obligation or declares bankruptcy, the fund may experience delays in selling the securities underlying the repurchase agreement. As a result, the fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights.
High-coupon U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium. If these securities experience a faster principal prepayment rate than expected, both the market value of and income from such securities will decrease.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990.................................... 9.39%
1991.................................... 12.98%
1992.................................... 6.26%
1993.................................... 7.07%
1994.................................... -3.44%
1995.................................... 16.28%
1996.................................... 2.35%
1997.................................... 9.07%
1998.................................... 8.17%
1999.................................... -1.87%
|
* The Class A share's year-to-date total return as of September 30, 2000 was 5.52%.
During the periods shown in the bar chart, the highest quarterly return was 5.49% (quarter ended June 30, 1995) and the lowest quarterly return was -2.92% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE --------------------------------------------------------------------------------------------------- Class A -6.55% 5.59% 5.95% 6.41% 04/28/87 Class B -7.16% 5.48% -- 3.78% 09/07/93 Class C -3.49% -- -- 3.39% 08/04/97 Lehman Bros. Intermediate Government Bond Index(1) 0.49% 6.93% 7.10% 7.44%(2) 04/30/87(2) --------------------------------------------------------------------------------------------------- |
(1) The Lehman Bros. Intermediate Government Bond Index is an unmanaged composite generally considered representative of intermediate publicly issued debt of U.S. Government agencies and quasi-federal corporations, and corporate debt guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C --------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C --------------------------------------------------------------- Management Fees 0.45% 0.45% 0.45% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.28 0.29 0.29 Interest 0.27 0.27 0.27 Total Other Expenses 0.55 0.56 0.56 Total Annual Fund Operating Expenses 1.25 2.01 2.01 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $596 $853 $1,129 $1,915
Class B 704 930 1,283 2,142
Class C 304 630 1,083 2,338
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $596 $853 $1,129 $1,915
Class B 204 630 1,083 2,142
Class C 204 630 1,083 2,338
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.45% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Laurie F. Brignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
SALES CHARGES
Purchases of Class A shares of AIM Intermediate Government Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
-----------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
JULY 31, 2000 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70 $ 8.99
------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.34 0.60 0.62 0.63 0.63 0.69
------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.03) (0.78) 0.13 0.18 (0.42) 0.73
================================================ ======== ======== ======== ======== ======== ========
Total from investment operations 0.31 (0.18) 0.75 0.81 0.21 1.42
================================================ ======== ======== ======== ======== ======== ========
Less distributions:
Dividends from net investment income (0.34) (0.60) (0.63) (0.61) (0.59) (0.67)
------------------------------------------------ -------- -------- -------- -------- -------- --------
Return of capital -- -- -- (0.02) (0.04) (0.04)
================================================ ======== ======== ======== ======== ======== ========
Total distributions (0.34) (0.60) (0.63) (0.63) (0.63) (0.71)
================================================ ======== ======== ======== ======== ======== ========
Net asset value, end of period $ 8.77 $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Total return(a) 3.55% (1.87)% 8.17% 9.07% 2.35% 16.28%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $221,636 $238,957 $245,613 $167,427 $174,344 $176,318
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets
(including interest expense) 1.25%(b) 1.08% 1.20% 1.11% 1.08% 1.19%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets
(excluding interest expense) 0.98%(b) 0.89% 0.96% 1.00% 1.00% 1.08%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 6.61%(b) 6.60% 6.43% 6.77% 6.76% 7.36%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of interest expense to average net assets 0.27%(b) 0.19% 0.24% 0.11% 0.08% 0.11%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 65% 141% 147% 99% 134% 140%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
|
(a)Does not deduct sales charges and is not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $218,614,108.
CLASS B
------------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------
JULY 31, 2000 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69 $ 8.99
------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.30 0.53 0.55 0.56 0.55 0.63
------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.04) (0.77) 0.13 0.17 (0.41) 0.70
================================================ ======== ======== ======== ======== ======== ========
Total from investment operations 0.26 (0.24) 0.68 0.73 0.14 1.33
================================================ ======== ======== ======== ======== ======== ========
Less distributions:
Dividends from net investment income (0.29) (0.53) (0.55) (0.53) (0.51) (0.59)
------------------------------------------------ -------- -------- -------- -------- -------- --------
Return of capital -- -- -- (0.02) (0.04) (0.04)
================================================ ======== ======== ======== ======== ======== ========
Total distributions (0.29) (0.53) (0.55) (0.55) (0.55) (0.63)
================================================ ======== ======== ======== ======== ======== ========
Net asset value, end of period $ 8.79 $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Total return(a) 3.05% (2.56)% 7.40% 8.16% 1.61% 15.22%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $177,032 $228,832 $237,919 $ 89,265 $ 79,443 $ 61,300
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets
(including interest expense) 2.01%(b) 1.85% 1.96% 1.87% 1.84% 1.97%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets
(excluding interest expense) 1.74%(b) 1.66% 1.72% 1.76% 1.76% 1.86%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 5.85%(b) 5.83% 5.68% 6.01% 6.00% 6.58%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of interest expense to average net assets 0.27%(b) 0.19% 0.24% 0.11% 0.08% 0.11%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 65% 141% 147% 99% 134% 140%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
|
(a)Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $192,126,552.
CLASS C
-----------------------------------------------------------------
AUGUST 4, 1997
YEAR ENDED (DATE SALES
SEVEN MONTHS DECEMBER 31, COMMENCED)
ENDED ----------------- TO DECEMBER 31,
JULY 31, 2000 1999 1998 1997
------------- ------- ------- ---------------
Net asset value, beginning of period $ 8.79 $ 9.56 $ 9.44 $ 9.33
------------------------------------------------ ------- ------- ------- ------
Income from investment operations:
Net investment income 0.30 0.53 0.56 0.24
------------------------------------------------ ------- ------- ------- ------
Net gains (losses) on securities (both
realized and unrealized) (0.03) (0.77) 0.11 0.10
================================================ ======= ======= ======= ======
Total from investment operations 0.27 (0.24) 0.67 0.34
================================================ ======= ======= ======= ======
Less distributions:
Dividends from net investment income (0.29) (0.53) (0.55) (0.22)
------------------------------------------------ ------- ------- ------- ------
Return of capital -- -- -- (0.01)
================================================ ======= ======= ======= ======
Total distributions (0.29) (0.53) (0.55) (0.23)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Net asset value, end of period $ 8.77 $ 8.79 $ 9.56 $ 9.44
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Total return(a) 3.18% (2.57)% 7.31% 3.64%
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $34,206 $39,011 $38,026 $1,851
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of expenses to average net assets
(including interest expense) 2.01%(b) 1.85% 1.96% 1.87%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of expenses to average net assets
(excluding interest expense) 1.74%(b) 1.66% 1.72% 1.76%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of net investment income to average net
assets 5.85%(b) 5.83% 5.68% 6.01%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Ratio of interest expense to average net assets 0.27%(b) 0.19% 0.24% 0.11%(c)
________________________________________________ _______ _______ _______ ______
================================================ ======= ======= ======= ======
Portfolio turnover rate 65% 141% 147% 99%
________________________________________________ _______ _______ _______ ______
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(a) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $34,843,129.
(c) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
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- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
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DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
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A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
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CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
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CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
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Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
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HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
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OPENING AN ACCOUNT ADDING TO AN ACCOUNT
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Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
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A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-5686 ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com GOV-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM MONEY MARKET FUND
AIM Money Market Fund seeks to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
PROSPECTUS AIM--Registered Trademark--
NOVEMBER 28, 2000
This prospectus contains important
information about the Class B and C
shares and AIM Cash Reserve Shares of the
fund. Please read it before investing and
keep it for future reference.
As with all other mutual fund securities,
the Securities and Exchange Commission
has not approved or disapproved these
securities or determined whether the
information in this prospectus is
adequate or accurate. Anyone who tells
you otherwise is committing a crime.
There can be no assurance that the fund
will be able to maintain a stable net
asset value of $1.00 per share.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
|
---------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund attempts to meet its objective by investing only in high-quality U.S. dollar-denominated short-term obligations, including:
- securities issued by the U.S. Government or its agencies;
- bankers' acceptances, certificates of deposit, and time deposits from U.S. or foreign banks;
- repurchase agreements;
- commercial paper;
- taxable municipal securities;
- master notes; and
- cash equivalents.
The fund may invest up to 50% of its assets in U.S. dollar-denominated foreign securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concerns for preservation of capital and liquidity. The portfolio managers usually hold portfolio securities to maturity, but may sell a particular security when they deem it advisable, such as when any of the factors above materially changes.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Additionally, the fund's yield will vary as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates.
The following factors could reduce the fund's income and/or share price:
- sharply rising interest rates;
- downgrades of credit ratings or default of any of the fund's holdings;
- the risks generally associated with concentrating investments in the banking industry, such as interest rate risk, credit risk and regulatory developments relating to the banking and financial services industries; or
- the risks generally associated with U.S. dollar-denominated foreign investments, including political and economic upheaval, seizure or nationalization of deposits, imposition of taxes or other restrictions on the payment of principal and interest.
If the seller of a repurchase agreement in which the fund invests defaults on its obligation or declares bankruptcy, the fund may experience delays in selling the securities underlying the repurchase agreement. As a result, the fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994 ....................................... 3.44%
1995 ....................................... 5.04%
1996 ....................................... 4.41%
1997 ....................................... 4.66%
1998 ....................................... 4.62%
1999 ....................................... 4.22%
|
* The Cash Reserve Shares' year-to-date total return as of September 30, 2000 was 3.99%.
During the periods shown in the bar chart, the highest quarterly return was 1.27% (quarters ended March 31, 1995 and June 30, 1995) and the lowest quarterly return was 0.59% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table reflects the fund's performance over the period indicated. The fund's performance reflects payment of sales loads, if any.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE --------------------------------------------------------------------------------- AIM Cash Reserve Shares 4.22% 4.59% -- 4.33% 10/16/93 Class B -1.55% 3.45% -- 3.53% 10/16/93 Class C 2.44% -- -- 3.67% 08/04/97 --------------------------------------------------------------------------------- |
AIM Cash Reserve Shares', Class B shares' and Class C shares' seven day yields on December 31, 1999, were 4.43%, 3.69% and 3.68%, respectively. For the current seven day yield, call (800) 347-4246.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from AIM CASH your investment) RESERVE SHARES CLASS B CLASS C ------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None 5.00% 1.00% ------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted AIM CASH from fund assets) RESERVE SHARES CLASS B CLASS C ------------------------------------------------------------------- Management Fees 0.54% 0.54% 0.54% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.28 0.28 0.28 Total Annual Fund Operating Expenses 1.07 1.82 1.82 ------------------------------------------------------------------ |
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------
AIM Cash Reserve
Shares $109 $340 $ 590 $1,306
Class B 685 873 1,185 1,940
Class C 285 573 985 2,137
----------------------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------
AIM Cash Reserve
Shares $109 $340 $590 $1,306
Class B 185 573 985 1,940
Class C 185 573 985 2,137
----------------------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.54% of average daily net assets.
SALES CHARGES
Purchase of Class B and Class C Shares of AIM Money Market Fund are subject to the contingent deferred sales charges listed in the "Shareholder Information -- Choosing a Share Class" section of this prospectus.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
In order to earn dividends on a purchase of fund shares on the day of the purchase, the transfer agent must receive payment in federal funds before 12:00 noon Eastern Time on that day. Purchases made by payments in other forms, or payments in federal funds received after 12:00 noon Eastern Time but before the close of the customary trading session of the New York Stock Exchange, will begin to earn dividends on the next business day.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CASH RESERVE
--------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31,
JULY 31, ----------------------------------------------------------
2000(a) 1999 1998 1997 1996 1995
------------ -------- ---------- -------- -------- --------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------ -------- -------- ---------- -------- -------- --------
Income from investment operations:
Net investment income 0.0300 0.0414 0.0453 0.0456 0.0433 0.0493
========================================== ======== ======== ========== ======== ======== ========
Less distributions from net investment
income (0.0300) (0.0414) (0.0453) (0.0456) (0.0433) (0.0493)
========================================== ======== ======== ========== ======== ======== ========
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
__________________________________________ ________ ________ __________ ________ ________ ________
========================================== ======== ======== ========== ======== ======== ========
Total return(b) 3.03% 4.22% 4.62% 4.66% 4.41% 5.04%
__________________________________________ ________ ________ __________ ________ ________ ________
========================================== ======== ======== ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $912,042 $989,478 $1,179,072 $344,117 $315,470 $293,450
__________________________________________ ________ ________ __________ ________ ________ ________
========================================== ======== ======== ========== ======== ======== ========
Ratio of expenses to average net assets 1.07%(c) 1.04% 0.99% 1.05% 1.08% 1.04%
__________________________________________ ________ ________ __________ ________ ________ ________
========================================== ======== ======== ========== ======== ======== ========
Ratio of net investment income to average
net assets 5.15%(c) 4.16% 4.53% 4.55% 4.32% 4.92%
__________________________________________ ________ ________ __________ ________ ________ ________
========================================== ======== ======== ========== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $915,893,647.
CLASS B
------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31,
JULY 31, --------------------------------------------------------
2000(a) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0256 0.0339 0.0371 0.0378 0.0360 0.0419
============================================== ======== ======== ======== ======== ======== ========
Less distributions from net investment income (0.0256) (0.0339) (0.0371) (0.0378) (0.0360) (0.0419)
============================================== ======== ======== ======== ======== ======== ========
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
______________________________________________ ________ ________ ________ ________ ________ ________
============================================== ======== ======== ======== ======== ======== ========
Total return(b) 2.59% 3.45% 3.78% 3.84% 3.66% 4.27%
______________________________________________ ________ ________ ________ ________ ________ ________
============================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $289,327 $404,911 $310,534 $116,058 $ 91,148 $ 69,857
______________________________________________ ________ ________ ________ ________ ________ ________
============================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.82%(c) 1.79% 1.81% 1.80% 1.81% 1.78%
______________________________________________ ________ ________ ________ ________ ________ ________
============================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 4.40%(c) 3.41% 3.71% 3.80% 3.60% 4.14%
______________________________________________ ________ ________ ________ ________ ________ ________
============================================== ======== ======== ======== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $327,368,646.
CLASS C
--------------------------------------------------------------
SEVEN MONTHS YEAR ENDED AUGUST 4, 1997
ENDED DECEMBER 31, (DATE SALES COMMENCED)
JULY 31, -------------------- TO DECEMBER 31,
2000(a) 1999 1998 1997
------------ -------- -------- ----------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0256 0.0339 0.0371 0.0158
================================================= ======== ======== ======== ========
Less distributions from net investment income (0.0256) (0.0339) (0.0371) (0.0158)
================================================= ======== ======== ======== ========
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
_________________________________________________ ________ ________ ________ ________
================================================= ======== ======== ======== ========
Total return(b) 2.59% 3.44% 3.78% 3.92%
_________________________________________________ ________ ________ ________ ________
================================================= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 45,457 $ 56,636 $ 27,391 $ 8,287
_________________________________________________ ________ ________ ________ ________
================================================= ======== ======== ======== ========
Ratio of expenses to average net assets 1.82%(c) 1.79% 1.81% 1.80%(d)
_________________________________________________ ________ ________ ________ ________
================================================= ======== ======== ======== ========
Ratio of net investment income to average net
assets 4.40%(c) 3.41% 3.71% 3.80%(d)
_________________________________________________ ________ ________ ________ ________
================================================= ======== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $45,687,844.
(d) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
-----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------
|
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
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TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
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You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com MKT-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM MUNICIPAL BOND FUND
AIM Municipal Bond Fund seeks to achieve a high level of current income
exempt from federal income taxes, consistent with the preservation of
principal.
AIM--Registered Trademark--
PROSPECTUS
NOVEMBER 28, 2000
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 Special Tax Information Regarding the Fund 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to achieve a high level of current income exempt from federal income taxes, consistent with the preservation of principal. The fund's investment objective may be changed by the Board of Trustees without shareholder approval. The fund will attempt to achieve its objective by investing primarily in a diversified portfolio of municipal bonds.
The fund attempts to meet its objective by investing at least 80% of its total invested assets in securities that pay interest exempt from all federal taxes and which does not constitute an item of preference for purposes of the alternative minimum tax. The fund will invest at least 80% of its total invested assets in municipal bonds. Municipal bonds include debt obligations of varying maturities issued to obtain funds for various public purposes by or on behalf of states, territories and possessions of the United States and the District of Columbia and their political subdivisions, agencies, authorities and instrumentalities. Certain types of industrial development bonds, such as private activity bonds, that meet certain standards, are treated as municipal bonds.
The fund will also invest at least 80% of its total assets in investment-grade municipal securities rated by Moody's Investors Service, Inc., Standard & Poor's Ratings Services or any other nationally recognized statistical rating organization. Other securities meeting certain standards set by the fund are included in this category. The fund may invest up to 20% of its total assets in lower-quality municipal securities, i.e. "junk bonds," or unrated municipal securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The portfolio managers focus on municipal securities they believe have favorable prospects for current income consistent with the fund's objective of preservation of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. Such investments may or may not be subject to federal taxes. As a result, the fund may not achieve its investment objective.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. A municipality may default or otherwise be unable to honor a financial obligation. Private activity bonds are not backed by the taxing power of the issuing municipality.
The value of, payment of interest and repayment of principal by, and the ability of the fund to sell, a municipal security may also be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations and voter initiatives as well as the economies of the regions in which the fund invests.
Compared to higher quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer and because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990 ............................... 5.27%
1991 ............................... 13.30%
1992 ............................... 9.10%
1993 ............................... 11.66%
1994 ............................... -3.79%
1995 ............................... 13.04%
1996 ............................... 3.90%
1997 ............................... 7.27%
1998 ............................... 5.28%
1999 ............................... -2.45%
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* The Class A shares' year-to-date total return as of September 30, 2000 was 5.22%.
During the periods shown in the bar chart, the highest quarterly return was 5.03% (quarter ended June 30, 1992) and the lowest quarterly return was -4.22% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE ---------------------------------------------------------------------------------------------------------- Class A -7.12% 4.26% 5.59% 6.27% 03/28/77 Class B -7.91% 4.13% -- 3.06% 09/01/93 Class C -4.09% -- -- 1.42% 08/04/97 Lehman Bros. Municipal Bond Index(1) -2.06% 6.91% 6.89% 8.11%(2) 12/31/79(2) ---------------------------------------------------------------------------------------------------------- |
(1) The Lehman Bros. Municipal Bond Index is a broad-based, total return index comprised of 8000 actual bonds, all of which are investment grade, fixed rate, long term maturities (greater than two years) and are selected from issues larger than $50 million dated since January 1984.
(2) The average annual total return given is since the earliest date the index became available.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES -------------------------------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C ---------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% ---------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES -------------------------------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.46% 0.46% 0.46% Distribution and/or Service (12b-1) Fees 0.25 1.00 1.00 Other Expenses 0.14 0.15 0.15 Total Annual Fund Operating Expenses 0.85 1.61 1.61 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
You may also be charged a transaction or other fee by the financial institution managing your account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $558 $733 $ 924 $1,474
Class B 664 808 1,076 1,708
Class C 264 508 876 1,911
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $558 $733 $924 $1,474
Class B 164 508 876 1,708
Class C 164 508 876 1,911
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.46% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Richard A. Berry, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1987.
- Stephen D. Turman, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1985.
SALES CHARGES
Purchases of Class A shares of AIM Municipal Bond Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of tax-exempt income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
SPECIAL TAX INFORMATION REGARDING THE FUND
In addition to the general tax information set forth under the heading "Shareholder Information--Taxes" in this prospectus, the following information describes the tax impact of certain dividends you may receive from the fund.
You will not be required to include the "exempt-interest" portion of dividends paid by the fund in your gross income for federal income tax purposes. You will be required to report the receipt of exempt-interest dividends and other tax-exempt interest on your federal income tax returns. Exempt-interest dividends from the fund may be subject to state and local income taxes, may give rise to a federal alternative minimum tax liability, may affect the amount of social security benefits subject to federal income tax, may affect the deductibility of interest on certain indebtedness, and may have other collateral federal income tax consequences for you. The fund may invest in municipal securities the interest on which constitutes an item of tax preference and could give rise to a federal alternative minimum tax liability for you, and may invest up to 20% of its net assets in such securities and other taxable securities. The fund will try to avoid investments that result in taxable dividends.
To the extent that dividends paid by the fund are derived from taxable investments or realized capital gains, they will be taxable as ordinary income or long-term capital gains. The percentage of dividends that constitutes exempt-interest dividends will be determined annually. This percentage may differ from the actual percentage of exempt interest received by the fund for the particular days in which you hold shares.
From time to time, proposals have been introduced before Congress that would have the effect of reducing or eliminating the federal tax exemption on municipal securities. If such a proposal were enacted, the ability of the fund to pay exempt-interest dividends might be adversely affected.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
-----------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
JULY 31, 2000(a) 1999 1998 1997 1996 1995
---------------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31 $ 7.78
------------------------------------------------ -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.24 0.41 0.42 0.42 0.43 0.43
------------------------------------------------ -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) 0.09 (0.61) 0.01 0.16 (0.12) 0.56
================================================ ======== ======== ======== ======== ======== ========
Total from investment operations 0.33 (0.20) 0.43 0.58 0.31 0.99
================================================ ======== ======== ======== ======== ======== ========
Less distributions:
Dividends from net investment income (0.24) (0.41) (0.42) (0.43) (0.43) (0.43)
------------------------------------------------ -------- -------- -------- -------- -------- --------
Return of capital -- -- -- -- -- (0.03)
================================================ ======== ======== ======== ======== ======== ========
Total distributions (0.24) (0.41) (0.42) (0.43) (0.43) (0.46)
================================================ ======== ======== ======== ======== ======== ========
Net asset value, end of period 7.83 $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Total return(b) 4.32% (2.45)% 5.28% 7.27% 3.90% 13.05%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $283,416 $294,720 $327,705 $318,469 $278,812 $284,803
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.85%(c) 0.84% 0.82% 0.90% 0.80% 0.88%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 5.32%(c) 5.01% 5.00% 5.14% 5.29% 5.26%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
Portfolio turnover rate 18% 28% 19% 24% 26% 36%
________________________________________________ ________ ________ ________ ________ ________ ________
================================================ ======== ======== ======== ======== ======== ========
|
(a)Calculated using average shares outstanding.
(b)Does not deduct sales charges and is not annualized for periods less than one year.
(c)Ratios are annualized and based on average daily net assets of $283,622,551.
CLASS B
------------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------
JULY 31, 2000(a) 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- -------
Net asset value, beginning of period $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.78
------------------------------------------------ ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.21 0.35 0.36 0.36 0.37 0.39
------------------------------------------------ ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized
and unrealized) 0.08 (0.62) 0.01 0.17 (0.13) 0.54
================================================ ======= ======= ======= ======= ======= =======
Total from investment operations 0.29 (0.27) 0.37 0.53 0.24 0.93
================================================ ======= ======= ======= ======= ======= =======
Less distributions:
Dividends from net investment income (0.20) (0.35) (0.36) (0.36) (0.36) (0.37)
------------------------------------------------ ------- ------- ------- ------- ------- -------
Return of capital -- -- -- -- -- (0.03)
================================================ ======= ======= ======= ======= ======= =======
Total distributions (0.20) (0.35) (0.36) (0.36) (0.36) (0.40)
================================================ ======= ======= ======= ======= ======= =======
Net asset value, end of period $ 7.84 $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
Total return(b) 3.84% (3.28)% 4.48% 6.59% 2.99% 12.14%
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $67,363 $72,256 $72,723 $47,185 $33,770 $21,478
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.61%(c) 1.59% 1.57% 1.66% 1.61% 1.68%(d)
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net
assets 4.56%(c) 4.26% 4.25% 4.38% 4.49% 4.46%
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
Portfolio turnover rate 18% 28% 19% 24% 26% 36%
________________________________________________ _______ _______ _______ _______ _______ _______
================================================ ======= ======= ======= ======= ======= =======
|
(a) Calculated using average shares method.
(b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $67,438,640.
(d) After fee waivers and/or expense reimbursements. The ratio of expenses to average daily net assets prior to fee waivers and/or expense reimbursements was 1.77% for 1995.
CLASS C
-----------------------------------------------------------
YEAR ENDED AUGUST 4, 1997
SEVEN MONTHS DECEMBER 31, (DATE SALES COMMENCED)
ENDED --------------- TO DECEMBER 31,
JULY 31, 2000(a) 1999 1998 1997
---------------- ------ ------ ----------------------
Net asset value, beginning of period $ 7.74 $ 8.35 $ 8.35 $ 8.30
------------------------------------------------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.21 0.35 0.36 0.15
------------------------------------------------ ------ ------ ------ ------
Net gains (losses) on securities (both realized
and unrealized) 0.08 (0.61) -- 0.04
================================================ ====== ====== ====== ======
Total from investment operations 0.29 (0.26) 0.36 0.19
================================================ ====== ====== ====== ======
Less distributions from net investment income (0.20) (0.35) (0.36) (0.14)
------------------------------------------------ ------ ------ ------ ------
Net asset value, end of period $ 7.83 $ 7.74 $ 8.35 $ 8.35
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
Total return(b) 3.85% (3.16)% 4.36% 2.36%
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,252 $9,652 $9,565 $ 825
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
Ratio of expenses to average net assets 1.61%(c) 1.59% 1.57% 1.67%(d)
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
Ratio of net investment income to average net
assets 4.56%(c) 4.26% 4.25% 4.37%(d)
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
Portfolio turnover rate 18% 28% 19% 24%
________________________________________________ ______ ______ ______ ______
================================================ ====== ====== ====== ======
|
(a) Calculated using average shares method.
(b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,458,483.
(d) Annualized.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
|
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
|
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
|
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
-----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------
|
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com MBD-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM LIMITED MATURITY
TREASURY FUND
|
AIM Limited Maturity Treasury Fund seeks liquidity with minimum fluctuation of principal value, and, consistent with this objective, the highest total return achievable.
PROSPECTUS AIM--Registered Trademark--
NOVEMBER 28, 2000
This prospectus contains important
information about Class A shares of the
fund. Please read it before investing and
keep it for future reference.
As with all other mutual fund securities,
the Securities and Exchange Commission
has not approved or disapproved these
securities or determined whether the
information in this prospectus is
adequate or accurate. Anyone who tells
you otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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----------------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to seek liquidity with minimum fluctuation of principal value, and, consistent with this objective, the highest total return achievable. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of the U.S. Treasury, including bills, notes and bonds. The fund will only purchase securities with maturities of three years or less.
The portfolio managers focus on U.S. Treasury obligations they believe have favorable prospects for total return consistent with the fund's investment objective. The portfolio managers usually sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash and shares of affiliated money market funds. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Interest rate increases can cause the price of a debt security to decrease; the longer the debt security's duration, the more sensitive it is to this risk.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance.
The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990.................................... 8.96%
1991.................................... 10.48%
1992.................................... 5.64%
1993.................................... 4.45%
1994.................................... 0.85%
1995.................................... 9.40%
1996.................................... 4.73%
1997.................................... 5.97%
1998.................................... 6.10%
1999.................................... 2.64%
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* The Class A shares' year-to-date total return as of September 30, 2000 was 4.56%.
During the periods shown in the bar chart, the highest quarterly return was
3.24% (quarter ended December 31, 1991) and the lowest quarterly return was
- 0.20% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ending SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE --------------------------------------------------------------------------------------------------------- Class A 1.64% 5.53% 5.78% 6.12% 12/15/87 Lehman Bros. 1- to 2-Year Government Bond Index(1) 3.41% 6.28% 6.40% 6.70%(2) 7/31/88(2) --------------------------------------------------------------------------------------------------------- |
(1) The Lehman Bros. 1- to 2-Year Government Bond Index is an unmanaged index composed of U.S. Agency and Treasury issues with maturities of one to two years.
(2) The average annual total return given is since the date closest to the earliest date the index became available.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A --------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 1.00% Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None -------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A --------------------------------------------------- Management Fees 0.20% Distribution and/or Service (12b-1) Fees 0.15 Other Expenses 0.19 Total Annual Fund Operating Expenses 0.54 --------------------------------------------------- |
You may also be charged a transaction or other fee by the financial institution managing your account.
EXPENSE EXAMPLE
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------
Class A $155 $271 $399 $770
---------------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.20% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Laurie A. Brignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Scot W. Johnson, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
SALES CHARGES
Purchases of Class A shares of AIM Limited Maturity Treasury Fund are subject to the maximum 1.00% initial sales charge as listed under the heading "CATEGORY III Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A
-----------------------------------------------------
YEAR ENDED JULY 31,
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.51 0.47 0.53 0.54 0.55
------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.07) (0.04) -- 0.10 (0.06)
====================================================== ======== ======== ======== ======== ========
Total from investment operations 0.44 0.43 0.53 0.64 0.49
====================================================== ======== ======== ======== ======== ========
Less distributions:
Dividends from net investment income (0.51) (0.47) (0.53) (0.54) (0.55)
====================================================== ======== ======== ======== ======== ========
Net asset value, end of period $ 9.96 $ 10.03 $ 10.07 $ 10.07 $ 9.97
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
Total return(a) 4.50% 4.32% 5.42% 6.55% 4.98%
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $300,058 $390,018 $345,355 $389,812 $359,048
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.54%(b) 0.54% 0.54% 0.54% 0.54%
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.07%(b) 4.61% 5.29% 5.35% 5.45%
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
Portfolio turnover rate 122% 184% 133% 130% 117%
______________________________________________________ ________ ________ ________ ________ ________
====================================================== ======== ======== ======== ======== ========
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(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $344,717,229.
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------
- Initial sales charge - No initial sales charge - No initial sales charge
- Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
at the end of the month shares
which is eight years after
the date on which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
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DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
A-1 MCF--10/00
CATEGORY II INITIAL SALES CHARGES
------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
-------------------------------------------------------------
|
CATEGORY III INITIAL SALES CHARGES
-------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
-------------------------------------------------------------
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
-------------------------------------------------------------
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CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
----------------------------------------------------------
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
----------------------------------------------------------
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COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase.
REDUCED SALES CHARGES
AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- on shares purchased by reinvesting dividends and distributions;
- when exchanging shares among certain AIM Funds;
- when using the reinstatement privilege; and
- when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- if you redeem Class B shares you held for more than six years;
- if you redeem Class C shares you held for more than one year;
- if you redeem shares acquired through reinvestment of dividends and distributions; and
- on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details.
MCF--10/00 A-2
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Large Cap Opportunities Fund, AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
-----------------------------------------------------------------------------------------------------------
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
----------------------------------------------------------------------------------------------------------
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HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
---------------------------------------------------------------------------------------------------------
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
----------------------------------------------------------------------------------------------------------
|
A-3 MCF--10/00
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares.
MCF--10/00 A-4
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
|
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day.
A-5 MCF--10/00
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered on the account;
(3) you request that payment be sent somewhere other than the bank of record on the account; or
(4) you request that payment be sent to a new address or an address that changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge;
MCF--10/00 A-6
(ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging;
- Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence;
- Exchanges must be made between accounts with identical registration information;
- The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9);
- Shares must have been held for at least one day prior to the exchange;
- If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and
- You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares.
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
A-7 MCF--10/00
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities.
The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges that trade on days when the AIM Funds do not price their shares, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates may apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
MCF--10/00 A-8
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com LTD-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
AIM HIGH YIELD FUND
AIM HIGH YIELD FUND II
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AND
CLASS A SHARES OF AIM LIMITED MATURITY TREASURY FUND
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS FOR THE
ABOVE-NAMED FUNDS, COPIES OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS, OR BY WRITING
A I M FUND SERVICES, INC., P.O. BOX 4739,
HOUSTON, TEXAS 77210- 4739,
OR BY CALLING (800) 347-4246.
STATEMENT OF ADDITIONAL INFORMATION DATED: NOVEMBER 28, 2000
RELATING TO THE PROSPECTUSES OF
AIM HIGH YIELD FUND DATED: NOVEMBER 28, 2000,
AIM HIGH YIELD FUND II DATED: NOVEMBER 28, 2000,
AIM INCOME FUND DATED: NOVEMBER 28, 2000,
AIM INTERMEDIATE GOVERNMENT FUND DATED: NOVEMBER 28, 2000,
AIM MONEY MARKET FUND DATED: NOVEMBER 28, 2000,
AIM MUNICIPAL BOND FUND DATED: NOVEMBER 28, 2000, AND
CLASS A SHARES OF AIM LIMITED MATURITY TREASURY FUND DATED: NOVEMBER 28, 2000
TABLE OF CONTENTS
Page
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INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE TRUST...............................................................................1
The Trust and its Shares.................................................................................1
PERFORMANCE INFORMATION...........................................................................................4
Yield Calculations.......................................................................................4
Total Return Calculations................................................................................5
Total Return Quotations..................................................................................6
Cumulative Return Quotations.............................................................................8
Historical Portfolio Results.............................................................................9
PORTFOLIO TRANSACTIONS...........................................................................................10
General Brokerage Policy................................................................................10
Allocation of Portfolio Transactions....................................................................11
Allocation of IPO Securities Transactions...............................................................11
Section 28(e) Standards.................................................................................12
Transactions with Regular Brokers.......................................................................12
Brokerage Commissions Paid..............................................................................13
Portfolio Turnover (All Funds Except Money Market)......................................................13
INVESTMENT STRATEGIES AND RISKS..................................................................................13
High Yield..............................................................................................14
High Yield II...........................................................................................14
Limited Maturity........................................................................................15
Money Market............................................................................................15
Municipal Bond..........................................................................................16
High Yield, High Yield II, Income, Intermediate Government and Municipal Bond...........................17
Risk Factors Regarding Non-Investment Grade Debt Securities.............................................18
Real Estate Investment Trusts ("REITs").................................................................19
Lending Portfolio Securities............................................................................19
Interfund Loans.........................................................................................19
Short Sales.............................................................................................19
Margin Transactions.....................................................................................20
Delayed Delivery Agreements.............................................................................20
When-Issued Securities..................................................................................21
Investments in Foreign Securities.......................................................................21
Risk Factors Regarding Foreign Securities...............................................................22
Illiquid Securities.....................................................................................23
Rule 144A Securities....................................................................................23
Repurchase Agreements...................................................................................23
Reverse Repurchase Agreements...........................................................................24
Dollar Roll Transactions................................................................................24
Borrowing...............................................................................................25
Investment in Other Investment Companies................................................................25
Temporary Defensive Investments.........................................................................25
U.S. Treasury Securities................................................................................25
Foreign Exchange Transactions...........................................................................25
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OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................26
Introduction............................................................................................26
General Risks of Options, Futures and Currency Strategies...............................................26
Cover...................................................................................................27
Writing Call Options....................................................................................27
Writing Put Options.....................................................................................28
Purchasing Put Options..................................................................................28
Purchasing Call Options.................................................................................29
Over-The-Counter Options................................................................................29
Index Options...........................................................................................29
Limitations on Options..................................................................................30
Interest Rate, Currency and Stock Index Futures Contracts...............................................30
Options on Futures Contracts............................................................................31
Forward Contracts.......................................................................................31
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................32
INVESTMENT RESTRICTIONS..........................................................................................32
Fundamental Restrictions................................................................................32
Non-Fundamental Restrictions............................................................................33
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................34
MANAGEMENT.......................................................................................................39
Trustees and Officers...................................................................................39
Remuneration of Trustees................................................................................42
AIM Funds Retirement Plan for Eligible Directors/Trustees...............................................44
Deferred Compensation Agreements........................................................................44
Investment Advisory and Other Services..................................................................45
Distribution Plans......................................................................................48
THE DISTRIBUTION AGREEMENTS......................................................................................54
SALES CHARGES AND DEALER CONCESSIONS.............................................................................56
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................59
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................63
HOW TO PURCHASE AND REDEEM SHARES................................................................................65
Variable Annuity Contracts..............................................................................65
Backup Withholding......................................................................................66
NET ASSET VALUE DETERMINATION....................................................................................67
For Money Market........................................................................................67
For All Other Funds.....................................................................................68
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................69
Dividends and Distributions.............................................................................69
Tax Matters.............................................................................................69
Qualification as a Regulated Investment Company.........................................................70
Excise Tax on Regulated Investment Companies............................................................71
Fund Distributions......................................................................................71
Municipal Bond..........................................................................................72
Sale or Redemption of Fund Shares.......................................................................73
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Reinstatement Privilege.................................................................................74
Foreign Shareholders....................................................................................74
Effect of Future Legislation; Local Tax Considerations..................................................74
DESCRIPTION OF MONEY MARKET INSTRUMENTS..........................................................................74
SHAREHOLDER INFORMATION..........................................................................................75
MISCELLANEOUS INFORMATION........................................................................................78
Charges for Certain Account Information.................................................................78
Audit Reports...........................................................................................78
Legal Matters...........................................................................................78
Custodian and Transfer Agent............................................................................78
Other Information.......................................................................................79
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES.................80
RATINGS OF SECURITIES............................................................................................83
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
AIM Investment Securities Funds (the "Trust") is a series mutual fund. The rules and regulations of the United States Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors with certain information concerning the activities of the Fund being considered for investment. This information is included in prospectuses for each series portfolio of the Trust (each a "Fund" and collectively, the "Funds"). The date of the most recent prospectus for each Fund is set forth below.
Date of Most
Fund Name: Recent Prospectus:
--------- ------------------
AIM High Yield Fund November 28, 2000
AIM High Yield Fund II November 28, 2000
AIM Income Fund November 28, 2000
AIM Intermediate Government Fund November 28, 2000
AIM Limited Maturity Treasury Fund November 28, 2000
AIM Money Market Fund November 28, 2000
AIM Municipal Bond Fund November 28, 2000
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Throughout this Statement of Additional Information, these prospectuses are referred to collectively as the "Prospectuses" and individually, each is referred to as a "Prospectus."
AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund and AIM Municipal Bond Fund all issue Class A, Class B and Class C shares. AIM Money Market Fund issues AIM Cash Reserve Shares, Class B shares and Class C shares. AIM Limited Maturity Treasury Fund issues Class A shares (which are discussed in this Statement of Additional Information) and Institutional Class shares (which are discussed in a separate Statement of Additional Information).
This Statement of Additional Information is intended to furnish investors with additional information concerning the Funds. Some of the information set forth in this Statement of Additional Information is also included in the Prospectuses. Copies of the Prospectuses and additional copies of this Statement of Additional Information may be obtained without charge by writing A I M Fund Services, Inc. ("AFS"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must receive and should read the appropriate Prospectus before they invest in any Fund.
The Prospectuses and this Statement of Additional Information omit certain information contained in the Trust's Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from the Prospectuses and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust was previously organized as a Maryland corporation on November 4, 1988. Pursuant to an Agreement and Plan of Reorganization, AIM Limited Maturity Treasury Fund ("Limited Maturity") was reorganized on October 15, 1993 as a series portfolio of the Trust. Pursuant to another Agreement and Plan of Reorganization, AIM High Yield Fund ("High Yield"), AIM Income Fund ("Income"), AIM Intermediate Government Fund ("Intermediate Government"), AIM Money Market Fund series ("Money Market") and AIM Municipal Bond Fund ("Municipal Bond") were reorganized on June 1, 2000 as series portfolios of the Trust. A copy of the Trust's Amended and Restated Agreement and Declaration of Trust dated November 5, 1998, as amended (the "Trust Agreement"), is on file with the SEC. In connection with their reorganization as series portfolios of the Trust, the fiscal year end of each of High Yield, Income, Intermediate Government, Money Market and Municipal Bond changed from December 31 to July 31.
AIM High Yield Fund II ("High Yield II") commenced operations on September 30, 1998. Limited Maturity succeeded to the assets and assumed the liabilities of a series portfolio with a corresponding name (the "Predecessor Fund") of Short-Term Investments Co., a Massachusetts business trust, on October 15, 1993. All historical financial information and other information contained in this Statement of Additional Information for periods prior to October 15, 1993, relating to Limited Maturity (or a class thereof) is that of the Predecessor Fund (or a corresponding class thereof). High Yield, Income, Intermediate Government, Money Market and Municipal Bond succeeded to the assets and assumed the liabilities of series portfolios with corresponding names (the "Predecessor Funds") of AIM Funds Group, a Delaware business trust, on June 1, 2000. All historical financial information and other information contained in this Statement of Additional Information for periods prior to June 1, 2000, relating to High Yield, Income, Intermediate Government, Money Market or Municipal Bond (or any classes thereof) is that of the Predecessor Funds (or the corresponding classes thereof).
Shares of beneficial interest of the Trust are redeemable at their net asset value at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption and the rights of share ownership, investors should consult the Prospectuses under the captions "Exchanging Shares" and "Redeeming Shares." The assets received by the Trust for the issuance or sale of shares of each Fund, and all income, earnings, profits, losses and proceeds therefrom, subject only to the rights of creditors, will be allocated to that Fund. They constitute the underlying assets of a Fund, are required to be segregated on the Trust's books of account, and are to be charged with the expenses with respect to the Fund and its respective classes. Any general expenses of the Trust not readily identifiable as belonging to a particular Fund are allocated by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Shareholders of a Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of that Fund. However, on matters affecting one Fund or one class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class. An example of a matter which would be voted on separately by shareholders of a particular portfolio is the approval of the Advisory Agreement, and an example of a matter which would be voted on separately by shareholders of each class is the approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees. Under the Trust Agreement, the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
Class B shares automatically convert to Class A shares at the end of the month which is eight years after the date of purchase. A pro rata portion of shares from reinvested dividends and distributions convert at the same time. No other shares have conversion rights. Because Class B shares convert into Class A shares, the holders of Class B shares (as well as the holders of Class A shares) of each Fund must approve any material increase in fees payable with respect to that Fund under the Class A and C Plan or a new class of shares into which the Class B shares will convert must be created which will be identical in all material respects to the Class A shares prior to the material increase in fees.
Each share of beneficial interest of a Fund represents an equal proportionate interest in the Fund with each other share and is entitled to such dividends and distributions out of the income belonging to the Fund. Fractional shares have proportionately the same rights, including voting rights, as are provided for full shares, as declared by the Board of Trustees. The Trust offers seven separate Funds with differing Class structures: Class A, Class B and Class C shares of High Yield, High Yield II, Income, Intermediate Government and Municipal Bond; Class A shares and the Institutional Class of Limited Maturity; and AIM Cash Reserve Shares, Class B and Class C shares of Money Market. As further described in the Prospectuses, each class is subject to differing sales charges (if applicable) and expenses, which differences will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class of the
respective Funds are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution. If the Trust liquidates, the Funds will first satisfy the outstanding liabilities of each of their classes. The Funds will then distribute the net assets allocable to each of their classes to the shareholders of such classes on a pro rata basis.
To obtain information about the Institutional Class of Limited Maturity, please call A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer and a wholly owned subsidiary of A I M Advisors, Inc. ("AIM"), at (800) 659-1005. AIM Distributors is the exclusive distributor of the Trust's shares.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of a class will be held from time to time to consider matters requiring a vote of such shareholders in accordance with the requirements of the Investment Company Act of 1940, as amended, (the "1940 Act"), state law and the provisions of the Trust Agreement. It is not expected that shareholder meetings will be held annually.
The Trust Agreement provides that trustees of the Trust shall hold office during the existence of the Trust, except as follows: (a) any trustee may resign or retire; (b) any trustee may be removed by a vote of at least two-thirds of the outstanding shares of the Trust, or at any time by written instrument signed by at least two-thirds of the trustees and specifying when such removal becomes effective; or (c) any trustee who has died or become incapacitated and is unable to serve may be retired by a written instrument signed by a majority of the trustees and specifying the date of his or her retirement.
Under Delaware law, the shareholders of a Delaware business Trust shall be entitled to the same limitations of liability extended to shareholders of private, for-profit corporations; however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement, though, does disclaim shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement also provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss is limited to circumstances in which the Fund would be unable to meet its obligations and wherein the complaining party was not held to be bound by the disclaimer.
The Trust Agreement further provides that the trustees and officers will not be liable for any act, omission or obligation of the Trust or any trustee or officer. However, nothing in the Trust Agreement protects a trustee or officer against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust. The Trust Agreement also provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, if it is determined that such person acted in good faith and reasonably believed: (1) in the case of conduct in his or her official capacity for the Trust, that his or her conduct was in the Trust's best interests, (2) in all other cases, that his or her conduct was at least not opposed to the Trust's best interests and (3) in a criminal proceeding, that he or she had no reason to believe that his or her conduct was unlawful. Such person may not be indemnified against any liability to the Trust or to the Trust's shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued
rather than recorded on the ex-dividend date. Interest earned
under this formula must generally be calculated based on the
yield to maturity of each obligation (or, if more
appropriate, based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the
period.
d = the maximum offering price per share on the last day of the
period.
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Yield is a function of the type and quality of the Fund's investments, the maturity of the securities held in the Fund's portfolio and the operating expense ratio of the Fund. A tax-equivalent yield is calculated in the same manner as the standard yield with an adjustment for a stated, assumed tax rate. Municipal Bond may also demonstrate the effect of such tax-equivalent adjustments generally by comparing various yield levels with their corresponding tax-equivalent yields, given a stated tax rate.
The yields for each of the Funds (except Money Market) for the thirty-day period ended July 31, 2000, were as follows:
30-DAY YIELDS
--------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
High Yield*........................ 12.15% 11.97%* 11.97%*
High Yield II*..................... 11.76% 11.58% 11.58%
Income .......................... 8.23% 7.89% 7.89%
Intermediate Government............ 6.02% 5.55% 5.55%
Limited Maturity ................. 5.89% N/A N/A
Municipal Bond..................... 4.38%** 3.84%** 3.84%**
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* The relatively high yields in this Fund, like that of other junk bond funds, reflect a substantial premium for the high default risk perceived by the market. Investors should not consider these yields a measure of income potential.
** The tax-equivalent yields, assuming a tax rate of 39.6%, for the Class A shares, Class B shares and Class C shares of Municipal Bond were 7.25%, 6.36% and 6.36%, respectively.
The standard formula for calculating annualized 7-day yields for Money Market is as follows:
V - V x 365
1 0
Y = ------ ---
V 7
0
Where Y = annualized yield.
V(0) = the value of a hypothetical pre-existing account in
the Fund having a balance of one share at the
beginning of a stated seven-day period.
V(1) = the value of such an account at the end of the stated
period.
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The annualized yields for each of the AIM Cash Reserve Shares, Class B and Class C shares of Money Market for the 7 days ended July 31, 2000, were 5.58%, 4.85% and 4.86%, respectively.
The standard formula for calculating effective annualized yield for Money Market is as follows:
365/7 EY = (Y+1) -1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
The effective annualized yields for each of the AIM Cash Reserve Shares, Class B and Class C shares of Money Market for the 7 days ended July 31, 2000, were 5.74%, 4.96% and 4.97%, respectively.
For the purpose of determining the annualized yield and effective annualized yield, the net change in the value of the hypothetical Money Market account reflects the value of additional shares purchased with dividends from the original shares and any such additional shares, and all fees charged, other than non-recurring account or sales charges, to all shareholder accounts in proportion to the length of the base period and the Fund's average account size, but does not include realized gains and losses or unrealized appreciation and depreciation or income other than investment income.
Certain of the Funds may also quote their distribution rates, which express the historical amount of income a Fund paid as dividends to its shareholders as a percentage of the Fund's offering price. The distribution rates for the Class A shares of Limited Maturity for the month ended July 31, 2000; for the Class A, Class B and Class C shares of High Yield, High Yield II, Income, Intermediate Government and Municipal Bond for the month ended July 31, 2000, were as follows:
DISTRIBUTION RATES
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- ------------------ --------------
High Yield......................... 10.78% 10.53% 10.56%
High Yield II...................... 11.12% 10.79% 10.81%
Income .......................... 7.36% 6.81% 6.82%
Intermediate Government............ 6.25% 5.73% 5.75%
*Limited Maturity ................. 5.55% N/A N/A
Municipal Bond..................... 4.96% 4.44% 4.44%
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* Limited Maturity 30 day yield.
These distribution rates were calculated by dividing dividends declared over the applicable month by the maximum offering price per share at the end of the period and annualizing the result.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of a Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any changes in the Fund's net asset value per share over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical investment in a Fund over a stated period, and then calculating the annual compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that a Fund's performance is not constant over time, but changes from year to year, and that average annual returns do not represent the actual year-to-year performance of a Fund.
Each Fund's total return is calculated in accordance with a standardized formula. Standardized total return for Class A shares reflects the deduction of the Fund's maximum front-end sales charge at the time of purchase. Standardized total return for Class B and Class C shares of the Funds (except for Limited Maturity) reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period. Standardized total return for AIM Cash Reserve Shares does not reflect a deduction of any sales charge, since that class is sold and redeemed at net asset value.
In addition to average annual total return, a Fund may quote unaveraged or cumulative total return reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns, yields and other performance information may be quoted numerically or in a table, graph or similar illustration. Total returns may be quoted with or without taking any applicable maximum sales charge or maximum contingent deferred sales charge into account. If quoted without the sales charge or contingent deferred sales charge, the performance quotation will be noted by an asterisk or other conspicuous footnote disclosing this fact. Excluding a Fund's sales charge or contingent deferred sales charge from a total return calculation produces a higher total return figure.
TOTAL RETURN QUOTATIONS
The following chart shows the average annual total returns for each of the named Funds' Class A shares for the one-year, five-year and ten-year periods (or since inception, if shorter) ended July 31, 2000:
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION
------ ------- ------- -----------
Class A Shares:
High Yield (11.86)% 2.99% 8.42% 9.59%
High Yield II (4.00)% N/A N/A 9.18%(1)
Income (6.82)% 4.69% 6.91% 7.25%
Intermediate Government (0.63)% 4.44% 5.84% 6.40%
Limited Maturity 3.47% 4.94% 5.62% 6.10%
Municipal Bond (2.71)% 3.43% 5.62% 6.30%
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(1) September 30, 1998 (date operations commenced)
The following chart shows the average annual total returns for each of the named Funds' Class B shares for the one-year, five-year and ten-year periods (or since inception, if shorter) ended July 31, 2000:
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------
ONE FIVE SINCE
YEAR YEARS INCEPTION
------ ------- ---------
Class B Shares:
---------------
High Yield......................... (12.23)% 2.96% 4.21%(2)
High Yield II...................... (4.38)% N/A 5.41%(3)
Income............................. (7.47)% 4.59% 3.63%(4)
Intermediate Government............ (1.38)% 4.35% 3.91%(4)
Money Market....................... (0.81)% 3.46% 3.62%(2)
Municipal Bond..................... (3.52)% 3.42% 3.36%(5)
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(2) September 1, 1993 (date operations commenced)
(3) November 20, 1998 (date operations commenced)
(4) September 7, 1993 (date operations commenced)
(5) October 15, 1993 (date operations commenced)
The following chart shows the average annual total return for each of the named Funds' Class C shares for the one-year and five-year periods (or since inception, if shorter) ended July 31, 2000:
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------
ONE SINCE
YEAR INCEPTION
------- ----------
Class C Shares:
---------------
High Yield......................... (9.05)% (2.66)%(6)
High Yield II...................... (0.92)% 7.43%(7)
Income .......................... (3.84)% 1.03%(6)
Intermediate Government............ 2.66% 3.80%(6)
Money Market....................... 3.19% 3.83%(6)
Municipal Bond..................... 0.36% 2.42%(6)
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(6) August 4, 1997 (date operations commenced)
(7) November 20, 1998 (date operations commenced)
The average annual total return for Money Market's AIM Cash Reserve Shares, for the one-year period ended July 31, 2000, was 4.96%; for the five-year period ended July 31, 2000, was 4.60%; and since inception (October 16, 1993), was 4.41%.
CUMULATIVE RETURN QUOTATIONS
The following chart shows the cumulative returns for each of the named Funds' Class A shares, for the one-year, five-year and ten-year periods (or since inception, if shorter), ended July 31, 2000:
CUMULATIVE RETURNS
------------------------------------------------------------
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION
------ ------ -------- -----------
Class A Shares:
High Yield (11.86)% 15.87% 124.34% 654.22%
High Yield II (4.00)% N/A N/A 17.46%(1)
Income (6.82)% 25.74% 95.09% 856.61%
Intermediate Government (0.63)% 24.27% 76.42% 127.66%
Limited Maturity 3.47% 27.28% 72.69% 111.12%
Municipal Bond (2.71)% 18.34% 72.69% 316.51%
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(1) September 30, 1998 (date operations commenced)
The following chart shows the cumulative returns for each of the named Funds' Class B shares for the one-year, five-year and ten-year periods (or since inception, if shorter) ended July 31, 2000:
CUMULATIVE RETURNS
--------------------------------------------
ONE FIVE SINCE
YEAR YEARS INCEPTION
------ ------- -----------
Class B Shares:
High Yield (12.23)% 15.73% 33.00%(2)
High Yield II (4.38)% N/A 9.34%(3)
Income (7.47)% 25.16% 27.92%(4)
Intermediate Government (1.38)% 23.74% 30.25%(2)
Money Market (0.81)% 18.57% 27.27%(5)
Municipal Bond (3.52)% 18.31% 25.68%(2)
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(2) September 1, 1993 (date operations commenced)
(3) November 20, 1998 (date operations commenced)
(4) September 7, 1993 (date operations commenced)
(5) October 15,1993 (date operations commenced)
The following chart shows the cumulative returns for each of the named Funds' Class C shares, for the one-year and five-year periods (or since inception, if shorter) ended July 31, 2000:
CUMULATIVE RETURNS
---------------------------
ONE SINCE
YEAR INCEPTION
------ -----------
Class C Shares:
---------------
High Yield......................... (9.05)% (7.75)%(6)
High Yield II...................... (0.92)% 12.90%(7)
Income .......................... (3.84)% 3.12%(6)
Intermediate Government............ 2.66% 11.81%(6)
Money Market....................... 3.19% 11.88%(6)
Municipal Bond..................... 0.36% 7.42%(6)
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(6) August 4, 1997 (date operations commenced)
(7) November 20, 1998 (date operations commenced)
The cumulative return for Money Market's AIM Cash Reserve Shares for the one-year ended July 31, 2000, was 4.96%; and for the five-year period ended July 31, 2000, was 25.22%; and since inception was 34.03%.
HISTORICAL PORTFOLIO RESULTS
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of a Fund. Voluntary fee waivers or reductions or commitments to assume expenses may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions or commitments to assume expenses, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions or reimbursement of expenses set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
The performance of each Fund will vary from time to time and past performance is not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. An investor should be aware that an investment in a Fund is subject to risks not present in ownership of a certificate of deposit, due to possible greater risk of loss of capital. These factors should be carefully considered by the investor before making an investment in any Fund.
High Yield II may participate in the Initial Public Offering ("IPO") market, and a significant portion of its returns may be attributable to its investment in IPOs. Investment in IPOs could have a magnified impact on High Yield II due to its small asset base. There is no guarantee that as the Fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs.
A Fund's performance may be compared in advertising to the performance of other mutual funds in general, or to the performance of particular types of mutual funds, especially those with similar investment objectives. Such performance data may be prepared by Lipper Inc. and other independent services which monitor the performance of mutual funds. A Fund may also advertise mutual fund performance rankings which have been assigned to it by such monitoring services.
A Fund's performance may also be compared in advertising and other materials to the performance of comparative benchmarks such as the Consumer Price Index, the Standard & Poor's 500 Stock Index, and
fixed-price investments such as bank certificates of deposit and/or savings accounts. In addition, a Fund's long-term performance may be described in advertising in relation to historical, political and/or economic events.
From time to time, a Fund's sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. These topics include, but are not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
From time to time sales literature and/or advertisements may disclose
(i) top holdings included in a Fund's portfolio, (ii) the names of certain
selling group members and/or (iii) the names of certain institutional
shareholders.
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions, and where applicable, negotiates commissions and spreads on transactions. Since most purchases and sales of portfolio securities by the Funds are usually principal transactions, the Funds incur little or no brokerage commissions. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate. While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Section 28(e) Standards" below.
In the event a Fund purchases securities traded in the over-the-counter market, the Fund deals directly with dealers who make markets in the securities involved, except when better prices are available elsewhere. Portfolio transactions placed through dealers who are primary market makers are effected at net prices without commissions, but which include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general, and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, "AIM Funds") in particular, including sales of the Funds and of the other AIM Funds. In connection with item (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account and may invest in affiliated money market funds, provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates also manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another AIM Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of a purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment.
ALLOCATION OF IPO SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in security distributions that are available in an IPO, and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for IPO securities for all AIM Funds and accounts participating in purchase transactions for that security, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular IPO by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in IPOs will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of IPOs over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon its asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the three tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in syndicates, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such syndicate transactions will be the same for each AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, may lawfully cause an account to pay a higher commission than the lowest available. Under Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to it, a Fund may pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Board of Trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communication of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information, the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
TRANSACTIONS WITH REGULAR BROKERS
As of July 31, 2000, High Yield, High Yield II, Intermediate Government, Limited Maturity, and Municipal Bond had no transactions with regular brokers, as that term is defined in Rule 10b-1 under the 1940 Act.
As of July 31, 2000, Money Market entered into repurchase agreements with Bank of America Securities, Credit Suisse First Boston Corp., UBS Warburg and Westdeutsche Landesbank Girozentrate, regular brokers, as that term is defined in Rule 10b-1 under the 1940 Act, having market values of $225,090,983, $58,000,000, $58,000,000 and $58,000,000, respectively. As of July 31, 2000, Money Market held an amount of commercial paper issued by Morgan Stanley Dean Witter, regular brokers, as the term is defined in Rule 10b-1 under the 1940 Act, having a market value of $10,000,000. As of July 31, 2000, Money
Market entered into a master note agreement with Morgan Stanley Dean Witter, regular broker, as the term is defined in Rule 10b-1 under the 1940 Act, having a market value of $60,000,000.
As of July 31, 2000, Income held an amount of common stock issued by Lehman Brothers Holding Inc. and Merrill Lynch & Co., regular brokers, as that term is defined in Rule 10b-1 under the 1940 Act, having a market value of $10,391,806 and $904,270, respectively.
BROKERAGE COMMISSIONS PAID
Intermediate Government, Limited Maturity, Municipal Bond and Money Market paid no brokerage commissions to brokers affiliated with those Funds during their past three fiscal years.
Brokerage commissions or underwriting concessions (or both) paid by High Yield II for the year ended July 31, 2000 and for the period ended July 31, 1999; and for High Yield and Income, for the period ended July 31, 2000 and the years ended December 31, 1999, 1998 and 1997, were as follows:
FUND 2000 1999 1998 1997
---- ------- ---------- --------- --------
High Yield ..................... $2,882 $ 102,000 $14,000 $102,000
High Yield II................... $2,868 $ 6,459 N/A N/A
Income.......................... $8,000 $ 44,000 $12,000 $ 28,000
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For the year ended July 31, 2000, AIM allocated certain High Yield brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $225,147 and the related brokerage commissions were $1,798.
For the year ended July 31, 2000, AIM allocated certain of High Yield II's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $213,493 and the related brokerage commissions were $1,500.
PORTFOLIO TURNOVER (ALL FUNDS EXCEPT MONEY MARKET)
Any particular security will be sold, and the proceeds reinvested, whenever such action is deemed prudent from the viewpoint of a Fund's investment objective, regardless of the holding period of that security. Each Fund's historical portfolio turnover rates are included in the Financial Highlights tables of the Fund's Prospectus. For the year ended July 31, 2000 AIM High Yield Fund II experienced a lower level of turnover due to large cash inflows relative to its beginning asset base. A higher rate of portfolio turnover may result in higher transaction costs, including brokerage commissions and other trading costs. Also, to the extent that higher portfolio turnover results in a higher rate of net realized capital gains to a Fund, the portion of the Fund's distributions constituting taxable capital gains may increase. See "Dividends, Distributions and Tax Matters."
INVESTMENT STRATEGIES AND RISKS
Information concerning each Fund's investment objective is set forth in the Prospectuses under the heading "Investment Objective and Strategies." There can be no assurance that any Fund will achieve its objective. The principal features of each Fund's investment program and the principal risks associated with the investment program are discussed in the Prospectuses under the headings "Investment Objective and Strategies" and "Principal Risks of Investing in the Fund."
The investment objective(s) of each Fund are non-fundamental policies and may be changed by the Board of Trustees without shareholder approval. Each Fund's investment policies, strategies and practices are also non-fundamental. Set forth in this section is a description of each Fund's investment policies, strategies and practices. The Board of Trustees of the Trust reserves the right to change any of these non-
fundamental investment policies, strategies or practices without shareholder approval. However, shareholders will be notified before any material change in the investment policies becomes effective.
Each Fund has adopted certain investment restrictions, some of which are fundamental and cannot be changed without shareholder approval. See "Investment Restrictions" in this Statement of Additional Information.
Individuals considering the purchase of shares of any fund should recognize that there are risks in the ownership of any security.
Any percentage limitations with respect to assets of a Fund will be applied at the time of purchase. A later change in percentage resulting from changes in asset values will not be considered a violation of the percentage limitations. The percentage limitations applicable to borrowings, reverse repurchase agreements and dollar roll transactions will be applied in accordance with applicable provisions of the 1940 Act and the rules and regulations promulgated thereunder which specifically limit each Fund's borrowing abilities.
HIGH YIELD
The investment objective of High Yield is to achieve a high level of current income.
The Fund will attempt to achieve its investment objective by investing principally in securities that are rated Baa, Ba or B by Moody's Investors Service, Inc. ("Moody's"), or BBB, BB or B by Standard & Poor's ("S&P"), or securities of comparable quality in the opinion of AIM that are either unrated or rated by other nationally recognized statistical rating organizations ("NRSROs"). The Fund may also hold, from time to time, securities rated Caa by Moody's or CCC by S&P, or, if unrated or rated by other NRSROs, securities of comparable quality as determined by AIM. It should be noted, however, that achieving the Fund's investment objective may be more dependent on the credit analysis of AIM, and less on that of credit rating agencies, than may be the case for funds that invest in more highly rated bonds.
The Fund will not acquire equity securities, other than preferred stocks, except when (a) attached to or included in a unit with income-generating securities that otherwise would be attractive to the Fund; (b) acquired through the exercise of equity features accompanying convertible securities held by the Fund, such as conversion or exchange privileges or warrants for the acquisition of stock or equity interests of the same or a different issuer; or (c) in the case of an exchange offer whereby the equity security would be acquired with the intention of exchanging it for a debt security issued on a "when-issued" basis.
HIGH YIELD II
The investment objective of High Yield II is to achieve a high level of current income.
The Fund will attempt to achieve its investment objective by investing primarily in publicly traded non-investment grade debt securities. The Fund will also consider the possibility of capital growth when it purchases and sells securities. Debt securities of less than investment grade (commonly referred to as "junk bonds") are considered "high risk" securities.
The Fund may invest up to 100% of its net assets in junk bonds. Junk bonds are considered to be speculative and entail greater risks, including default risks, than those found in higher rated securities. See "Risk Factors Regarding Non-Investment Grade Debt Securities" and Rating Categories below.
At least 80% of the value of the Fund's total assets will be invested in high yield debt securities. At least 51% of the value of the Fund's total assets will be invested in securities that are rated Ba or B by Moody's or BB or B by S&P, or securities of comparable quality as determined by AIM (under the supervision of and pursuant to guidelines established by the Board of Trustees) that are either unrated or rated by other NRSROs. The Fund may also hold, from time to time, securities rated Caa by Moody's or CCC by S&P, or
securities of comparable quality as determined by AIM that are either unrated or rated by other NRSROs. It should be noted, however, that achieving the Fund's investment objective may be more dependent on the credit analysis of AIM, and less on that of credit rating agencies, than may be the case for Funds that invest in more highly rated bonds. The Fund may also invest up to 15% of the value of its total assets in equity securities.
LIMITED MATURITY
The investment objective of Limited Maturity is to seek liquidity with minimum fluctuation in principal value, and, consistent with this objective, the highest total return achievable.
The Fund will attempt to achieve its objective by investing in an actively managed portfolio of U.S. Treasury notes and other direct obligations of the U.S. Treasury. The Fund will attempt to enhance its total return through capital appreciation when market factors, such as economic and market conditions and the prospects for interest rate changes, indicate that capital appreciation may be available without significant risk to principal. The Fund will only purchase securities whose maturities do not exceed three (3) years. The Fund's policy of investing in securities with remaining maturities of three (3) years or less will result in high portfolio turnover. Under normal circumstances, the average portfolio maturity of the Fund will range between one-and-one-half (1 1/2) and two (2) years. Since brokerage commissions are not normally paid on investments of the type made by the Fund, the high turnover rate should not adversely affect the net income of the Fund.
MONEY MARKET
The investment objective of Money Market is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
The Fund will limit investments in Money Market Instruments to those which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940 Act"), as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category for short-term debt obligations by two NRSROs, or, if only rated by one NRSRO, are rated in the highest rating category for short-term debt obligations by that NRSRO, or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards, as well as securities issued by a registered investment company that is a money market Fund and U.S. government securities.
The Fund will not invest in instruments maturing more than 397 days from the date of investment, and will maintain a dollar weighted average portfolio maturity of 90 days or less. The Fund must comply with the requirements of Rule 2a-7, which govern the operations of money market Funds and may be more restrictive than the Fund's restrictions. If any of the Fund's policies and restrictions are more restrictive than Rule 2a-7, such policies and restrictions will be followed.
The rating applied to a security at the time the security is purchased by the Fund may be changed while the Fund holds such security in its portfolio. This change may affect, but will not necessarily compel, a decision to dispose of a security. If the major rating services used by the Fund were to alter their standards or systems for ratings, the Fund would then employ ratings under the revised standards or systems that would be comparable to those specified in its current investment objectives, policies and restrictions.
The Board of Trustees has established procedures in compliance with Rule 2a-7 that include reviews of portfolio holdings by the trustees at such intervals as they may deem appropriate to determine whether net asset value, calculated by using available market quotations, deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to investors or existing shareholders. In the event the trustees determine that a deviation having such a result exists, they intend to take such corrective action as they deem necessary and appropriate, including, but not limited to, the following: the sale of portfolio instruments prior to maturity in order to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends; authorizing redemption of shares in kind; or establishing a net asset value per share by using available market quotations, in which case, the net asset value could possibly be greater or less than $1.00 per share. If the trustees deem it inadvisable to continue the practice of maintaining a net asset value of $1.00 per share, they may alter this procedure. The shareholders of the Fund will be notified promptly after any such change.
Any increase in the value of a shareholder's investment in the Fund resulting from the reinvestment of dividend income is reflected by an increase in the number of shares in the shareholder's account.
Money Market may not invest in puts, calls, or any combinations thereof, except to the extent consistent with its other investment policies.
MUNICIPAL BOND
The investment objective of Municipal Bond is to achieve a high level of current income exempt from federal income taxes, consistent with the preservation of principal.
For purposes of the Fund's investment policies and limitations, the term "municipal bonds" includes debt obligations of varying maturities issued to obtain funds for various public purposes, including the construction of a wide range of public facilities, the refunding of outstanding obligations, the obtaining of funds for general operating expenses and the lending of such funds to other public institutions and facilities. In addition, certain types of industrial development bonds are issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated facilities ("private activity bonds"). Such obligations are considered to be municipal bonds appropriate for investment by the Fund, provided that the interest paid thereon, in the opinion of bond counsel, is exempt from federal income taxes.
The two principal classifications of municipal bonds are "general obligation" and "revenue" bonds. General obligation bonds are secured by the issuer's pledge of its faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Industrial development bonds, which are municipal bonds, are in most cases revenue bonds and do not generally constitute the pledge of the credit of the issuer of such bonds.
The Fund may also invest in municipal lease obligations, which may take the form of a lease, an installment purchase or a conditional sales contract. Municipal lease obligations are issued by state and local governments and authorities to acquire land, equipment and facilities such as state and municipal vehicles, telecommunications and computer equipment, and other capital assets. Interest payments on qualifying municipal leases are exempt from federal income taxes. The Fund may purchase these obligations directly, or they may purchase participation interests in such obligations. Municipal leases are generally subject to greater risks than general obligation or revenue bonds. State laws set forth requirements that states or municipalities must meet in order to issue municipal obligations, and such obligations may contain a covenant by the issuer to budget for, appropriate, and make payments due under the obligation. However, certain municipal lease obligations may contain "non-appropriation" clauses which provide that the issuer is not obligated to make payments on the obligation in future years unless funds have been appropriated for this purpose each year. Accordingly, such obligations are subject to "non-appropriation" risk. While municipal leases are secured by the underlying capital asset, it may be difficult to dispose of such assets in the event of non-appropriation or other default. All direct investments by the Fund in municipal lease obligations shall be deemed illiquid and shall be valued according to the Fund's Procedures for Valuing Securities current at the time of such valuation.
As used in this Statement of Additional Information, interest which is "tax-exempt" or "exempt from federal income taxes" means interest on municipal securities which is excluded from gross income for federal income tax purposes, but which may give rise to federal alternative minimum tax liability. The principal and interest payments on private activity bonds (such as industrial development or pollution control bonds) are the
responsibility of the industrial user and, therefore, are not backed by the taxing power of the issuing municipality. Such obligations are included within the term municipal bonds if the interest paid thereon qualifies for exemption from federal income tax, but the interest on private activity bonds will be considered to be an item of preference for purposes of alternative minimum tax liability under the Internal Revenue Code of 1986, as amended (the "Code"). See "Dividends, Distributions and Tax Matters" below.
There is a risk that some or all of the interest received by the Fund from municipal securities might become taxable as a result of tax law changes or determinations of the Internal Revenue Service.
At least 80% of the Fund's total assets will be invested in municipal securities rated within the four highest rating categories of Moody's, S&P or any other NRSRO. The Fund may invest up to 20% of its total assets in municipal securities that are rated below Baa/BBB (or a comparable rating of any other NRSRO) or that are unrated. For purposes of the foregoing percentage limitations, municipal securities (i) which have been collateralized with U.S. Government obligations held in escrow until the municipal securities' scheduled redemption date or final maturity, but (ii) which have not been rated by a NRSRO subsequent to the date of escrow collateralization, will be treated by the Fund as the equivalent of Aaa/AAA rated securities.
Securities in which the Fund invests may be insured by financial insurance companies. Since a limited number of entities provide such insurance, the Fund may invest more than 25% of its assets in securities insured by the same insurance company.
For purposes of the Fund's fundamental investment restriction regarding issuer diversification, the Fund will regard each state and political subdivision, agency or instrumentality, and each multi-state agency of which such state is a member, as a separate issuer.
The Fund: (i) will not invest 25% or more of its assets in securities whose issuers are located in the same state; (ii) will not invest 25% or more of its assets in securities the interest upon which is paid from revenues of similar type projects; and (iii) will not invest 25% or more of its assets in industrial development bonds. The policy described in (ii) does not apply, however, if the securities are subject to a guarantee. For securities subject to a guarantee, the Fund does not intend to purchase any such security if, after giving effect to the purchase, 25% or more of the Fund's assets would be invested in securities issued or guaranteed by entities in a particular industry. Securities issued or guaranteed by a bank or subject to financial guaranty insurance are not subject to the limitations set forth in the preceding sentence.
The Fund may not invest in puts, calls, straddles, spreads or any combination thereof, except, however, that the Fund may purchase and sell options on financial futures contracts and may sell covered call options.
HIGH YIELD, HIGH YIELD II, INCOME, INTERMEDIATE GOVERNMENT AND MUNICIPAL BOND
High Yield, High Yield II, Income, Intermediate Government and Municipal Bond generally acquire bonds in new offerings or in principal trades with broker-dealers. Ordinarily, the Funds do not purchase securities with the intention of engaging in short-term trading. However, any particular security will be sold, and the proceeds reinvested, whenever such action is deemed prudent from the viewpoint of a Fund's investment objectives, regardless of the holding period of that security.
A portion of each Fund's assets may be held in cash and high quality, short-term money market instruments such as certificates of deposit, commercial paper, bankers' acceptances, short-term U.S. Government obligations, taxable municipal securities, master notes, and repurchase agreements, pending investment in portfolio securities, to meet anticipated short-term cash needs such as dividend payments or redemptions of shares, or for temporary defensive purposes. Such investments generally are the type in which Money Market invests, generally will have maturities of 60 days or less, and normally are held to maturity. However, Money Market is the only Fund limited to investing in Money Market Instruments which are "First Tier" securities as defined in Rule 2a-7. See "Description of Money Market Instruments" below. The
underlying securities that are subject to a repurchase agreement will be "marked-to-market" on a daily basis so that AIM can determine the value of the securities in relation to the amount of the repurchase agreement.
U.S. Government securities may take the form of participation interests in, and may be evidenced by, deposit or safekeeping receipts. Participation interests are pro rata interests in U.S. Government securities. A Fund may acquire participation interests in pools of mortgages sold by the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Banks. Instruments evidencing deposit or safekeeping are documentary receipts for such original securities held in custody by others.
U.S. Government securities, including those that are guaranteed by federal agencies or instrumentalities, may or may not be backed by the "full faith and credit" of the United States. Some securities issued by federal agencies or instrumentalities are only supported by the credit of the agency or instrumentality (such as the Federal Home Loan Banks) while others have an additional line of credit with the U.S. Treasury (such as FNMA). In the case of securities not backed by the full faith and credit of the United States, the Funds must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitments.
RISK FACTORS REGARDING NON-INVESTMENT GRADE DEBT SECURITIES
High Yield, High Yield II, and to a lesser extent Income and Municipal Bond, seek to meet their respective investment objectives by investing in non-investment grade debt securities, commonly known as "junk bonds." While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than higher-rated securities. Economic downturns tend to disrupt the market for junk bonds and adversely affect their values. Such economic downturns may be expected to result in increased price volatility for junk bonds and of the value of shares of the above-named Funds, and increased issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, junk bonds are subordinated to the prior payment of senior indebtedness, which potentially limits a Fund's ability to fully recover principal or to receive payments when senior securities are subject to a default.
The credit rating of a junk bond does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. Junk bonds have speculative characteristics which are likely to increase in number and significance with each successive lower rating category.
When the secondary market for junk bonds becomes more illiquid, or in the absence of readily available market quotations for such securities, the relative lack of reliable objective data makes it more difficult for the trustees to value a Fund's securities, and judgment plays a more important role in determining such valuations. Increased illiquidity in the junk bond market also may affect a Fund's ability to dispose of such securities at desirable prices.
In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds without regard to their investment merits, thereby decreasing the asset base upon which the Fund's expenses can be spread and possibly reducing the Fund's rate of return. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments than those of higher-rated debt securities.
REAL ESTATE INVESTMENT TRUSTS ("REITS")
To the extent consistent with their respective investment objectives and policies, High Yield, High Yield II and Income may each invest up to 10% of their net assets in equity and/or debt securities issued by REITs.
REITs are Trusts which sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the Southeastern United States, or both.
To the extent that a Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate, including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the Trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such Trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
LENDING PORTFOLIO SECURITIES
Consistent with applicable regulatory requirements, the Funds may each lend their portfolio securities (principally to broker-dealers) to the extent of one-third of their respective total assets. Such loans would be callable at any time and will be continuously secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or its agencies. Each Fund would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of the loan collateral if it were cash. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or affiliated money market funds. Where voting or consent rights with respect to loaned securities pass to the borrower, the Funds will follow the policy of calling the loan, in whole or in part as may be appropriate, to permit the exercise of such voting or consent rights if the matters involved are expected to have a material effect on each Fund's investment in the loaned securities. Lending securities entails a risk of loss to the Funds if and to the extent that the market value of the securities loaned were to increase and the lender did not increase the collateral accordingly.
INTERFUND LOANS
Each Fund may lend up to 33-1/3% of its total assets to another AIM Fund, on such terms and conditions as the SEC may require in an exemptive order. An application for exemptive relief has been filed with the SEC on behalf of the Funds and others. Each Fund may also borrow from another AIM Fund to satisfy redemption requests or to cover unanticipated cash shortfalls due to a delay in the delivery of cash to the Fund's custodian or improper delivery instructions by a broker effectuating a transaction.
SHORT SALES
Each of the Funds (except for Limited Maturity and Money Market) may from time to time make short sales of securities which it owns or which it has the right to acquire through the conversion or exchange of other securities it owns. In a short sale, a Fund does not immediately deliver the securities sold and does not
receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will neither make short sales of securities nor maintain a short position unless, at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against the box." To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian, an equal amount of the securities sold short or securities convertible into or exchangeable for such securities. In no event may more than 10% of a Fund's total assets be deposited or pledged as collateral for short sales at any one time.
Since a Fund ordinarily will want to continue to receive interest and dividend payments on securities in its portfolio which are convertible into the securities sold short, the Fund will normally close out a short position by purchasing and delivering an equal amount of the securities sold short, rather than by delivering securities which it already holds.
A Fund will make a short sale as a hedge when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because, among other reasons, it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount the Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
MARGIN TRANSACTIONS
The Funds will not purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
DELAYED DELIVERY AGREEMENTS
Each Fund may purchase or sell securities on a delayed delivery basis. Delayed delivery agreements involve commitments by a Fund to dealers or issuers to acquire securities or instruments at a specified future date beyond the customary same-day settlement for such securities or instruments. These commitments may fix the payment price and interest rate to be received on the investment. Intermediate Government may also engage in buy/sellback transactions (a form of delayed delivery agreement). In a buy/sellback transaction, the Fund enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date. Delayed delivery agreements will not be used as a speculative or leverage technique. Rather, from time to time, AIM can anticipate that cash for investment purposes will result from, among other things, scheduled maturities of existing portfolio instruments or from net sales of shares of a Fund. To assure that a Fund will be as fully invested as possible in instruments meeting the Fund's investment objective, a Fund may enter into delayed delivery agreements, but only to the extent of anticipated funds available for investment during a period of not more than five business days. Until the settlement date, a Fund will segregate liquid assets (cash and short-term U. S. Treasury obligations, in the case of Limited Maturity) of a dollar value sufficient at all times to make payment for the delayed delivery securities. No more than 25% of a Fund's total assets will be committed to delayed delivery agreements and when-issued securities, as described below. The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery securities prior to settlement. If cash is not available to a Fund at the time of settlement, the Fund may be
required to dispose of portfolio securities that it would otherwise hold to maturity in order to meet its obligation to accept delivery under a delayed delivery agreement. The Board of Trustees has determined that entering into delayed delivery agreements does not present a materially increased risk of loss to shareholders, but the Board of Trustees may restrict the use of delayed delivery agreements if the risk of loss is determined to be material, or if it affects the stable net asset value of Money Market.
WHEN-ISSUED SECURITIES
Each Fund may purchase securities on a "when-issued" basis, that is, the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued (normally within forty-five days after the date of the transaction). The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but a Fund may sell these securities before the settlement date if it is deemed advisable. No additional when-issued commitments will be made if as a result more than 25% of a Fund's total assets would become committed to purchases of when-issued securities and delayed delivery agreements.
If a Fund purchases a when-issued security, it will direct its custodian bank to collateralize the when-issued commitment by segregating liquid assets (cash and short-term U.S. Treasury obligations, in the case of Limited Maturity) in the same fashion as required for a delayed delivery agreement. Such segregated liquid assets will likewise be marked-to-market, and the amount segregated will be increased if necessary to maintain adequate coverage of the when-issued commitments.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for a Fund to meet its obligations under when-issued commitments, the Fund will do so by using then available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Fund's payment obligation).
Investment in securities on a when-issued or delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a when-issued or delayed delivery commitment. In a delayed delivery transaction, the Fund relies on the other party to complete the transaction. If the transaction is not completed, the Fund may miss a price or yield considered to be advantageous. A Fund will employ techniques designed to reduce such risks. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. To the extent liquid assets are segregated, they will not be available for new investments or to meet redemptions. Securities purchased on a delayed delivery basis may require a similar segregation of liquid assets.
INVESTMENTS IN FOREIGN SECURITIES
High Yield and High Yield II may invest up to 25% of their total assets in securities of issuers located in foreign countries, including up to 10% of High Yield II's total assets which may be invested in securities of issuers located in emerging markets and developing countries such as Turkey, Poland and Mexico. A "developing country" is a country in the initial stages of its industrialization cycle. Income and Money Market may invest up to 40% and 50%, respectively, of their total assets in foreign securities, although Money Market may only invest in foreign securities denominated in U.S. dollars. To the extent it invests in securities denominated in foreign currencies, each Fund bears the risks of changes in the exchange rates between U.S.
currency and the foreign currency, as well as the availability and status of foreign securities markets. Each Fund (other than Intermediate Government, Money Market and Municipal Bond) may invest in securities of foreign issuers which are in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers, and such investments are treated as foreign securities for purposes of percentage limitations on investments in foreign securities. For a discussion of the risks pertaining to investments in foreign securities, see "Risk Factors Regarding Foreign Securities" below.
RISK FACTORS REGARDING FOREIGN SECURITIES
Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail some or all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of these risks.
Currency Risk. The value of a Fund's foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country will replace its local currency with the euro on July 1, 2002. Any other European country that is a member of the European Union and satisfies the criteria for participation in the EMU may elect to participate in the EMU and may supplement its existing currency with the euro. The anticipated replacement of existing currencies with the euro on July 1, 2002 could cause market disruptions before or after July 1, 2002 and could adversely affect the value of securities held by a Fund.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Funds' investments.
Regulatory Risk. Foreign companies are not registered with the SEC and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Fund's shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
Emerging Markets and Developing Countries. High Yield II may invest in companies located within emerging markets or developing countries. Investments in emerging markets or developing countries involve exposure to economic structures that are generally less diverse and mature and to political systems which can be expected to have less stability than those of more developed countries. Developing countries may
have relatively unstable governments, economies based on only a few industries, and securities markets which trade only a small number of securities. Historical experience indicates that emerging markets have been more volatile than the markets of more mature economies. Such markets have also from time to time provided higher rates of return and greater risks to investors. AIM believes that these characteristics of emerging markets can be expected to continue in the future.
ILLIQUID SECURITIES
Illiquid securities include securities that cannot be disposed of promptly (within seven days) in the normal course of business at a price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933. Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations. The Trust's Board of Trustees has established procedures for determining the liquidity of Rule 144A securities held by the Funds and monitors AIM's liquidity determinations made pursuant to such procedures. High Yield, High Yield II, Income, Intermediate Government, Limited Maturity and Municipal Bond may each invest up to 15% of their net assets, and Money Market may invest up to 10% of its net assets, in illiquid securities including repurchase agreements with remaining maturities in excess of seven (7) days.
RULE 144A SECURITIES
Each Fund, except Limited Maturity, may purchase securities which, while privately placed, are eligible for purchase and resale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. AIM, under the supervision of the Board of Trustees, will consider whether securities purchased under Rule 144A are illiquid and thus subject to each Fund's restrictions of investing no more than 15% of its net assets (10% in the case of Money Market) in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination, AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market and (iv) nature of the security and of market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by AIM and if, as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that such Fund does not invest more than 15% of its net assets (10% in the case of Money Market) in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities.
REPURCHASE AGREEMENTS
Each Fund may engage in repurchase agreements involving the types of securities in which it is permitted to invest. A repurchase agreement involves the purchase by a Fund of an investment contract from a financial institution, such as a domestic bank or primary dealers in U.S. Government securities or U.S. Treasury obligations. The agreement provides that the seller will repurchase the underlying securities at an agreed-upon time and price. The total amount received on repurchase will exceed the price paid by a Fund, reflecting the agreed-upon rate of interest for the period from the date of the repurchase agreement to the settlement date. This rate of return is not related to the interest rate on the underlying securities. The difference between the total amount received upon the repurchase of the securities and the price paid by a Fund upon their acquisition is accrued daily as interest. Investments in repurchase agreements may involve risks not associated with investments in the underlying securities. If the seller defaulted on its repurchase obligations, a Fund would incur a loss to the extent that the proceeds from a sale of the underlying securities
were less than the repurchase price under the agreement. A Fund will limit repurchase agreements to transactions with sellers believed by AIM to present minimal credit risk. Securities subject to repurchase agreements will be held by a Fund's custodian or in the custodian's account with the Federal Reserve Treasury Book-Entry System. Although the securities subject to repurchase agreements might bear maturities in excess of one year, a Fund will not enter into a repurchase agreement with an agreed-upon repurchase date in excess of seven (7) calendar days from the date of acquisition by a Fund, unless the Fund has the right to require the selling institution to repurchase the underlying securities within seven (7) days of the date of acquisition.
Rule 2a-7 provides that, for purposes of determining the percentage of the total assets of Money Market that are invested in securities of an issuer, a repurchase agreement shall be deemed to be an acquisition of the underlying securities, provided that the obligation of the seller to repurchase the securities from the Fund is fully collateralized. To be fully collateralized, the collateral must among other things consist entirely of cash items, U.S. Government securities or securities that, at the time the repurchase agreement is entered into, are rated in the highest rating category by the Requisite NRSROs (as defined in Rule 2a-7), and the repurchase agreement must qualify under a provision of applicable insolvency law providing an exclusion from any automatic stay of creditors' rights against the seller.
Limited Maturity's investment policies permit it to invest in repurchase agreements with banks and broker-dealers pertaining to U.S. Treasury obligations. However, in order to maximize the Fund's dividends which are exempt from state income taxation, as a matter of operating policy, the Fund does not currently invest in repurchase agreements.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of securities held by a Fund, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. A Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction or (iii) to cover short-term cash requirements resulting from the timing of trade settlements (except for Limited Maturity). At the time it enters into a reverse repurchase agreement, a Fund will segregate liquid assets (U.S. Treasury obligations in the case of Limited Maturity) having a dollar value equal to the repurchase price. Reverse repurchase agreements are considered borrowings by a Fund under the 1940 Act.
DOLLAR ROLL TRANSACTIONS
In order to enhance portfolio returns and manage prepayment risks, Income and Intermediate Government may engage in dollar roll transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, a Fund sells a mortgage security held in the portfolio to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, a Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for a Fund exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the securities retained by a Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities in a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities.
BORROWING
Each of the Funds may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Funds' borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each of the Funds may invest in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and if applicable, exemptive orders granted by the SEC. The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds (defined below): (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies other than Affiliated Money Market Funds. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds, the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest uninvested cash balances and cash collateral received in connection with securities lending in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that, with respect to uninvested cash balances, investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
TEMPORARY DEFENSIVE INVESTMENTS
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each of the Funds may temporarily hold all or a portion of its assets in cash, money market instruments, bonds, or (with the exception of Limited Maturity) other debt securities. Each of the Funds may also invest up to 25% of their total assets in Affiliated Money Market Funds for these purposes. For a description of the various rating categories of corporate bonds and commercial paper in which the Funds may invest, see "Ratings of Securities" below.
U.S. TREASURY SECURITIES
Each of the Funds may invest in U.S. Treasury obligations, which are direct obligations of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance, including U.S. Treasury bills, U.S. Treasury notes and U.S. Treasury bonds.
FOREIGN EXCHANGE TRANSACTIONS
High Yield, High Yield II, and Income each has the ability to deal in foreign exchange between currencies of the different countries in which it will invest either for the settlement of transactions or as a hedge against possible variations in the foreign exchange rates between those currencies. This may be accomplished through direct purchases or sales of foreign currency, purchases of futures contracts with respect to foreign currency (and options thereon), and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
A Fund may purchase and sell options on futures contracts or forward contracts which are denominated in a particular foreign currency to hedge the risk of fluctuations in the value of another currency. A Fund's dealings in foreign exchange may involve specific transactions or portfolio positions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of a Fund, or the payment of dividends and distributions by a Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as an ADR) denominated or quoted in a foreign currency. A Fund will not speculate in foreign exchange, nor commit a larger percentage of their total assets to foreign exchange hedges than they could invest in foreign securities.
Purchases and sales of foreign securities are usually made with foreign currencies, and consequently a Fund may from time to time hold cash balances in the form of foreign currencies and multinational currency units. Such foreign currencies and multinational currency units will usually be acquired on a spot (i.e., cash) basis at the spot rate prevailing in foreign exchange markets, and will result in currency conversion costs to a Fund. The Funds attempt to purchase and sell foreign currencies on as favorable a basis as practicable; however, some price spread on foreign exchange transactions (to cover service charges) may be incurred, particularly when a Fund changes investments from one country to another, or when U.S. dollars are used to purchase foreign securities. Certain countries could adopt policies which would prevent a Fund from transferring cash out of such countries, and the Fund may be affected either favorably or unfavorably by fluctuations in relative exchange rates while they hold foreign currencies.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
High Yield, High Yield II, Income and Intermediate Government may each use forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging
strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract, forward contract or option thereon at any particular time.
(5) As described below, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, the Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
WRITING CALL OPTIONS
High Yield, High Yield II, Income and Intermediate Government may each write (sell) covered call options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a call option, a Fund would have the obligation to deliver the underlying security, cash or currency (depending on the type of derivative) to the holder (buyer) at a specified price (the exercise price) at any time until (American style) or on (European style) a certain date (the expiration date). So long as the obligation of a Fund continues, it may be assigned an exercise notice, requiring it to deliver the underlying security, cash or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold.
When writing a call option a Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security, contract or currency above the exercise price, and retains the risk of loss should the price of the security, contract or currency decline. Unlike one who owns securities,
contracts or currencies not subject to an option, a Fund has no control over when it may be required to sell the underlying securities, contracts or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option.
Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit the Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
High Yield, High Yield II, Income and Intermediate Government may each write (sell) covered put options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a put option, a Fund would have the obligation to buy the underlying security, contract or currency (depending on the type of derivative) at the exercise price at any time until (American style) or on (European style) the expiration date. This obligation terminates upon the expiration of the put option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold.
A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lower price it is willing to pay for the underlying security, contract or currency. The risk in such a transaction would be that the market price of the underlying security, contract or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
High Yield, High Yield II, Income and Intermediate Government may each purchase covered put options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a put option, a Fund would have the right to sell the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such option or permit such option to expire.
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon exercise of said option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost.
A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
PURCHASING CALL OPTIONS
High Yield, High Yield II, Income and Intermediate Government may each purchase covered call options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a call option, a Fund would have the right to purchase the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such options or permit such options to expire.
Call options may be purchased by a Fund for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security, contract or currency and, in such event, could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option.
High Yield, High Yield II, Income and Intermediate Government may each purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
OVER-THE-COUNTER OPTIONS
Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market value of the option) to be illiquid securities. A Fund may also sell OTC options and, in connection therewith, segregate assets or cover its obligations with respect to OTC options written by it. The assets used as cover for OTC options written by the Fund will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Fund may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question (and thus on price movements in the securities market or a particular market section generally) rather than on price movements in individual securities or futures contracts. The amount of cash is equal to the difference between the closing
price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
A Fund will not write options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at the time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
High Yield, High Yield II, Income and Intermediate Government may each enter into interest rate, currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge against changes in prevailing levels of interest rates, currency exchange rates or stock price levels, respectively, in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by it. A Fund's hedging may include sales of Futures as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place. A stock index future provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times the Future is outstanding.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls.
Closing out an open Future is effected by entering into an offsetting Future for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Future at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Future.
A Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be deposited by a Fund in order to initiate Futures trading and maintain its open positions in Futures. A margin deposit made when the Futures
Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Future is set by the exchange on which the Future is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Future or an option on a Futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Future or option or to maintain cash or securities in a segregated account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
High Yield, High Yield II, Income and Intermediate Government may each engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount of which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
INVESTMENT RESTRICTIONS
Each Fund is subject to the following investment restrictions, which
may be changed only by a vote of a majority of such Fund's outstanding shares.
Fundamental restrictions may be changed only by a vote of the lesser of (i) 67%
or more of the Fund's shares present at a meeting if the holders of more than
50% of the outstanding shares are present in person or represented by proxy, or
(ii) more than 50% of the Fund's outstanding shares. Any investment restriction
that involves a maximum or minimum percentage of securities or assets shall not
be considered to be violated unless an excess over or a deficiency under the
percentage occurs immediately after, and is caused by, an acquisition or
disposition of securities or utilization of assets by the Fund.
FUNDAMENTAL RESTRICTIONS
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act of 1933.
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) tax-exempt obligations issued by governments or political subdivisions of governments, or (iii) for AIM Money Market Fund, bank instruments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide each of the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though each of the Funds have this flexibility, the Board of Trustees has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to each of the Funds. They may be changed for any Fund without approval of that Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets (and for Money Market with respect to 100% of its total assets), purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, except as permitted by Rule 2a-7 under the 1940 Act, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of other money market funds and lend money to other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "AIM Advised Fund"), subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to another AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
For purposes of Limited Maturity's fundamental restriction regarding industry concentration, the United States Government shall not be considered an industry.
The Trust has obtained an opinion of Dechert Price & Rhoads, special counsel to the Trust, that shares of Limited Maturity are eligible for investment by a federal credit union. In order to ensure that shares of Limited Maturity meet the requirements for eligibility for investment by federal credit unions, that Fund has adopted the following additional policies:
(a) The Fund will enter into repurchase agreements only with:
(i) banks insured by the Federal Deposit Insurance Corporation (FDIC);
(ii) savings and loan associations insured by the FDIC; or (iii)
registered broker-dealers. The Fund will only enter into repurchase
transactions pursuant to a master repurchase agreement in writing with
the Fund's counterparty. Under the terms of a written agreement with
its custodian, the Fund receives on a daily basis written confirmation
of each purchase of a security subject to a repurchase agreement and a
receipt from the Fund's custodian evidencing each transaction. In
addition, securities subject to a repurchase agreement may be recorded
in the Federal Reserve Book-Entry System on behalf of the Fund by its
custodian. The Fund purchases securities subject to a repurchase
agreement only when the purchase price of the security acquired is
equal to or less than its market price at the time of the purchase.
(b) The Fund will only enter into reverse repurchase agreements and purchase additional securities with the proceeds when such proceeds are used to purchase other securities that either mature on a date simultaneous with or prior to the expiration date of the reverse repurchase agreement, or are subject to an agreement to resell such securities within that same time period.
(c) The Fund will only enter into securities lending transactions that comply with the same counterparty, safekeeping, maturity and borrowing restrictions that the Fund observes when participating in repurchase and reverse repurchase transactions.
(d) The Fund will enter into when-issued and delayed delivery transactions only when the time period between trade date and settlement date does not exceed 120 days, and only when settlement is on a cash basis. When the delivery of securities purchased in such manner is to occur within 30 days of the trade date, the Fund will purchase the securities only at their market price as of the trade date.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 1, 2000, the trustees and officers of the Trust as a group owned less than 1% of all classes of outstanding shares of the Trust except for the trustees and officers of Municipal Bond which own 3.76% of the Class A Shares.
To the best knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of each class of the Trust's equity securities as of November 1, 2000, and the percentage of the outstanding shares held by such holders are set forth below:
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
---------------- ---------- ----------------
LIMITED MATURITY
CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith 11.84% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
INSTITUTIONAL CLASS
Esor & Co. 56.42% -0-
Attn: Trust Operations
P. O. Box 19006
Green Bay, WI 54307-9006
Frost National Bank Tx 43.01% -0-
Muir & Co.
c/o Frost
P. O. Box 2479
San Antonio, TX 78298-2479
HIGH YIELD
CLASS A SHARES
Charles Schwab & Co. Inc. 5.42% -0-
Reinvestment Account
101 Montgomery St
San Francisco, CA 94104-0000
Merrill Lynch Pierce Fenner & Smith 5.20% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 12.52% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
|
* The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
---------------- ---------- ----------------
CLASS C SHARES
Banc One Securities Corp FBO 14.69% -0-
The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081-0000
Merrill Lynch Pierce Fenner & Smith 14.34% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
HIGH YIELD II
CLASS A SHARES
Jonathan C. Schoolar SEP Prop -0- 9.98%
3722 Tartan Lane
Houston, TX 77025
Charles Schwab & Co. Inc. 5.29% -0-
Reinvestment Account
101 Montgomery St
San Francisco, CA 94104-0000
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 9.25% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith 8.17% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
|
* The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
---------------- ---------- ----------------
INCOME
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 7.47% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith 15.33% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
INTERMEDIATE GOVERNMENT
CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith 5.18% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 15.96% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
|
* The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
---------------- ---------- ----------------
CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith 16.10% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Banc One Securities Corp FBO 5.05% -0-
The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081-0000
MUNICIPAL BOND
CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith 10.62% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith 17.90% -0-
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Reagan Family Partners -0- 6.20%
Robert L Reagan Gen Partner
Dalene C Gragan Gen Partner
125 Crestline Drive
Kerrville, TX 78028
|
* The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
MANAGEMENT
The overall management of the business and affairs of the Funds and the
Trust is vested in the Trust's Board of Trustees. The Board of Trustees approves
all significant agreements between the Trust, on behalf of the Funds, and
persons or companies furnishing services to the Funds, including (i) the
investment advisory and administrative services agreements with AIM; (ii) the
agreements with AIM Distributors regarding distribution of each Fund's shares;
(iii) the agreement with The Bank of New York to act as the custodian for
Limited Maturity and Municipal Bond: (iv) the agreement with State Street Bank
and Trust Company to act as the custodian for High Yield, High Yield II, Income,
Intermediate Government and Money Market; and (v) the agreement with AFS to act
as transfer agent for each of the Funds. The day-to-day operations of each Fund
are delegated to the officers of the Trust and to AIM, subject always to the
investment objectives, restrictions and policies of the applicable Fund and to
the general supervision of the Board of Trustees. Certain trustees and officers
of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent corporation of AIM.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during at least the last five years are set forth below. Unless otherwise indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. All of the trustees of the Trust also serve as directors or trustees of some or all of the other AIM Funds. Certain of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS
---------------------- ------------------- -------------------------------------------
*ROBERT H. GRAHAM (53) Trustee, Chairman and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and Fund
Management Company; and Director and Chief Executive
Officer, Managed Products, AMVESCAP PLC.
BRUCE L. CROCKETT (56) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
OWEN DALY II (76) Trustee Formerly, Director, Cortland Trust Inc. (investment
Six Blythewood Road company). CF & I Steel Corp., Monumental Life
Baltimore, MD 21210 Insurance Company and Monumental General Insurance
Company; and Chairman of the Board of Equitable
Bancorporation.
EDWARD K. DUNN, JR. (65) Trustee Formerly, Chairman of the Board of Directors,
2 Hopkins Plaza, 8th Floor, Mercantile Mortgage Corp.; Vice Chairman of the Board
Suite 805 of Directors, President and Chief Operating Officer,
Baltimore, MD 21201 Mercantile-Safe Deposit & Trust Co.; and President,
Mercantile Bankshares.
JACK M. FIELDS (48) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
434 New Jersey Avenue, S.E. trading company) and Twenty First Century Group, Inc.
Washington, DC 20003 (a governmental affairs company). Formerly, Member of
the U.S. House of Representatives.
** CARL FRISCHLING (63) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue firm).
New York, NY 10022
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* A trustee who is an "interested person" of the Trust and AIM as defined in the 1940 Act.
** A trustee who is an "interest person" of the Trust as defined in the 1940 Act.
POSITIONS HELD PRINCIPAL OCCUPATION DURING AT
NAME, ADDRESS AND AGE WITH REGISTRANT LEAST THE PAST 5 YEARS
--------------------- --------------- ------------------------------
PREMA MATHAI-DAVIS (50) Trustee Formerly, Chief Executive Officer, YWCA of the USA.
370 East 76th Street
New York, NY 10021
LEWIS F. PENNOCK (58) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
LOUIS S. SKLAR (61) Trustee Executive Vice President, Development and
The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
GARY T. CRUM (53) Senior Vice President Director and President, A I M Capital Management,
Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
CAROL F. RELIHAN (46) Senior Vice President Director, Senior Vice President, General Counsel and
and Secretary Secretary, A I M Advisors, Inc.; Senior Vice
President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President and
General Counsel, Fund Management Company; General
Counsel and Vice President, A I M Fund Services,
Inc.; and Vice President, A I M Capital Management,
Inc. and A I M Distributors, Inc.
DANA R. SUTTON (41) Vice President and Vice President and Fund Controller, A I M Advisors,
Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
MELVILLE B. COX (57) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company.
KAREN DUNN KELLEY (40) Vice President Senior Vice President, A I M Capital Management, Inc
and Vice President, A I M Advisors, Inc.
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The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn (Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Fund's independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Fund's independent accountants and management.
The members of the Investments Committee are Messrs. Crockett, Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's investment-related compliance systems and procedures to ensure their continued adequacy; and (ii) considering and acting, on an interim basis between meetings of the full Board, on investment-related matters requiring Board consideration, including dividends and distributions, brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs. Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis. The Nominating and Compensation Committee is responsible for: (i) considering and nominating individuals to stand for election as independent trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees recommended by a shareholder to serve as trustees, provided (i) that such person is a shareholder of record at the time he or she submits such names and is entitled to vote at the meeting of shareholders at which trustees will be elected, and (ii) that the Nominating and Compensation Committee or the Board, as applicable, shall make the final determination of persons to be nominated.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any committee attended. Each trustee who is not also an officer of the Trust is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a trustee or director of the other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust:
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL
TRUSTEE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
----------------------------------- ------------ ------------ ------------
Charles T. Bauer(4) $ 0 $ 0 $ 0
Bruce L. Crockett 5,461 37,485 103,500
Owen Daly II 5,461 122,898 103,500
Edward K. Dunn, Jr 5,461 55,565 103,500
Jack M. Fields 5,421 15,826 101,500
Carl Frischling(5) 5,461 97,791 103,500
Robert H. Graham 0 0 0
John F. Kroeger(6) 0 40,461 0
Prema Mathai-Davis 5,422 11,870 101,500
Lewis F. Pennock 5,461 45,766 103,500
Ian W. Robinson(6) 0 94,442 25,000
Louis S. Sklar 5,422 90,232 101,500
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(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended July 31, 2000, including earnings thereon, was $39,147.
(2) During the fiscal year ended July 31, 2000, the total estimated amount of expenses allocated to the Trust in respect of such retirement benefits was $12,655. Data reflects compensation for the calendar year ended December 31, 1999.
(3) Each trustee serves as a director or trustee of a total of 12 registered investment companies advised by AIM as of December 31, 1999. Data reflects total compensation earned during the calendar year ended December 31, 1999.
(4) Mr. Bauer was a trustee and officer until September 30, 2000, when he retired.
(5) During the fiscal year ended July 31, 2000, the Trust paid $22,567 in legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel, LLP, for services rendered to the independent trustees of the Trust.
(6) Mr. Kroeger was a trustee until June 11, 1998. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's widow will receive his pension as described below under "AIM Funds Retirement Plan for Eligible Directors/Trustees".
(7) Mr. Robinson was a trustee until March 12, 1999, when he retired.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of the AIM Funds, AIM Management, or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, a trustee becomes eligible to retire and receive full benefits under the Plan when he or she has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "Applicable AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his or her date of retirement equal to a maximum of 75% of the annual retainer paid or accrued by the Applicable AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the trustee) and based on the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of all benefits under the Plan, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the Plan are not secured or funded by any Applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable to an eligible trustee upon retirement assuming the retainer amount reflected below and various years of service. The estimated credited years of service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 19, 11, 11 and 2 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Number of Years of
Service With
Applicable AIM Estimated Annual Benefits Upon
Funds Retirement
------------------------- ------------------------------
10 $ 75,000
9 $ 67,500
8 $ 60,000
7 $ 52,500
6 $ 45,000
5 $ 37,500
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DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the "Deferring Trustees") have each executed a Deferred Compensation Agreement. Pursuant to the agreements, the Deferring Trustees may elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees'
deferral accounts will be paid in cash, in generally equal quarterly installments over a period of five (5) or ten (10) years (depending on the agreement) beginning on the date the Deferring Trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary in a single lump sum payment as soon as practicable after such Deferring Trustee's death. The agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Funds and of each other AIM Fund from which they are deferring compensation.
INVESTMENT ADVISORY AND OTHER SERVICES
The Trust, on behalf of the Funds, has entered into a Master Investment Advisory Agreement (the "Advisory Agreement") and a Master Administrative Services Agreement (the "Administrative Services Agreement") with AIM.
AIM was organized in 1976, and together with its subsidiaries advises or manages over 120 investment portfolios encompassing a broad range of investment objectives. AIM is a wholly owned subsidiary of AIM Management, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM Management is a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YK, England. AMVESCAP PLC and its subsidiaries are an independent investment management group engaged in institutional investment management and retail fund businesses in the Unites States, Europe and the Pacific Region. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Trustees and Officers". AIM Capital, a wholly owned subsidiary of AIM, is engaged in the business of providing investment advisory services to investment companies, corporations, institutions and other accounts.
AIM and the Trust have adopted a Code of Ethics which requires investment personnel and certain other employees (a) to pre-clear all personal securities transactions subject to the Code of Ethics; (b) file reports or duplicate confirmations regarding such transactions; (c) refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security (subject to a de minimis exception), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to the de minimis exception); and (d) abide by certain other provisions of the Code of Ethics. The de minimis exception under the Code of Ethics covers situations where there is no material conflict of interest because of the large market capitalization of a security and the relatively small number of shares involved in a personal transaction. The Code of Ethics also generally prohibits AIM employees who are registered with the NASD from purchasing securities in an initial public offering. Personal trading reports are periodically reviewed by AIM, and the Board of Trustees reviews quarterly and annual reports (which summarize any significant violations of the Code of Ethics). Sanctions for violating the Code of Ethics may include censure, monetary penalties, suspension or termination of employment.
The Advisory Agreement provides that each Fund will pay or cause to be paid all expenses of that Fund not assumed by AIM, including, without limitation: brokerage commissions; taxes, legal, accounting, auditing or governmental fees; the cost of preparing share certificates; custodian, transfer and shareholder service agent costs; expenses of issue, sale, redemption and repurchase of shares; expenses of registering and qualifying shares for sale; expenses relating to trustees and shareholder meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Trust on behalf of the Fund in connection with membership in investment company organizations; the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders; and all other charges and costs of the Fund's operations unless otherwise explicitly provided.
The Advisory Agreement will continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees or the vote of a "majority of the outstanding voting securities" of each Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a majority of the trustees
who are not parties to the Advisory Agreement or "interested persons" of any such party (the "Non-Interested Trustees") by votes cast in person at a meeting called for such purpose. The Trust or AIM may terminate the Advisory Agreement with respect to a Fund on sixty (60) days' written notice without penalty. The Advisory Agreement terminates automatically in the event of its assignment.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds. AIM will not be liable to the Funds or their shareholders except in the case of AIM's willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
AIM and the Trust have also entered into a Master Administrative Services Agreement (the "Administrative Services Agreement"), pursuant to which AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services.
In addition, pursuant to the terms of a Transfer Agency and Service Agreement, AFS, a wholly owned subsidiary of AIM and registered transfer agent, receives a fee for its provision of transfer agency, dividend distribution and disbursement and shareholder services to the Funds. AFS' principal address is P.O. Box 4739, Houston, Texas 77210-4739.
In addition, if a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Advisory Agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fees, and has agreed to seek Board approval prior to its receipt of all or a portion of such fees.
Under the Advisory Agreement, AIM is entitled to receive from Limited Maturity a fee calculated at the following annual rates, based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $500 million 0.20%
Amount over $500 million 0.175%
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Under the Advisory Agreement, AIM is entitled to receive from High Yield a fee calculated at the following annual rates, based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.625%
Next $300 million 0.550%
Next $500 million 0.500%
Amount over $1 billion 0.450%
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Under the Advisory Agreement, AIM is entitled to receive from High Yield II a fee calculated at the following annual rates, based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $500 million 0.625%
Next $500 million 0.55%
Amount over $1 billion 0.50%
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Under the Advisory Agreement, AIM is entitled to receive from each of Income, Intermediate Government and Municipal Bond a fee calculated at the following annual rates, based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.50%
Next $300 million 0.40%
Next $500 million 0.35%
Amount over $1 billion 0.30%
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Under the Advisory Agreement, AIM is entitled to receive from Money Market a fee calculated at the following annual rates based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion 0.55%
Over $1 billion 0.50%
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Each Fund paid to AIM the following management fees net of any expense limitations and fee waivers for the years ended July 31, 2000, 1999 and 1998, relating to Limited Maturity, for the year ended July 31, 2000 and for the period September 30, 1998 through July 31, 1999, relating to High Yield II; and for the period ended July 31, 2000 and for the years ended December 31, 1999, 1998 and 1997, relating to High Yield, Income, Intermediate Government, Money Market and Municipal Bond:
2000 1999 1998 1997
------------- ------------- ------------- -------------
Limited Maturity ............. $ 705,741 $ 850,738 $ 855,900 --
High Yield ................... $ 7,537,550 $ 16,396,698 $ 17,600,312 $ 13,632,090
High Yield II*................ $ 366,416 $ 146,069 N/A N/A
Income ....................... $ 1,512,830 $ 2,785,338 $ 2,375,487 $ 1,801,746
Intermediate Government ...... $ 1,153,654 $ 2,310,621 $ 1,611,515 $ 1,174,166
Money Market ................. $ 4,041,617 $ 7,448,373 $ 5,891,106 $ 4,586,148
Municipal Bond ............... $ 953,308 $ 1,830,490 $ 1,738,038 $ 1,532,157
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* September 30, 1998 (commencement of operations)
For the year ended July 31, 2000, AIM waived $251,914 of the advisory fees due from High Yield II.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Funds.
The Administrative Services Agreement for the Funds provides that AIM may provide or arrange for the performance of certain accounting, shareholder servicing and other administrative services to the Funds. For such services, AIM would be entitled to receive from each Fund reimbursement of AIM's costs or such reasonable compensation as may be approved by AIM and the Board of Trustees. The Administrative Services Agreement provides that such agreement will continue in effect from year to year if such continuance is specifically approved at least annually by (i) the Trust's Board of Trustees or the vote of a "majority of the outstanding voting securities" of a Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a majority of the Non-Interested Trustees, by votes cast in person at a meeting called for such purpose.
For the years ended July 31, 2000, 1999 and 1998, for Limited Maturity; for the year ended July 31, 2000 and for the period September 30, 1998 through July 31, 1999 for High Yield II; and for the period ended July 31, 2000 and for the years ended December 31, 1999, 1998 and 1997 for High Yield, Income, Intermediate Government, Money Market and Municipal Bond, AIM was paid in the following amounts:
2000 1999 1998 1997
---- ---- ---- ----
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
AMOUNT AVERAGE AMOUNT AVERAGE AMOUNT AVERAGE AMOUNT AVERAGE NET
PAID NET ASSETS PAID NET ASSETS PAID NET ASSETS PAID NET ASSETS
------ ------------- ------ ------------- ------ ------------- ------ -------------
Limited Maturity......... $ 80,566 .023% $ 70,069 .02% $ 59,396 .02% $ 66,785 .02%
High Yield .............. $ 107,029 .004% $ 177,468 .005% $ 135,537 .004% $ 111,767 .004%
High Yield II............ $ 45,890 .046% $ 64,643 .22% N/A N/A N/A N/A
Income................... $ 72,169 .012% $ 111,839 .02% $ 87,349 .02% $ 81,464 .02%
Intermediate Government.. $ 63,465 .014% $ 97,900 .02% $ 80,271 .02% $ 70,736 .03%
Money Market............. $ 83,475 .006% $ 118,024 .01% $ 71,394 .007% $ 68,947 .01%
Municipal Bond........... $ 53,056 .015% $ 91,647 .02% $ 73,917 .02% $ 70,780 .02%
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The Transfer Agency and Service Agreement, provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares, prepare and transmit payments for dividends and distributions declared by a Fund, maintain shareholder accounts and provide shareholders with information regarding the Funds and other accounts.
DISTRIBUTION PLANS
THE CLASS A AND C PLAN. The Trust has adopted a Master Distribution Plan, as amended, pursuant to Rule 12b-1 under the 1940 Act relating to the Class A (other than Money Market) and Class C (other than Limited Maturity) shares of the Funds and the AIM Cash Reserve Shares of Money Market (the "Class A and C Plan"). Such plan provides that the Class A shares and AIM Cash Reserve Shares pay 0.25% (0.15% for Limited Maturity) per annum of their average daily net assets as compensation to AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, for the purpose of financing any activity which is primarily intended to result in the sale of the Class A shares or AIM Cash Reserve Shares. Under the Class A and C Plan, Class C shares of the Funds (other than Limited Maturity) pay compensation to A I M Distributors, Inc., a registered broker-dealer and a wholly owned subsidiary of AIM, at an annual rate of 1.00% per annum of the average daily net assets attributable to Class C shares for the purpose of financing any activity which is primarily intended to result in the sale of Class C shares. Activities appropriate for financing under the Class A and C Plan include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class A and C Plan.
The Class A and C Plan is designed to compensate AIM Distributors, on a quarterly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of a Fund. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares (or AIM Cash Reserve Shares) of each Fund and who provide continuing personal shareholder services to their customers who own such shares of a Fund.
Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions including AIM Distributors, acting as principal, for providing continuing personal shareholder services to their customers who purchase and own shares of a Fund, in amounts of up to 0.25% of the average daily net assets of the Fund attributable to the customers of such dealers or financial institutions are characterized as a service fee, and payments to dealers and other financial institutions including AIM Distributors, acting as principal, in excess of such amount would be characterized as an asset-based sales charge pursuant to the Class A and C Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (other than Limited Maturity) (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to its customers who purchase and own Class B shares. Any amounts not paid as a service fee would constitute an asset-based sales charge. Amounts paid in accordance with the Class B Plan may be used to finance any activity primarily intended to result in the sale of Class B shares, including but not limited to printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class B Plan.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may enter into agreements ("Shareholder Service Agreements") with investment dealers selected from time to time by AIM Distributors for the provision of distribution assistance in connection with the sale of the Funds' shares to such dealers' customers, and for the provision of continuing personal shareholder services to customers who may from time to time directly or beneficially own shares of the Funds. The distribution assistance and continuing personal shareholder services to be rendered by dealers under the Shareholder Service Agreements may include, but shall not be limited to, the following: distributing sales literature; answering routine customer inquiries concerning the Funds; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of the Funds' shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in the Funds' shares; and providing such other information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements authorizing payments to selected dealers, banks may enter into Shareholder Service Agreements authorizing payments under the Plans to be made to banks which provide services to their customers who have purchased shares. Services provided pursuant to Shareholder Service Agreements with banks may include some or all of the following: answering shareholder inquiries regarding a Fund and the Trust; performing sub-accounting; establishing and maintaining shareholder accounts and records; processing customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by the bank; forwarding applicable prospectuses, proxy statements, reports and notices to bank clients who hold Fund shares; and such other administrative services as a Fund reasonably may request, to the extent permitted by
applicable statute, rule or regulation. Similar agreements may be permitted under the Plans for institutions which provide recordkeeping for and administrative services to 401(k) plans.
The Trust may also enter into Variable Group Annuity Contractholder Service Agreements ("Variable Contract Agreements") on behalf of the Funds (other than Money Market) authorizing payments to selected insurance companies offering variable annuity contracts to employers as funding vehicles for retirement plans qualified under Section 401(a) of the Code. Services provided pursuant to such Variable Contract Agreements may include some or all of the following: answering inquiries regarding a Fund and the Trust; performing sub-accounting; establishing and maintaining contractholder accounts and records; processing and bunching purchase and redemption transactions; providing periodic statements of contract account balances; forwarding such reports and notices to contractholders relative to a Fund as deemed necessary; generally, facilitating communications with contractholders concerning investments in a Fund on behalf of plan participants; and performing such other administrative services as deemed to be necessary or desirable, to the extent permitted by applicable statute, rule or regulation to provide such services.
Similar agreements may be permitted under the Plans for institutions which provide recordkeeping for and administrative services to 401(k) plans.
In addition, Shareholder Service Agreements may be permitted under the Plans for bank trust departments and brokers for bank trust departments which provide shareholder services to their customers.
AIM Distributors, acting as principal, may also enter into Shareholder Service Agreements with the Funds, substantially identical to those agreements entered into with investment dealers or other financial institutions, authorizing payments to AIM Distributors for providing continuing personal shareholder services to those customers for which AIM Distributors serves as dealer of record.
Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rates of 0.15% of the average daily net asset value of Limited Maturity's Class A shares, and 0.25% of the average daily net asset value of the other Fund's shares, purchased or acquired through exchange. Fees calculated in this manner shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. and NASD Regulation, Inc. (the "NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Funds to no more than 0.25% per annum of the average daily net assets of the Funds attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Funds and their respective classes.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Funds.
Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive
and shareholder servicing payments to dealers and other financial institutions under the Plans. These payments are an obligation of the Funds and not of AIM Distributors.
For the fiscal year ended July 31, 2000, Limited Maturity, High Yield II and for the period ended July 31, 2000, High Yield, Income, Intermediate Government, Money Market and Municipal Bond and the various classes of the Funds paid to AIM Distributors the following amounts pursuant to the Plans:
Class A Class B Class C
------- ------- -------
High Yield $1,735,976 $7,941,484 $700,789
High Yield II 116,793 451,249 70,906
Income 529,667 1,299,325 156,134
Intermediate Government 318,066 1,118,113 202,776
Limited Maturity 517,076 N/A N/A
Money Market 1,332,550* 1,905,178 265,889
Municipal Bond 412,647 392,471 49,226
|
* AIM Cash Reserve Shares
For the year ended December 31, 1999, High Yield, Income, Intermediate Government, Money Market and Municipal Bond and the various classes of the Funds paid to AIM Distributors the following amounts pursuant to the Plans:
Class A Class B Class C
------- ------- -------
High Yield $3,885,854 $17,586,035 $1,307,654
Income 1,006,620 2,401,345 244,571
Intermediate Government 622,422 2,414,889 411,484
Money Market 2,443,795* 3,680,653 440,903
Municipal Bond 805,244 753,522 101,726
|
* AIM Cash Reserve Shares
An estimate by category of the allocation of actual fees paid by Class A shares of the Funds (AIM Cash Reserve Shares of Money Market) under the Class A and C Plan during the year ended July 31, 2000, with respect to Limited Maturity and High Yield II and period ended July 31, 2000, with respect to High Yield, Income, Intermediate Government, Money Market and Municipal Bond was as follows:
LIMITED HIGH HIGH INTERMEDIATE MONEY MUNICIPAL
MATURITY YIELD YIELD II INCOME GOVERNMENT MARKET BOND
---------- ---------- ---------- ---------- ------------ ---------- ----------
CLASS A
Advertising.............................. $ 12,180 $ 21,843 $ 7,128 $ 8,996 $ 4,798 $ 166,463 $ 10,769
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)........................ $ 1,155 $ 2,061 $ 674 $ 867 $ 449 $ 15,970 $ 1,048
Seminars................................. $ 2,954 $ 5,131 $ 2,497 $ 2,183 $ 1,118 $ 40,757 $ 2,646
Compensation to Dealers including
Finders Fees......................... $ 500,787 $1,706,941 $ 106,494 $ 517,621 $ 311,701 $1,109,360 $ 398,185
Annual Report Total...................... $ 517,076 $1,735,976 $ 116,793 $ 529,667 $ 318,066 $1,332,550 $ 412,648
|
An estimate by category of the allocation of actual fees paid by Class A shares of the Funds (AIM Cash Reserve Shares of Money Market) under the Class A and C Plan during the year ended December 31, 1999 was as follows:
HIGH INTERMEDIATE MONEY MUNICIPAL
YIELD INCOME GOVERNMENT MARKET BOND
---------- ---------- ------------ ---------- ----------
CLASS A
Advertising.............................. $ 63,938 $ 16,079 $ 9,141 $ 174,714 $ 20,146
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)........................ 5,923 1,532 868 16,315 1,949
Seminars................................. 14,814 4,207 2,380 41,631 5,524
Compensation to Dealers including
Finders Fees......................... 3,801,179 984,801 610,033 2,211,135 777,625
Annual Report Total...................... $3,885,854 $1,006,659 $ 622,422 $2,443,795 $ 805,244
|
An estimate by category of the allocation of actual fees paid by the Funds under the Class B Plan for the year ended July 31, 2000, with respect to High Yield II; and period ended July 31, 2000, with respect to High Yield, Income, Intermediate Government, Money Market and Municipal Bond was as follows:
HIGH HIGH INTERMEDIATE MONEY MUNICIPAL
YIELD YIELD II INCOME GOVERNMENT MARKET BOND
---------- ---------- ---------- ------------ ---------- ----------
CLASS B
Advertising.............................. $ 115,315 $ 27,406 $ 40,799 $ 33,137 $ 55,730 $ 8,852
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)........................ $ 11,028 $ 2,615 $ 3,930 $ 3,062 $ 5,166 $ 825
Seminars................................. $ 28,730 $ 6,779 $ 9,585 $ 7,851 $ 12,949 $ 2,037
Compensation to Underwriters to
partially offset other marketing
expenses............................. $5,956,113 $ 338,437 $ 974,494 $ 838,585 $1,428,884 $ 294,353
Compensation to Dealers including
Finders Fees......................... $1,830,298 $ 76,012 $ 270,517 $ 235,479 $ 402,449 $ 86,404
Annual Report Total...................... $7,941,484 $ 451,249 $1,299,325 $1,118,114 $1,905,178 $ 392,471
|
An estimate by category of the allocation of actual fees paid by the Funds under the Class B Plan for the year ended December 31, 1999, was as follows:
HIGH INTERMEDIATE MONEY MUNICIPAL
YIELD INCOME GOVERNMENT MARKET BOND
----------- ----------- ----------- ----------- -----------
CLASS B
Advertising.............................. $ 515,604 $ 113,165 $ 109,571 $ 117,635 $ 24,928
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)........................ 48,632 10,994 10,552 10,813 2,466
Seminars................................. 128,178 30,039 28,829 26,840 6,849
Compensation to Underwriters to
partially offset other marketing
expenses............................. 13,189,527 1,801,009 1,811,167 2,760,490 565,142
Compensation to Dealers including
Finders Fees......................... 3,704,095 446,139 454,770 764,875 154,137
Annual Report Total...................... $17,586,036 $ 2,401,346 $ 2,414,889 $ 3,680,653 $ 753,522
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An estimate by category of the allocation of actual fees paid by Class C shares of the Funds under the Class A and C Plan for the year ended July 31, 2000, with respect to High Yield II; and period ended July 31, 2000, with respect to High Yield, Income, Intermediate Government, Money Market and Municipal Bond was as follows:
HIGH HIGH INTERMEDIATE MONEY MUNICIPAL
YIELD YIELD II INCOME GOVERNMENT MARKET BOND
-------- -------- -------- ------------ -------- ---------
CLASS C
Advertising........................... $ 25,206 $ 6,881 $ 9,398 $ 7,668 $ 18,396 $ 2,173
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)..................... $ 2,363 $ 681 $ 930 $ 703 $ 1,698 $ -0-
Seminars.............................. $ 5,908 $ 2,269 $ 2,582 $ 2,232 $ 4,921 $ -0-
Compensation to Underwriters to
partially offset other marketing
expenses.......................... $161,473 $ 44,237 $ 58,094 $ 48,552 119,334 $ 16,297
Compensation to Dealers including
Finders Fees...................... $505,840 $ 16,838 $ 85,130 $143,621 $121,539 $ 30,756
Annual Report Total................... $700,789 $ 70,906 $156,134 $202,776 $265,888 $ 49,226
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An estimate by category of the allocation of actual fees paid by Class C shares of the Funds under the Class A and C Plan for the year ended December 31, 1999, was as follows:
HIGH INTERMEDIATE MONEY MUNICIPAL
YIELD INCOME GOVERNMENT MARKET BOND
---------- ---------- ------------ ---------- ----------
CLASS C
Advertising........................... $ 0 $ 229 $ 0 $ 0 $ 41
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)..................... 0 23 0 0 2
Seminars.............................. 0 69 0 0 8
Compensation to Underwriters to
partially offset other marketing
expenses.......................... 716,978 163,909 182,613 273,359 61,493
Compensation to Dealers including
Finders Fees...................... 590,676 80,341 228,871 167,544 40,182
Annual Report Total................... $1,307,654 $ 244,571 $ 411,484 $ 440,903 $ 101,726
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As required by Rule 12b-1, the Plans and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans (the "Independent Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each affected class of the Funds and its respective shareholders.
Amounts payable by a Fund under the Plans need not be directly related to the expenses actually incurred by AIM Distributors on behalf of each Fund. The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
The Plans require AIM Distributors to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to the Plans and the purposes for which such expenditures were made. The Board of Trustees reviews these reports in connection with their decisions with respect to the Plans.
Unless terminated earlier in accordance with their terms, the Plans continue as long as such continuance is specifically approved at least annually by the Board of Trustees, including a majority of the Independent Trustees.
The Plans may be terminated by the vote of a majority of the Independent Trustees, or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
the Plans may be amended by the Trustees, including a majority of the
Independent Trustees, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Plans are in effect, the
selection or nomination of the Independent Trustees is committed to the
discretion of the Independent Trustees. In the event the Class A and C Plan is
amended in a manner which the Board of Trustees determines would materially
increase the charges paid by holders of Class A shares under the Class A and C
Plan, the Class B shares will no longer convert into Class A shares of the Funds
unless the Class B shares, voting separately, approve such amendment. If the
Class B shareholders do not approve such amendment, the Board of Trustees will
(i) create a new class of shares of the Funds which is identical in all material
respects to the Class A shares as they existed prior to the implementation of
the amendment, and (ii) ensure that the existing Class B shares of the Funds
will be exchanged or converted into such new class of shares no later than the
date the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan and the B Plan are: the Class A and C Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.15% of the average daily net assets for Limited Maturity and up to 0.25% of the average daily net assets for High Yield, High Yield II, Income, Intermediate Government, Money Market and Municipal Bond of their respective Class A shares or AIM Cash Reserve Shares, as compared to 1.00% of such assets of each Fund's Class B and Class C shares; (ii) the Class B Plan obligates Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors, unless there has been a complete termination of the Class B Plan (as defined in such Plan); and (iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTION AGREEMENTS
The Trust has entered into master distribution agreements, as amended, relating to the Funds (the "Distribution Agreements") with AIM Distributors, pursuant to which AIM Distributors acts as the distributor of Class A, Class B and Class C shares of the Funds and AIM Cash Reserve Shares of Money Market. The address of AIM Distributors is P. O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. Under the Distribution Agreement for the Class B shares, AIM Distributors sells Class B shares at net asset value subject to a contingent deferred sales charge established by AIM Distributors. AIM Distributors is authorized to advance to institutions through whom Class B shares are sold a sales commission under schedules established by AIM Distributors. The Distribution Agreement for the Class B shares provides that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the total 1.00% payable under the distribution plan applicable to Class B shares) of each Fund's average daily net assets attributable to Class B shares attributable to the sales efforts of AIM Distributors.
The Distribution Agreements provide that AIM Distributors will bear the expenses of printing from the final proof and distributing the Funds' prospectuses and statements of additional information relating to public offerings made by AIM Distributors pursuant to the Distribution Agreements (other than those prospectuses
and statements of additional information distributed to existing shareholders of the Funds), and any promotional or sales literature used by AIM Distributors or furnished by AIM Distributors to dealers in connection with the public offering of the Funds' shares, including expenses of advertising in connection with such public offerings. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B and Class C shares at the time of such sales.
Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors anticipates that it requires a number of years to recoup from Class B Plan payments the sales commissions paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor.
AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will pay quarterly to dealers and institutions 1.00% of the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of the Funds) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset-based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or the Distribution Agreement for Class B shares would not affect the obligation of a Fund and its Class B shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its right to payments under the Distribution Agreements relating to Class B shares in order to finance distribution expenditures in respect to Class B shares.
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the fiscal years ended July 31, 2000, 1999 and 1998, with respect to Limited Maturity; for the year ended July 31, 2000 and for the period September 30,
1998 (date operations commenced) through July 31, 1999, with respect to High Yield II; and for the period ended July 31, 2000 and for the years ended December 31, 1999, 1998 and 1997, with respect to High Yield, Income, Intermediate Government, Money Market and Municipal Bond:
2000 1999 1998 1997
---- ---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Limited Maturity......... $ 219,047 $ 57,087 $ 292,457 $ 75,023 $ 219,035 $ 56,989 $ 340,764 $ 105,675
High Yield............... 1,492,443 265,022 4,583,060 800,330 10,554,990 1,822,464 12,115,351 2,043,967
High Yield II ........... 989,320 177,396 339,816 61,541 N/A N/A N/A N/A
Income .................. 777,478 133,679 1,984,670 358,051 1,727,399 340,185 1,158,790 203,261
Intermediate Government.. 582,038 103,411 1,622,505 297,352 1,129,232 196,016 648,578 116,124
Money Market ............ -- -- N/A N/A 1,738,598 347,757 2,470,808 443,904
Municipal Bond .......... 167,101 33,406 524,426 97,187 556,829 100,100 480,346 87,434
|
The following chart reflects the contingent deferred sales charges paid by Class A shareholders of Limited Maturity for the years ended July 31, 2000, 1999 and 1998; Class A shareholders of High Yield II for the year ended July 31, 2000 and for the period September 30, 1998 through July 31, 1999; Class B and Class C shareholders of High Yield II for the year ended July 31, 2000 and for the period November 20, 1998 through July 31, 1999; Class A, B and AIM Cash Reserve Shares shareholders of High Yield, Income, Intermediate Government, Money Market and Municipal Bond for the period ended July 31, 2000 and for the years ended December 31, 1999, 1998 and 1997; and Class C shareholders of High Yield, Income, Intermediate Government, Money Market and Municipal Bond for the period ended July 31, 2000 and for the years ended December 31, 1999, 1998 and 1997:
2000 1999 1998 1997
---------- ---------- ---------- ----------
Limited Maturity ............. N/A $ 15 N/A N/A
High Yield ................... $ 136,582 423,986 $ 660,651 $ 581,549
High Yield II ................ 15,557 111 N/A N/A
Income ....................... 23,462 48,455 99,010 45,242
Intermediate Government ...... 44,911 171,470 108,148 131,697
Money Market ................. 740,774 1,254,200 905,887 344,545
Municipal Bond ............... 31,486 123,118 48,077 44,830
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SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex Fund, AIM Advisor International Value Fund, AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM European Development Fund, AIM European Small Company Fund, AIM Euroland Growth Fund, AIM Global Utilities Fund, AIM International Emerging Growth Fund, AIM International Equity Fund, AIM Japan Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund, AIM Mid Cap Opportunities Fund, AIM New Technology Fund, AIM Select Growth Fund, AIM Small Cap Equity Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value Fund, AIM Value II Fund and AIM Weingarten Fund.
Dealer
Concession
Investor's Sales Charge ----------
----------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------ ------------- ---------- ----------
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $ 1,000,000 2.00 2.04 1.60
|
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge ranging from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial Services Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Latin American Growth Fund, AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund of Connecticut.
Dealer
Concession
Investor's Sales Charge ----------
----------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------ ------------- ---------- ----------
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $ 1,000,000 2.00 2.04 1.60
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CATEGORY III. Certain AIM Funds are currently sold with a sales charge ranging from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000. These AIM Funds are the Class A shares of each of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
Dealer
Concession
Investor's Sales Charge ----------
----------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------ ------------- ---------- ----------
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $ 1,000,000 0.50 0.50 0.40
|
There is no sales charge on purchases of $1,000,000 or more of Category I, II or III Funds; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933.
In addition to, or instead of, amounts paid to dealers as a sales commission, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold or of average daily net assets of the AIM Fund attributable to that particular dealer. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to 0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares are considered sales of such Class B shares or Class C shares for purposes of the sales charges and dealer concessions discussed above.
AIM Distributors may pay investment dealers or other financial service firms for share purchases (measured on an annual basis) of Class A Shares of all AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity Treasury Fund sold at net asset value to an employee benefit plan in accordance with this paragraph.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables (quantity discounts) apply to purchases of shares of the AIM Funds that are otherwise subject to an initial sales charge, provided that such purchases are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of the AIM Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any Trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, Roth IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the Funds will not accept contributions submitted with respect to individual participants);
b. each transmittal must be accompanied by a single check or wire transfer; and
c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal;
o a trustee or fiduciary purchasing for a single Trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit Trust created pursuant to a plan qualified under Section 401 of the Code) and 457 plans, although more than one beneficiary or participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and other Elective Simplified Employee Pension account (SAR-SEP) or a Savings Incentive Match Plans for Employees IRA (SIMPLE IRA), where the employer has notified the distributor in writing that all of its related employee SEP, SAR-SEP or SIMPLE IRA accounts should be linked; or
o any other organized group of persons, whether incorporated or not, provided the organization has been in existence for at least six months and has some purpose other than the purchase at a discount of redeemable securities of a registered investment company.
Investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled, by virtue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below.
Each purchase of Fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the
purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he must give written notice to AIM Distributors. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, a cancellation of the LOI will automatically be effected. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also qualify for reduced initial sales charges based upon such purchaser's existing investment in shares of any of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a Fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish AFS with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at net asset value (without payment of an initial sales charge) may be made in connection with: (a) the reinvestment of dividends and distributions from a Fund; (b) exchanges of shares of certain Funds; (c) use of the reinstatement privilege; or (d) a merger, consolidation or acquisition of assets of a Fund.
The following purchasers will not pay initial sales charges on purchases of Class A shares because there is a reduced sales effort involved in sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of their immediate family) of AIM Management, its affiliates or The AIM Family of Funds--Registered Trademark-- and any foundation, Trust or employee benefit plan established exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and members of their immediate family), of CIGNA Corporation or its affiliates, or of First Data Investor Services Group; and any deferred compensation plan for directors of investment companies sponsored by CIGNA Investments, Inc. or its affiliates;
o Sales representatives and employees (and members of their immediate family) of selling group members or financial institutions that have arrangements with such selling group members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined above, and non-qualified plans offered in conjunction therewith, provided the initial investment in the plan(s) is at least $1 million; the sponsor signs a $1 million LOI; the employer-sponsored plan(s) has at least 100 eligible employees; or all plan transactions are executed through a single omnibus account per Fund and the financial institution or service organization has entered into the appropriate agreements with the distributor. Section 403(b) plans sponsored by public educational institutions are not eligible for a sales charge exception based on the aggregate investment made by the plan or the number of eligible employees. Purchases of AIM Small Cap Opportunities Fund by such plans are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any investment advisor holding shares of AIM Weingarten Fund or AIM Constellation Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously owned shares having a market value of at least $500 and who purchase additional shares of the same Fund;
o Shareholders of record of Advisor Class shares of AIM International Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have continuously owned shares of the AIM Funds.
o Unitholders of G/SET series unit investment Trusts investing proceeds from such Trusts in shares of AIM Weingarten Fund or AIM Constellation Fund; provided, however, prior to the termination date of the Trusts, a unitholder may invest proceeds from the redemption or repurchase of his units only when the investment in shares of AIM Weingarten Fund and AIM Constellation Fund is effected within 30 days of the redemption or repurchase;
o A shareholder of a Fund that merges or consolidates with an AIM Fund or that sells its assets to an AIM Fund in exchange for shares of an AIM Fund;
o Shareholders of the GT Global Funds as of April 30, 1987 who since that date continually have owned shares of one or more of these Funds;
o Certain former AMA Investment Advisers' shareholders who became shareholders of the AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT Global Funds since that time;
o Shareholders of record of Advisor Class shares of an AIM Fund on February 11, 2000 who have continuously owned shares of that AIM Fund, and who purchase additional shares of that AIM Fund;
o Qualified State Tuition Programs created and maintained in accordance with Section 529 of the U.S. Internal Revenue Code of 1986, as amended; and
o Participants in select brokerage programs for defined contribution plans and rollover IRAs who purchase shares through an electronic brokerage platform offered by entities with which AIM Distributors has entered into a written agreement.
As used above, immediate family includes an individual and his or her spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global Funds Class A shares that are subject to a contingent deferred sales charge and that were purchased before June 1, 1998 are entitled to the following waivers from the contingent deferred sales charge otherwise due upon redemption: (1) minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2; (2) total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement plan; (3) when a redemption results from a tax-free return of an excess contribution pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability of the employee; (4) redemptions pursuant to a Fund's right to liquidate a shareholder's account involuntarily; (5) redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global Funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global Funds; (6) redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan; (7) redemptions made for the purpose of providing cash to Fund a loan to a participant in a tax-qualified retirement plan; (8) redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (9) redemptions made in connection with a distribution from any retirement plan or account that involves the return of an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of the Code; (10) redemptions made in connection with a distribution from a qualified profit-sharing or stock bonus plan described in Section 401(k) of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission.
Former GT Global Funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a Prospectus: (1)
total or partial redemptions resulting from a distribution following retirement
in the case of a tax-qualified employer-sponsored retirement; (2) minimum
required distributions made in connection with an IRA, Keogh Plan or custodial
account under Section 403(b) of the Code or other retirement plan following
attainment of age 70 1/2; (3) redemptions pursuant to distributions from a
tax-qualified employer-sponsored retirement plan, which is invested in the
former GT Global Funds, which are permitted to be made without penalty pursuant
to the Code, other than tax-free rollovers or transfers of assets, and the
proceeds of which are reinvested in the former GT Global Funds; (4) redemptions
made in connection with participant-directed exchanges between options in an
employer-sponsored benefit plan; (5) redemptions made for the purpose of
providing cash to Fund a loan to a participant in a tax-qualified retirement
plan; (6) redemptions made in connection with a distribution from any retirement
plan or account that is permitted in accordance with the provisions of Section
72(t)(2) of the Code, and the regulations promulgated thereunder; (7)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund, AIM Advisor International Value Fund and AIM Advisor Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AFS on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time
of death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70-1/2 or
older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the
participant's or beneficiary's account value in a particular
AIM Fund; (ii) in kind transfers of assets where the
participant or beneficiary notifies the distributor of the
transfer no later than the time the transfer occurs; (iii)
tax-free rollovers or transfers of assets to another plan of
the type described above invested in Class B or Class C shares
of one or more of the AIM Funds; (iv) tax-free returns of
excess contributions or returns of excess deferral amounts;
and (v) distributions on the death or disability (as defined
in the Internal Revenue Code of 1986, as amended) of the
participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of 12% of the account value on a per Fund basis, at the time the withdrawal plan is established, provided the investor reinvests his dividends;
o Liquidation by the Fund when the account value falls below the minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies the distributor prior to the time of investment that the dealer waives the payment otherwise payable to him.
Upon the redemption of shares of Funds in sales charge Categories I and II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1 million or more, no CDSC will be applied in the following situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified purchasers, as defined above, where the redemptions are in connection with employee terminations or withdrawals, provided the total amount invested in the plan is at least $1,000,000; the sponsor signs a $1 million LOI; or the employer-sponsored plan has at least 100 eligible employees; provided, however, that 403(b) plans sponsored by public educational institutions shall qualify for the CDSC waiver on the basis of the value of each plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the plan or on the number of eligible employees;
o Private foundations or endowment Funds;
o Redemption of shares by the investor where the investor's dealer waives the amounts otherwise payable to it by the distributor and notifies the distributor prior to the time of investment; and
o Shares acquired by exchange from Class A shares of Funds in sales charges Categories I and II unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be purchased appears in the Prospectuses under the caption "Purchasing Shares."
The sales charge normally deducted on purchases of the Class A shares is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of Class A shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons, who, because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., due to the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase Class A shares of the Funds through AIM Distributors without payment of a sales charge. The persons who may purchase Class A shares of the Funds without a sales charge are described in "REDUCTIONS IN INITIAL SALES CHARGES - Purchases At Net Asset Value." You may also be charged a transaction or other fee by the financial institution managing your account.
Complete information concerning the method of exchanging shares of the Funds for shares of the other mutual funds managed or advised by AIM is set forth in the Prospectuses under the caption "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in the Prospectuses under the caption "Redeeming Shares." Shares of AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligations to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Funds at (800) 949-4246 and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of the applicable Fund next determined after such order is received. Such arrangement is subject to timely receipt by AFS of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by the Funds or by AIM Distributors (other than any applicable contingent deferred sales charge) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction.
The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange (the "NYSE") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency, as determined by the SEC, exists making disposition of portfolio securities or the valuation of the net assets of the Funds not reasonably practicable.
The Trust agrees to redeem shares of the Funds, or any other future portfolios of the Trust, solely in cash up to the lesser of $250,000 or 1% of the Funds' net assets during any 90-day period for any one shareholder. In consideration of the best interests of the remaining shareholders, the Trust reserves the right to pay any redemption price exceeding this amount in whole or in part by a distribution in kind of securities held by the Funds in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind. If shares are redeemed in kind, however, the redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received in the distribution.
VARIABLE ANNUITY CONTRACTS
Currently, shares of High Yield may be purchased at net asset value by the Life Insurance Company of North America ("LINA") under an arrangement whereby the shares will serve as an underlying investment medium for certain variable annuity contracts previously issued by LINA.
The basic objective of the variable annuity contracts is to provide individuals with retirement benefits through net purchase payment accumulations and annuity payments which are based upon the performance
of High Yield or other available Funds. The contracts allow their owners and participants to defer federal income tax ("FIT") payments on contract investment accumulations until annuity payments begin. The annuity payment options generally provide for lifetime annuity payments based upon the life of the named annuitant (and joint annuitant, if applicable). Such payments may be made for a guaranteed minimum number of years. Certain charges are made in connection with the sale of the contracts.
The LINA contracts are no longer being issued except that existing owners, participants and, in some cases, new participants under existing group contracts under certain tax-qualified plans, may continue to make contributions under the contract. Persons who wish to receive additional information concerning investment in High Yield through LINA's variable annuity contracts are urged to read the LINA prospectus which describes them. LINA variable annuity information and a prospectus may be obtained by writing to INA Security Corporation, 601 Walnut Street, Ninth Floor, Philadelphia, Pennsylvania 19102, or by calling (215) 351-3121.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations, withhold 31% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a taxpayer identification number ("TIN") and a certification that he is not subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor or the Fund is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term gain distributions are subject to backup withholding only if (1) (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and information reporting. A complete listing of such exempt entities appears in the Instructions for the Requester of Form W-9 (which can be obtained from the IRS) and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or instrumentalities
o an international organization or any of its agencies or instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S. or a possession of the U.S.
o a futures commission merchant registered with the Commodity Futures Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the 1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate on ordinary income dividends and distributions and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption.
NET ASSET VALUE DETERMINATION
FOR MONEY MARKET
The net asset value per share of the Fund is determined daily as of 12:00 noon and the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net asset value of the Fund is determined as of the close of the NYSE on such day. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the number of shares outstanding of that class and rounding the resulting per share net asset value to the nearest one cent. Determination of the net asset value per share is made in accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if the security were sold. During such periods, the daily yield on shares of the Fund computed as described under "Performance Information" may differ somewhat from an identical computation made by another investment company with identical investments utilizing available indications as to the market value of its portfolio securities.
The valuation of portfolio instruments based upon their amortized cost and the concomitant maintenance of the net asset value per share of $1.00 for the Fund is permitted in accordance with applicable rules and regulations of the SEC which require the Fund to adhere to certain conditions. These rules require, among other things, that the Fund maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase only instruments having remaining maturities of 397 calendar days or less and invest only in securities determined by the Board of Trustees to be "Eligible Securities" (as defined in Rule 2a-7 under the 1940 Act) and to present minimal credit risk to the Fund.
The Board of Trustees is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Fund's price per share at $1.00, as computed for the purpose of sales and redemptions. Such procedures include review of the Fund's holdings by the Board of Trustees at such intervals as they may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for the Fund deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing holders of the Fund's shares. In the event the Board of Trustees determines that such a deviation exists for the Fund, it will take such corrective action as the Board of Trustees deems necessary and appropriate with respect to the Fund, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten the average portfolio maturity; the withholding of dividends; redemption of shares in kind; or the establishment of a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which may require corresponding changes in the Fund's procedures which are designed to stabilize the Fund's price per share at $1.00.
FOR ALL OTHER FUNDS
The net asset value of a share of each Fund is normally determined once daily as of the close of the customary trading session of the NYSE (which is generally 4:00 p.m. Eastern Time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a share of a Fund is determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE will generally be used. The net asset value per share is determined by subtracting the liabilities (e.g., accrued expenses and dividends payable) of a Fund allocated to the class from the value of securities, cash and assets (including interest accrued but not collected) of the Fund allocated to the class; and dividing the result by the total number of shares outstanding of such class. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each equity security held by a Fund is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day, prior to the determination of net asset value. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the closing bid price back up quotes furnished by independent pricing services of market makers on the basis of prices provided by independent pricing services. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange
where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees. Short-term obligations having 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.
Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such securities used in computing the net asset value of each Fund's shares are determined at such times. Foreign currency exchange rates are also generally determined prior to the close of the customary trading session of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which such values are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of a Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees.
Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Funds, the net asset value per share of a Fund may be significantly affected on days when an investor can not exchange or redeem shares of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
The dividends accrued and paid for each class of each Fund's shares will consist of: (a) interest accrued and discounts earned (including both original issue and market discount) for the Fund, allocated based upon each class' pro rata share of the net assets of the Fund, less (b) Trust expenses accrued for the applicable dividend period attributable to the Fund, such as custodian fees, trustee's fees, and accounting and legal expenses, allocated based upon each class' pro rata share of the net assets of the Fund, less (c) expenses directly attributable to each class which accrued for the applicable dividend period, such as shareholder servicing plan expenses, if any, or transfer agent fees unique to each class.
Dividends are declared to shareholders of record immediately prior to the determination of the net asset value of each Fund. Accordingly, dividends begin accruing on the first business day of each Fund following the day on which a purchase order for shares of each Fund is effective, and accrue through the day on which a redemption order is effective. Thus, if a purchase order is effective on a Friday, dividends will begin accruing on the following Monday (unless such day is not a business day of the Fund).
Income dividends and capital gains distributions are automatically reinvested in additional shares of the same class of a Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting a Fund and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of a Fund or its shareholders, and the discussion here and in the Prospectus
is not intended as a substitute for careful tax planning. Investors are urged to consult their tax advisors with specific reference to their own tax situation.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, a Fund is not subject to federal income tax on the portion of its net investment income (i.e., its taxable interest, dividends and other taxable ordinary income, net of expenses) and realized capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (i.e., net investment income and the excess of net short-term capital gain over net long-term capital loss) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by a Fund made during the taxable year or, under specified circumstances, within 12 months after the close of the taxable year, will be considered distributions of income and gains of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, each Fund must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are ancillary to the Fund's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement").
In general, gain or loss recognized by a Fund on the disposition of an asset will be a capital gain or loss. However, gain recognized on the disposition of a debt obligation purchased by a Fund at a market discount (generally, at a price less than its principal amount) will be treated as ordinary income to the extent of the portion of the market discount which accrued during the period of time a Fund held the debt obligation. In addition, if a Fund purchases a debt obligation that was originally issued at a discount, the Fund is generally required to include in gross income each year the portion of the original issue discount which accrues during such year.
Limited Maturity may enter into notional principal contracts, including interest rate swaps, caps, floors and collars. Under Treasury regulations, in general, the net income or deduction from a notional principal contract for a taxable year is included in or deducted from gross income for that taxable year. The net income or deduction from a notional principal contract for a taxable year equals the total of all of the periodic payments (generally, payments that are payable or receivable at fixed periodic intervals of one year or less during the entire term of the contract) that are recognized from that contract for the taxable year and all of the non-periodic payments (including premiums for caps, floors and collars), even if paid in periodic installments, that are recognized from that contract for the taxable year. A periodic payment is recognized ratably over the period to which it relates. In general, a non-periodic payment must be recognized over the term of the notional principal contract in a manner that reflects the economic substance of the contract. A non-periodic payment that relates to an interest rate swap, cap, floor or collar shall be recognized over the term of the contract by allocating it in accordance with the values of a series of cash-settled forward or option contracts that reflect the specified index and notional principal amount upon which the notional principal contract is based (or, in the case of a swap or of a cap or floor that hedges a debt instrument, under alternative methods contained in the regulations and, in the case of other notional principal contracts, under alternative methods that the IRS may provide in a revenue procedure).
Treasury regulations permit a regulated investment company, in determining its investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) for any taxable year, to elect (unless it has made a taxable year election for excise tax purposes as discussed below) to treat all or part of any net capital loss, any net long-term capital loss or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the Distribution Requirement and the Income Requirement, a Fund must satisfy an asset diversification test in order to qualify as a regulated investment company. Under this test, at
the close of each quarter of a Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income for the one year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 of any
year (or after the end of its taxable year if it has made a taxable year
election) in determining the amount of ordinary taxable income for the current
calendar year (and, instead, include such gains and losses in determining
ordinary taxable income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability.
FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment company taxable income and net short-term capital gain for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they are not expected to qualify for the 70% dividends received deduction for corporations.
Each Fund may either retain or distribute to shareholders its net capital gain (net long-term capital gain over net short-term capital loss) for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain (taxable at a maximum rate of 20% for non-corporate shareholders), regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carryovers) at the 35% corporate tax rate. If a Fund elects to retain net capital gain, it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share of tax paid by the
Fund on the gain, and will increase the tax basis for its shares by an amount equal to the deemed distribution less the tax credit.
Distributions by a Fund that do not constitute ordinary income dividends, tax-exempt dividends or capital gain dividends will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of a Fund (or any other Fund in The AIM Family of Funds--Registered Trademark--). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. In addition, if the net asset value at the time a shareholder purchases shares of a Fund reflects undistributed net investment income or recognized capital gain net income, or unrealized appreciation in the value of the assets of the Fund, distributions of such amounts will be taxable to the shareholder in the manner described above, although such distributions economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made in certain cases) during the year in accordance with the guidance that has been provided by the Internal Revenue Service.
Each Fund is required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Fund that it is not subject to backup withholding or that it is a corporation or other "exempt recipient."
MUNICIPAL BOND
With respect to interest income that is exempt from federal income tax ("FIT"), the Fund intends to comply with Section 852(b)(5) of the Code, which enables distributions of tax-exempt income to retain their character when distributed to shareholders as an exempt interest dividend. Each year, the Fund provides shareholders a statement indicating the amount of distribution that is exempt from FIT. Some or all of the non-exempt interest that the Fund receives from municipal securities might become taxable by law or determined by the Internal Revenue Service to be taxable. This statement also provides a breakdown showing the percentage of such income that came from each state. In addition, the Fund reports for FIT purposes any net realized capital gains and any ordinary income from the Fund's short-term holdings. Further, the Fund also reports certain interest from "Qualified Private Activity Bonds" which shareholders may be required to include in the alternative minimum tax calculation.
The Tax Reform Act of 1986 (the "1986 Act") divided municipal debt obligations into three categories, only one of which ("Public Purpose Bonds") bears interest which is exempt from both the regular income tax and the alternative minimum tax as it applies to individuals. For corporations, some or all of the income from Public Purpose Bonds would be includable in the corporate alternative minimum tax base. Of the other two categories ("Qualified Private Activity Bonds" and "Private Activity Bonds"), for both individuals and corporations, Qualified Private Activity Bonds bear interest which is excluded from income for purposes of the regular income tax but must generally be included in the alternative minimum tax base, and Private Activity Bonds are taxable under both the regular and alternative minimum taxes. Certain small corporations are wholly exempt from the alternative minimum tax.
The 1986 Act also applied limitations on the issuance of bonds whose proceeds are used by organizations exempt from tax under Code Section 501(c)(3), as well as general limitations on the amount of Qualified Private Activity Bonds governmental units may issue.
The 1986 Act limitations on tax-exempt bonds apply generally to bonds issued after August 16, 1986. The private activity bond rules are generally applicable to bonds issued on or after September 1, 1986, with the alternative minimum tax rules applicable generally to bonds issued on or after August 7, 1986. Municipal Bond intends to limit its investments in Qualified Private Activity Bonds and taxable securities to no more than 20% of its total assets in any given year, consistent with its stated investment objective.
Original issue discount on tax-exempt bonds is accrued as tax-exempt interest (except for a portion thereof in the case of certain stripped tax-exempt bonds), and is included in the tax basis of the security for capital gain and loss computation purposes. Any gain or loss from the sale or other disposition of a tax-exempt security is generally treated as either long-term or short-term capital gain or loss, depending upon its holding period, and is fully taxable. However, gain recognized from the sale or other disposition of a tax-exempt security purchased after April 30, 1993, will be treated as ordinary income to the extent of the accrued market discount on such security.
Interest on indebtedness incurred by shareholders (including financial institutions) will not be deductible for FIT purposes to the extent that the money was used to purchase or carry tax-exempt securities. The purchase of Fund shares may be considered to have been made with borrowed funds even though the borrowed funds are not directly traceable to the purchase of Fund shares. Further, persons who are "substantial users" (or persons related thereto) of facilities financed by private activity bonds should consult their own tax advisor before purchasing Fund shares.
The exemption of interest income for FIT purposes does not necessarily result in exemption under state and local laws. Shareholders should consult their tax advisors as to the treatment of such income under state and local laws.
SALE OR REDEMPTION OF FUND SHARES
A shareholder will recognize gain or loss on the sale or redemption of shares of a Fund in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of a Fund will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. Except to the extent otherwise provided in future treasury regulations, any long-term capital gain recognized by a noncorporate shareholder will be subject to tax at a maximum rate of 20%. However, any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. For this purpose, the special holding period rules of Code Section 246(c)(3) and (4) generally will apply in determining the holding period of shares. Long-term capital gains of non-corporate taxpayers are currently taxed at a maximum rate that in some cases may be 19.6% lower than the maximum rate applicable to ordinary income. Capital losses in any year are deductible only to the extent of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of a Fund,
(ii) disposes of such shares less than 91 days after they are acquired and (iii)
subsequently acquires shares of the same or another Fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired. The wash sale rules may also
limit loss recognized.
REINSTATEMENT PRIVILEGE
For federal income tax purposes, exercise of your reinstatement privilege may increase the amount of gain or reduce the amount of loss recognized in the original redemption transaction, because the initial sales charge will not be taken into account in determining such gain or loss to the extent there has been a reduction in the initial sales charge.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from the Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, ordinary income dividends and return of capital distributions (other than capital gains dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale or redemption of shares of a Fund, capital gain dividends and amounts retained by the Fund that are designated as undistributed net capital gains.
If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is based on the Code and regulations issued thereunder as in effect on November 15, 2000. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. The tax treatment of foreign investors may also differ from the treatment for U.S. investors described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other state and local tax rules affecting investments in a Fund.
DESCRIPTION OF MONEY MARKET INSTRUMENTS
Money Market will limit its investments to those securities which at the time of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Subsequent to its purchase by Money Market, a security may cease to be a First Tier security. Subject to certain exceptions set forth in Rule 2a-7, such an event will not require the disposition of the security by the Fund, but AIM will consider such an event to be relevant in its determination of whether the Fund should continue to hold the security.
U.S. GOVERNMENT DIRECT OBLIGATIONS: Bills, notes and bonds issued by the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES: Certain federal agencies such as the Government National Mortgage Association have been established as instrumentalities of the U.S. Government to supervise and finance certain types of activities. Issues of these agencies, while not direct obligations of the U.S. Government, are either backed by the full faith and credit of the United States or are guaranteed by the Treasury or supported by the issuing agencies' right to borrow from the Treasury.
BANKER'S ACCEPTANCES: A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT: A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of Funds and normally can be traded in the secondary market, prior to maturity.
TIME DEPOSITS: A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market.
COMMERCIAL PAPER: The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months.
REPURCHASE AGREEMENTS: A repurchase agreement is a contractual undertaking whereby the seller of securities (limited to U.S. Government securities, including securities issued or guaranteed by the U.S. Treasury or the various agencies and instrumentalities of the U.S. Government, including mortgage-backed securities issued by U.S. Government agencies) agrees to repurchase the securities at a specified price on a future date determined by negotiations.
MASTER NOTES: Demand notes that permit investment of fluctuating amounts of money at varying rates of interest pursuant to arrangements with issuers who meet the quality criteria of a Fund. The interest rate on a master note may fluctuate based upon changes in specified interest rates or be reset periodically according to a prescribed formula or may be a set rate. Although there is no secondary market in master notes, if such notes have a demand feature, the payee may demand payment of the principal amount of the note on relatively short notice. The notes may be secured or unsecured.
VARIABLE AND FLOATING RATE INSTRUMENTS: Certain instruments issued, guaranteed or sponsored by the U.S. Government or its agencies, state and local government issuers, and certain debt instruments issued by domestic banks or corporations, may carry variable or floating rates of interest. Such instruments bear interest at rates which are not fixed, but which vary with changes in specified market rates or indices, such as a Federal Reserve composite index.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent. Any loss resulting from the dealer's failure to submit an
order within the prescribed time frame will be borne by that dealer. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors.
SHARES CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them upon written request to AFS. Otherwise, shares are held on the shareholder's behalf and recorded on the Fund books. AIM Funds will not issue certificates for shares held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide Funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a Fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a Fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the Funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by the Transfer Agent as long as such request is received prior to the close of the customary trading session of the NYSE. The Transfer Agent and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction.
By signing an account application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such Fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by
signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. The Transfer Agent reserves the right to modify or terminate the telephone exchange privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the "Shareholder Information" section of each Fund's prospectus, signature guarantees are required in the following situations: (1) requests to transfer the registration of shares to another owner; (2) telephone exchange and telephone redemption authorization forms; (3) changes in previously designated wiring or electronic funds transfer instructions; and (4) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $50,000 or the proceeds are to be sent to the address of record. AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference guides contained in the Transfer Agent's current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. The Transfer Agent will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his account through the Internet by selecting the AIM Internet Connect option on his completed account application form or completing an AIM Internet Connect Authorization Form. By signing either form the investor acknowledges and agrees that the Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any internet transaction effected in accordance with the instructions set forth in the forms if they reasonably believe such request to be genuine. Procedures for verification of internet transactions include requests for confirmation of the shareholder's personal identification number and mailings of confirmations promptly after the transactions. The investor also acknowledges that (1) if he no longer wants the AIM Internet Connect option,
he will notify the Transfer Agent in writing, and (2) the AIM Internet Connect option may be terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital gains, if any, available for distribution, net capital gains are offset against available net capital losses, if any, carried forward from previous fiscal periods.
For Funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For Funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date.
Dividends on Class B and Class C shares are expected to be lower than those for Class A shares or AIM Cash Reserve Shares because of higher distribution fees paid by Class B and Class C shares. Dividends on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the shareholder at any time by notice to the Transfer Agent and are effective as to any subsequent payment if such notice is received by the Transfer Agent prior to the record date of such payment. Any dividend and distribution election remains in effect until the Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a Fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
AFS, the transfer agent, may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Trustees will issue to the shareholders semi-annually financial statements for each Fund. Financial statements, audited by independent auditors, will be issued annually. The firm of KPMG LLP, 700 Louisiana, Houston, Texas 77002, currently serves as the auditors of each Fund.
LEGAL MATTERS
Certain legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103-7599.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, is custodian of all securities and cash of Limited Maturity, Money Market and Municipal Bond. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of High Yield, High Yield II, Income and Intermediate Government. The custodians attend to the collection of principal and income, pay and collect all monies for securities bought and sold by the respective Funds, and perform certain other ministerial duties. AFS, P.O. Box 4739, Houston, Texas 77210-4739, is transfer and dividend disbursing agent for the Funds' shares. These services do not include any supervisory function over
management or provide any protection against any possible depreciation of assets. The Funds pay the Custodians and AFS such compensation as may be agreed upon from time to time.
Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as Sub-Custodian for retail purchases of the AIM Funds.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has entered into an agreement with the Trust (and certain other AIM Funds), First Data Investor Service Group, and Financial Data Services, Inc., pursuant to which MLPF&S has agreed to perform certain shareholder sub-accounting services for its customers who beneficially own shares of the Fund(s).
OTHER INFORMATION
Each Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the Trust has filed with the SEC under the 1933 Act and reference is hereby made to the Registration Statement for further information with respect to the Funds and the securities offered pursuant to the Prospectuses. The Registration Statement is available for inspection by the public at the SEC in Washington, DC.
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES
Intermediate Government may invest in "Agency Securities," which include some or all of those listed below. The following list does not purport to be an exhaustive list of all Agency Securities, and the Fund reserves the right to invest in Agency Securities other than those listed below.
EXPORT-IMPORT BANK CERTIFICATES are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS are bonds issued by a cooperatively owned, nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS are notes and bonds issued by the Federal Home Loan Bank System.
FHA DEBENTURES are debentures issued by the Federal Housing Administration of the U.S. Government.
FHA INSURED NOTES are bonds issued by the Farmers Home Administration of the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS are bonds issued and guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its Funds by selling mortgages (as well as participation interests in the mortgages) and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" represent undivided interests in specified groups of conventional mortgage loans (and/or participation interests in those loans) underwritten and owned by FHLMC. At least 95% of the aggregate principal balance of the whole mortgage loans and/or participations in a group formed by FHLMC typically consist of single-family mortgage loans, and not more than 5% consists of multi-family loans. FHLMC Participation Certificates are not guaranteed by, and do not constitute a debt or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC Participation Certificates are issued in fully registered form only, in original unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million and $5 million. FHLMC guarantees to each registered holder of a Participation Certificate, to the extent of such holder's pro rata share (i) the timely payment of interest accruing at the applicable certificate rate on the unpaid principal balance outstanding on the mortgage loans, and (ii) collection of all principal on the mortgage loans without any offset or deductions. Pursuant to these guaranties, FHLMC indemnifies holders of Participation Certificates against any reduction in principal by reason of charges for property repairs, maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS are bonds issued and guaranteed by the Federal National Mortgage Association, a federally chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" are mortgage pass-through certificates issued and guaranteed by FNMA. FNMA Certificates represent a fractional undivided ownership interest in a pool of mortgage loans either provided from FNMA's own portfolio or purchased from primary lenders. The mortgage loans included in the pool are conventional, insured by the Federal Housing Administration or guaranteed by the Veterans Administration. FNMA Certificates are not backed by, nor entitled to, the full faith and credit of the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from primary lenders that satisfy certain criteria developed by FNMA, including depth of mortgage origination experience, servicing experience
and financial capacity. FNMA may purchase an entire loan pool from a single lender, and issue Certificates backed by that loan pool alone, or may package a pool made up of loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates, may be included in a single pool, although each pool will consist of mortgage loans related to one-family or two-to-four family residential properties. Substantially all FNMA mortgage pools currently consist of fixed interest rate and growing equity mortgage loans, although FNMA mortgage pools may also consist of adjustable interest rate mortgage loans or other types of mortgage loans. Each mortgage loans must conform to FNMA's published requirements or guidelines with respect to maximum principal amount, loan-to-value ratio, loan term, underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a Trust indenture for the benefit of Certificate holders. The Trust indenture gives FNMA responsibility for servicing or administering the loans in a pool. FNMA contracts with the lenders or other servicing institutions to perform all services and duties customary to the servicing of mortgages, as well as duties specifically prescribed by FNMA, and under FNMA supervision. FNMA may remove service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest rate borne by an underlying mortgage loan in the pool, less a fee to FNMA as compensation for servicing and for FNMA's guarantee. Lenders servicing the underlying mortgage loans receive as compensation a portion of the fee paid to FNMA, the excess yields on pooled loans with coupon rates above the lowest rate borne by any mortgage loan in the pool and certain other amounts collected, such as late charges.
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually through securities dealers. The lender of a single lender pool typically markets all Certificates based on that pool, and lenders of multiple lender pool market Certificates based on a pro rata interest in the aggregate pool. The amounts of FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE MAES" are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled, and, after being approved by GNMA, is offered to investors through securities dealers. GNMA is a U.S. Government corporation within the Department of Housing and Urban Development.
The Portfolio will purchase only GNMA Certificates of the "modified pass-through" type, which entitle the holder to receive its proportionate share of all interest and principal payments owed on the mortgage pool, net of fees paid to the issuer and GNMA, regardless of whether or not the mortgagor actually makes the payment. GNMA Certificates differ from bonds in that the principal is paid back monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity. Payment of principal of and interest on GNMA Certificates of the "modified pass-through" type is guaranteed by GNMA and backed by the full faith and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures will usually result in the return on the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose no risk to principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. However, statistics published by the FHA indicate that the average life of a single-family dwelling mortgage with 25- to 30-year maturity, the type of mortgage which backs the vast majority of GNMA Certificates, is approximately 12 years. It is therefore customary practice to treat GNMA Certificates as 30-year mortgage-backed securities which prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by the prepayment of mortgages included in the mortgage pool underlying the Certificates and the rate at which principal so prepaid is reinvested. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium may result in a loss to the Portfolio.
Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION PARTICIPATION CERTIFICATES are participation certificates issued by the General Services Administration of the U.S. Government.
MARITIME ADMINISTRATION BONDS are bonds issued and provided by the Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS are short-term project notes and long-term bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES are debentures backed by the Student Loan Marketing Association.
TITLE XI BONDS are bonds issued in accordance with the provisions of Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS are bonds issued by the Washington Metropolitan Area Transit Authority and are guaranteed by the Secretary of Transportation of the U.S. Government.
RATINGS OF SECURITIES
The following is a description of the factors underlying the commercial paper and debt ratings of Moody's, S&P, Fitch IBCA, Inc. ("Fitch") and Duff & Phelps:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier 1 indicates that the company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the company ranks in the lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term
ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issues to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
Funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified, which could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "DDD", "DD", or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
DUFF & PHELPS LONG-TERM RATINGS
AAA: Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA+, AA AND AA-: High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions.
A+, A AND A-: Protection factors are average but adequate. However, risk factors are more variable and greater in periods of economic stress.
BBB+, BBB AND BBB-: Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles.
BB+, BB AND BB-: Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions or company fortunes. Overall quality may move up or down frequently within this category.
B+, B AND B-: Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in the rating within this category or into a higher or lower rating grade.
CCC: Well below investment grade securities. Considerable uncertainty exists as to timely payment of principal, interest or preferred dividends. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments.
DP: Preferred stock with dividend arrearages.
DUFF & PHELPS SHORT-TERM RATINGS
D - 1+: Highest certainty of timely payment. Short-term liquidity, including internal operating factors and/or access to alternative sources of Funds, is outstanding and safety is just below risk-free U.S. Treasury short-term obligations.
D - 1: Very high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.
D - 1-: High certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.
D - 2: Good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small.
D - 3: Satisfactory liquidity and other protection factors qualify issue as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected.
D - 4: Speculative investment characteristics. Liquidity is not sufficient to insure against disruption in debt service. Operating factors and market access may be subject to a high degree of variation.
D - 5: Issuer failed to meet scheduled principal and/or interest payments.
FINANCIAL STATEMENTS
FS
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of AIM High Yield Fund:
We have audited the accompanying statement of assets and liabilities of AIM High
Yield Fund (a portfolio of AIM Investment Securities Funds), including the
schedule of investments, as of July 31, 2000, the related statement of
operations for the seven months ended July 31, 2000 and the year ended December
31, 1999, the statements of changes in net assets for the seven months ended
July 31, 2000 and the two-years ended December 31, 1999, and the financial
highlights for the seven months ended July 31, 2000 and for each of the years in
the five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
High Yield Fund as of July 31, 2000, the results of its operations for seven
months ended July 31, 2000 and the year ended December 31, 1999, the changes in
its net assets for the seven months ended July 31, 2000 and the two-years ended
December 31, 1999, and the financial highlights for the seven months ended July
31, 2000 and for each of the years in the five-year period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-1
SCHEDULE OF INVESTMENTS
July 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES-92.16%
AEROSPACE/DEFENSE-0.57%
Precision Partners, Inc., Sr.
Unsec. Sub. Notes, 12.00%,
03/15/09 $19,225,000 $ 13,553,625
---------------------------------------------------------------
AIR FREIGHT-0.66%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 15,147,000 15,601,410
---------------------------------------------------------------
AIRLINES-3.21%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 62,086,822 49,896,385
---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 9,115,000 8,408,587
---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 17,960,000 17,915,100
---------------------------------------------------------------
76,220,072
---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.38%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 24,825,000 20,418,562
---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 22,550,000 20,858,750
---------------------------------------------------------------
Venture Holdings Trust, Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
06/01/07 20,250,000 15,288,750
---------------------------------------------------------------
56,566,062
---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-4.66%
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(a) 33,920,000 19,504,000
---------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Disc.
Yankee Notes, 10.75%,
02/15/07(a) 8,000,000 6,240,000
---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 28,000,000 19,460,000
---------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 44,305,000 23,592,412
---------------------------------------------------------------
Pegasus Communications
Corp.-Series B, Sr. Unsec.
Notes, 12.50%, 08/01/07 17,500,000 18,637,500
---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B,
Sr. Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(a) 50,000,000 23,250,000
---------------------------------------------------------------
110,683,912
---------------------------------------------------------------
BUILDING MATERIALS-1.51%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 22,750,000 23,091,250
---------------------------------------------------------------
Dayton Superior Corp., Sr. Sub.
Notes, 13.00%, 06/15/09
(Acquired 06/09/00; Cost
$12,179,750)(b)(c) 12,500,000 12,468,750
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BUILDING MATERIALS-(CONTINUED)
Imperial Home Decor Group-Series
B, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 03/15/08(d) $19,100,000 $ 286,500
---------------------------------------------------------------
35,846,500
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.33%
Avecia Group PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 14,300,000 14,478,750
---------------------------------------------------------------
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 16,500,000 17,201,250
---------------------------------------------------------------
31,680,000
---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.28%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07(d) 23,770,000 2,495,850
---------------------------------------------------------------
Trans-Resources, Inc.-Series B,
Sr. Unsec. Disc. Notes, 12.00%,
03/15/08(a) 11,750,000 1,116,250
---------------------------------------------------------------
Sr. Unsec. Notes, 10.75%,
03/15/08 19,000,000 2,945,000
---------------------------------------------------------------
6,557,100
---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.47%
Convergent Communications-Series
B, Sr. Unsec. Notes, 13.00%,
04/01/08 23,540,000 16,536,850
---------------------------------------------------------------
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 18,425,000 18,425,000
---------------------------------------------------------------
34,961,850
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.54%
Equinix Inc., Sr. Unsec. Notes,
13.00%, 12/01/07 15,110,000 12,843,500
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.68%
Cybernet Internet Services
International, Inc., Conv.
Unsec. Sub. Notes, 13.00%,
08/15/09(a)(e) 11,250,000 5,203,125
---------------------------------------------------------------
Earthwatch Inc.,
Sr. Disc. Notes, 13.00%,
07/15/07 (Acquired 07/07/99;
Cost $23,276,740)(a)(b)(c) 34,000,000 23,715,000
---------------------------------------------------------------
Sr. Notes, 12.50%, 03/01/05
(Acquired 03/14/97-09/01/99;
Cost $15,500,000)(c) 22,320,000 15,679,800
---------------------------------------------------------------
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 24,000,000 19,020,000
---------------------------------------------------------------
63,617,925
---------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.41%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 14,000,000 9,695,000
---------------------------------------------------------------
|
FS-2
PRINCIPAL MARKET
AMOUNT VALUE
DISTRIBUTORS (FOOD &
HEALTH)-1.01%
Fleming Cos., Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.63%,
07/31/07 $27,700,000 $ 24,029,750
---------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.75%
Cherokee International LCC-Series
B, Sr. Unsec. Sub. Notes,
10.50%, 05/01/09 20,600,000 17,819,000
---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.70%
Morrison Knudsen Corp., Sr.
Notes, 11.00%, 07/01/10
(Acquired 06/28/00; Cost
$16,467,566)(c) 16,590,000 16,672,950
---------------------------------------------------------------
ENTERTAINMENT-0.52%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $12,500,000)(c) 12,500,000 12,281,250
---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.07%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(e) 17,700,000 16,018,500
---------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Gtd. Sub. Euro Notes,
13.00%, 05/01/09 9,500,000 9,357,500
---------------------------------------------------------------
25,376,000
---------------------------------------------------------------
FOODS-0.47%
Volume Services America Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
03/01/09 12,000,000 11,040,000
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-3.14%
Hollywood Casino Corp., Sr. Sec.
Gtd. Sub. Notes, 11.25%,
05/01/07 1,000,000 1,025,000
---------------------------------------------------------------
MGM Grand, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 12,240,000 12,576,600
---------------------------------------------------------------
Resort at Summerlin LP-Series B,
Sr. Unsec. Sub. Notes, 13.00%,
12/15/07 25,769,000 18,167,145
---------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 42,200,000 42,833,000
---------------------------------------------------------------
74,601,745
---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.77%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 19,300,000 20,747,500
---------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(e) 20,650,000 21,372,750
---------------------------------------------------------------
42,120,250
---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.39%
Triad Hospitals, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/15/09 8,915,000 9,360,750
---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.50%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
06/15/09 12,400,000 11,842,000
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
HEALTH CARE (SPECIALIZED
SERVICES)-0.06%
Team Health Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
03/15/09 $ 1,735,000 $ 1,479,087
---------------------------------------------------------------
HOMEBUILDING-0.29%
Lennar Corp., Sr. Notes, 9.95%,
05/01/10(e) 6,775,000 6,842,750
---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-2.03%
Falcon Products, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.38%, 06/15/09 12,065,000 11,672,887
---------------------------------------------------------------
O'Sullivan Industries,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 13.38%, 10/15/09 21,000,000 19,740,000
---------------------------------------------------------------
Winsloew Furniture, Inc.-Series
B, Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 17,870,000 16,708,450
---------------------------------------------------------------
48,121,337
---------------------------------------------------------------
IRON & STEEL-0.51%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(d) 28,939,000 3,906,765
---------------------------------------------------------------
Sheffield Steel Corp.-Series B,
First Mortgage Notes, 11.50%,
12/01/05 13,500,000 8,167,500
---------------------------------------------------------------
12,074,265
---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.99%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 29,375,000 23,573,437
---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.42%
National Equipment
Services-Series B, Sr. Unsec.
Sub. Notes, 10.00%, 11/30/04 11,850,000 9,894,750
---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.45%
Actuant Corp., Sr. Unsec. Gtd.
Sub. Notes, 13.00%, 05/01/09
(Acquired 07/21/00; Cost
$9,038,630)(c) 9,160,000 9,205,800
---------------------------------------------------------------
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 21,085,000 11,649,463
---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(d) 24,915,000 4,235,550
---------------------------------------------------------------
Jordan Industries, Inc.-Series D,
Sr. Unsec. Notes, 10.38%,
08/01/07 10,000,000 9,325,000
---------------------------------------------------------------
34,415,813
---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-5.15%
Berry Plastics Corp.,
Sr. Gtd. Sub. Notes, 12.25%,
04/15/04 13,000,000 12,577,500
---------------------------------------------------------------
Series C, Sr. Gtd. Sub. Notes,
12.25%, 04/15/04 4,750,000 4,607,500
---------------------------------------------------------------
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 20,800,000 18,564,000
---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Unsec. Notes, 11.00%, 02/01/08 22,835,000 13,130,125
---------------------------------------------------------------
Flextronics International Ltd.
(Singapore), Sr. Sub Yankee
Notes, 9.88%, 07/01/10
(Acquired 06/26/00; Cost
$6,151,640)(c) 6,200,000 6,378,250
---------------------------------------------------------------
|
FS-3
PRINCIPAL MARKET
AMOUNT VALUE
MANUFACTURING (SPECIALIZED)-(CONTINUED)
Knowles Electronics, Inc., Sr.
Sub. Notes, 13.13%, 10/15/09(e) $12,000,000 $ 10,980,000
---------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 17,640,000 17,375,400
---------------------------------------------------------------
Neenah Corp.
Series B, Sr. Sub. Notes,
11.13%, 05/01/07 4,000,000 3,030,000
---------------------------------------------------------------
Series D, Sr. Sub. Notes,
11.13%, 05/01/07 15,000,000 11,362,500
---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 16,740,000 15,317,100
---------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/00; Cost $8,580,810)(c) 8,700,000 8,917,500
---------------------------------------------------------------
122,239,875
---------------------------------------------------------------
METALS MINING-1.83%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 28,800,000 22,320,000
---------------------------------------------------------------
Doe Run Resources Corp.
(The)-Series B, Sr. Unsec. Gtd.
Sub. Notes, 11.25%, 03/15/05 21,000,000 10,815,000
---------------------------------------------------------------
Metal Management, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
05/15/08 20,500,000 10,352,500
---------------------------------------------------------------
43,487,500
---------------------------------------------------------------
NATURAL GAS-0.53%
Western Gas Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
06/15/09 12,000,000 12,480,000
---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.32%
Global Imaging Systems, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/07 8,800,000 7,612,000
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.56%
Pride International, Inc., Sr.
Unsec. Notes, 10.00%, 06/01/09 12,735,000 13,180,725
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-4.38%
Abraxas Petroleum Corp.
Series A, Sr. Gtd. Sub. Notes,
11.50%, 11/01/04 8,644,000 7,477,060
---------------------------------------------------------------
Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 13,000,000 13,422,500
---------------------------------------------------------------
Chesapeake Energy Corp., Series
B, Sr. Unsec. Gtd. Sub. Notes,
9.63%, 05/01/05 1,150,000 1,144,250
---------------------------------------------------------------
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 17,275,000 17,706,875
---------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 23,750,000 24,759,375
---------------------------------------------------------------
Pioneer Natural Resources Co.,
Sr. Unsec. Gtd. Notes, 9.63%,
04/01/10 13,000,000 13,617,500
---------------------------------------------------------------
Pogo Producing Co.-Series B, Sr.
Unsec. Sub. Notes, 10.38%,
02/15/09 18,335,000 18,976,725
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED)
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 $13,145,000 $ 6,769,675
---------------------------------------------------------------
103,873,960
---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.67%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 17,980,000 15,912,300
---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.82%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 18,370,000 19,380,350
---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.85%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 20,439,125 20,132,538
---------------------------------------------------------------
PUBLISHING-0.34%
Ziff Davis Media, Inc., Sr. Sub.
Notes, 12.00%, 07/15/10
(Acquired 07/18/00-07/20/00;
Cost $7,949,200)(c) 7,880,000 8,037,600
---------------------------------------------------------------
RAILROADS-1.72%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 16,400,000 15,170,000
---------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 33,150,000 25,691,250
---------------------------------------------------------------
40,861,250
---------------------------------------------------------------
RESTAURANTS-0.11%
AFC Enterprises, Sr. Unsec. Sub.
Notes, 10.25%, 05/15/07 2,625,000 2,559,375
---------------------------------------------------------------
RETAIL (SPECIALTY)-1.46%
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 14,245,000 11,146,713
---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 27,650,000 16,175,250
---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 7,520,000 7,294,400
---------------------------------------------------------------
34,616,363
---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.82%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 17,315,000 15,799,938
---------------------------------------------------------------
J. Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 4,500,000 3,768,750
---------------------------------------------------------------
19,568,688
---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.65%
MDC Corp. Inc. (Canada), Sr.
Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 15,920,000 15,362,800
---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.82%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 18,400,000 19,458,000
---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.59%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 14,930,000 14,108,850
---------------------------------------------------------------
|
FS-4
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-11.40%
AirGate PCS, Inc., Sr. Disc. Sub.
Notes, 13.50%, 10/01/09(a)(b) $28,400,000 $ 16,543,000
---------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr.
Unsec. Gtd. Disc. Notes,
12.88%, 02/15/10(a) 25,300,000 13,282,500
---------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 10,000,000 10,300,000
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(a) 18,144,000 13,925,520
---------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes,
14.00%, 07/15/10 (Acquired
06/30/00; Cost
$2,995,843)(a)(b)(c) 5,900,000 3,289,250
---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 21,100,000 18,884,500
---------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 19,650,000 16,407,750
---------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08 29,040,000 31,363,200
---------------------------------------------------------------
Nextel International, Inc., Sr.
Notes, 12.75%, 08/01/10
(Acquired 07/26/00; Cost
$16,765,740)(c) 17,000,000 16,957,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.13%,
04/15/08(a) 37,500,000 24,872,250
---------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 20,300,000 12,484,500
---------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 38,000,000 35,719,240
---------------------------------------------------------------
Spectrasite Holdings, Inc., Sr.
Disc. Notes, 12.00%,
07/15/08(a) 30,300,000 21,058,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%,
04/15/09(a) 21,230,000 13,056,450
---------------------------------------------------------------
TeleCorp PCS, Inc., Sr. Sub.
Notes, 10.63%, 07/15/10
(Acquired 07/11/00; Cost
$5,350,000)(c) 5,350,000 5,457,000
---------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd.
Disc. Notes, 14.00%,
04/15/10(a)(b)(e) 28,700,000 16,933,000
---------------------------------------------------------------
270,534,160
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-7.68%
360networks Inc. (Canada), Sr.
Unsec. Yankee Notes, 12.00%,
08/01/09 17,210,000 16,091,350
---------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 9,065,000 9,042,338
---------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 20,200,000 17,675,000
---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 19,500,000 14,137,500
---------------------------------------------------------------
FirstCom Corp., Sr. Notes,
14.00%, 10/27/07 30,990,000 34,786,275
---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04 20,000,000 13,300,000
---------------------------------------------------------------
RSL Communications PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 12.00%, 11/01/08 14,500,000 5,292,500
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
Versatel Telecom International
N.V. (Netherlands), Sr. Unsec.
Yankee Notes, 13.25%, 05/15/08 $12,810,000 $ 13,194,300
---------------------------------------------------------------
Sr. Yankee Notes, 13.25%,
05/15/08 19,100,000 19,673,000
---------------------------------------------------------------
Viatel, Inc., Sr. Sec. Notes,
11.25%, 04/15/08 28,250,000 19,351,250
---------------------------------------------------------------
Sr. Unsec. Notes, 11.50%,
03/15/09(e) 28,417,000 19,749,815
---------------------------------------------------------------
182,293,328
---------------------------------------------------------------
TELEPHONE-11.02%
Alestra S.A. (Mexico), Sr. Unsec.
Yankee Notes, 12.13%,
05/15/06(e) 12,000,000 11,880,000
---------------------------------------------------------------
Sr. Yankee Notes, 12.63%,
05/15/09(e) 7,535,000 7,327,788
---------------------------------------------------------------
CFW Communications Co., Sr.
Notes, 13.00%, 08/15/10
(Acquired 07/21/00; Cost
$14,944,346)(b)(c) 15,155,000 15,155,000
---------------------------------------------------------------
GT Group Telecom Inc. (Canada),
Sr. Disc. Yankee Notes, 13.25%,
02/01/10(a)(b) 28,900,000 15,172,500
---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(a) 79,650,000 44,782,416
---------------------------------------------------------------
IMPSAT Fiber Networks, Inc., Sr.
Yankee Notes, 13.75%, 02/15/05
(Acquired 02/11/00; Cost
$12,000,000)(c) 12,000,000 10,920,000
---------------------------------------------------------------
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(a) 30,620,000 20,668,500
---------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 53,750,000 13,571,875
---------------------------------------------------------------
NEXTLINK Communications, Inc.,
Sr. Disc. Notes, 12.13%,
12/01/09(a)(e) 23,500,000 13,218,750
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%,
06/01/09(a) 25,855,000 15,771,550
---------------------------------------------------------------
NTL Communications Corp.-Series
B, Sr. Unsec. Notes, 11.50%,
10/01/08 16,320,000 16,870,800
---------------------------------------------------------------
NTL Inc.-Series B, Sr. Disc.
Notes, 11.50%, 02/01/06 4,245,000 3,990,300
---------------------------------------------------------------
PF.Net Communications Inc., Sr.
Notes, 13.75%, 05/15/10
(Acquired 05/05/00; Cost
$18,200,000)(b)(c) 18,200,000 13,923,000
---------------------------------------------------------------
PTC International Finance II S.A.
(Luxembourg), Sr. Unsec. Gtd.
Yankee Sub. Notes, 11.25%,
12/01/09 11,400,000 11,913,000
---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 42,500,000 46,431,250
---------------------------------------------------------------
261,596,729
---------------------------------------------------------------
TEXTILES (APPAREL)-0.51%
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 11,975,000 12,034,875
---------------------------------------------------------------
TRUCKERS-0.58%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 13,530,000 13,699,125
---------------------------------------------------------------
|
FS-5
PRINCIPAL MARKET
AMOUNT VALUE
TRUCKS & PARTS-1.29%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 $10,665,000 $ 7,172,213
---------------------------------------------------------------
North American Van Lines Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(e) 24,750,000 23,388,750
---------------------------------------------------------------
30,560,963
---------------------------------------------------------------
WASTE MANAGEMENT-2.29%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(e) 61,990,000 54,396,225
---------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes
(Cost $2,569,417,266) 2,187,359,669
---------------------------------------------------------------
SHARES
STOCKS & OTHER EQUITY INTERESTS-5.22%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.17%
UnitedGlobalCom Inc.-Class A(f) 83,896 4,116,147
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.09%
Earthwatch Inc.-Series C, $1.20,
Conv. Pfd. (Acquired
03/14/97-06/15/00; Cost
$4,824)(c) 112,106 2,045,936
---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.03%
Tenet Healthcare Corp.(f) 26,460 805,376
---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.06%
Abraxas Petroleum Corp.(f) 736,227 1,426,440
---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.04%
Convergent Communications,
Inc.(f) 179,280 918,810
---------------------------------------------------------------
SHIPPING-0.03%
Pegasus Shipping Hellas Co.
(Bermuda) 15,000 825,000
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-3.55%
AirGate PCS, Inc.(f) 61,003 3,065,401
---------------------------------------------------------------
Celcaribe S.A., Ordinary Trust
Ctfs. (Acquired
05/17/94-01/23/97; Cost
$0)(c)(f) 2,276,400 3,414,600
---------------------------------------------------------------
Clearnet Communications
Inc.-Class A-ADR (Canada)(f) 100,716 2,832,637
---------------------------------------------------------------
Crown Castle International
Corp.-$3.13 Conv. Pfd.(f) 248,000 13,407,500
---------------------------------------------------------------
Dobson Communications
Corp.-$122.50 PIK Pfd. 22,781 21,471,313
---------------------------------------------------------------
Microcell Telecommunications
Inc.-Class B-ADR (Canada)(f) 253,257 8,056,738
---------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 104,390 5,839,316
---------------------------------------------------------------
Powertel, Inc.(f) 45,663 4,103,962
---------------------------------------------------------------
WebLink Wireless, Inc.(f) 1,260,940 12,688,209
---------------------------------------------------------------
World Access, Inc.-Series D,
Conv. Pfd. (Acquired 03/03/00;
Cost $16,365,448)(c)(f) 15,511 9,500,488
---------------------------------------------------------------
84,380,164
---------------------------------------------------------------
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG
DISTANCE)-1.22%
FirstCom Corp.(f) 804,650 $ 11,164,519
---------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 34,902 569,339
---------------------------------------------------------------
RSL Communications, Ltd.-Class A
(United Kingdom)(f) 179,444 964,512
---------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(f) 452,021 14,464,672
---------------------------------------------------------------
Viatel, Inc.(f) 121,387 1,691,831
---------------------------------------------------------------
28,854,873
---------------------------------------------------------------
TELEPHONE-0.03%
ICG Communications, Inc.(f) 39,600 603,900
---------------------------------------------------------------
Total Stocks & Other Equity
Interests
(Cost $85,723,866) 123,976,646
---------------------------------------------------------------
WARRANTS & OTHER INTERESTS-0.58%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.01%
Knology Inc., expiring 10/22/07
(Acquired 03/12/98-02/01/00;
Cost $270)(c) 47,295 118,238
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.00%
Sterling Chemicals Holdings,
expiring 08/15/08 7,500 69,375
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.05%
Equinix Inc., expiring 12/01/07
(Acquired 05/30/00; Cost
$0)(c)(g) 15,110 1,057,972
---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.01%
Cybernet Internet Services
International, Inc., expiring
07/01/09 (Acquired 10/18/99;
Cost $0)(c)(g) 23,000 235,750
---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc., expiring
02/01/04 18,802 18,802
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.00%
Resort At Summerlin LP, expiring
12/15/07 21,197 0
---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.03%
O'Sullivan Industries, Inc.,
expiring 11/05/09(g) 42,000 630,000
---------------------------------------------------------------
Winsloew Furniture, Inc.,
expiring 08/15/07 (Acquired
12/06/99; Cost $0)(c)(g) 17,870 178,700
---------------------------------------------------------------
808,700
---------------------------------------------------------------
IRON & STEEL-0.00%
Bar Technologies, Inc., expiring
04/01/01(g) 6,000 0
---------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(h) 15,990 0
---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.00%
Abraxas Petroleum Corp.-Rts.(i) 736,228 0
---------------------------------------------------------------
|
FS-6
MARKET
SHARES VALUE
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.05%
Cellnet Data System, expiring
10/01/07 (Acquired
09/24/97-10/15/97; Cost
$0)(c)(g) 10,000 $ 2,600
---------------------------------------------------------------
Globalstar Telecom, expiring
02/15/04 (Acquired 01/05/00;
Cost $11,790)(c) 45 56
---------------------------------------------------------------
KMC Telecom Holdings, Inc.,
expiring 04/15/08 35 107
---------------------------------------------------------------
Nextel International, Inc.,
expiring 04/15/07(g) 39,500 1,195,298
---------------------------------------------------------------
1,198,061
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.00%
Long Distance International,
Inc., expiring 04/13/08(g) 25,620 0
---------------------------------------------------------------
TELEPHONE-0.43%
Esat Telecom Group PLC (Ireland),
expiring 02/01/07 (Acquired
06/16/97-01/05/00; Cost
$7,245)(c) 25,565 5,943,863
---------------------------------------------------------------
|
MARKET
SHARES VALUE
TELEPHONE-(CONTINUED)
PF.Net Communications Inc.,
expiring 05/15/10 (Acquired
07/19/00; Cost $0)(c)(g) 18,200 $ 4,277,000
---------------------------------------------------------------
10,220,863
---------------------------------------------------------------
Total Warrants & Other
Interests (Cost $414,302) 13,727,761
---------------------------------------------------------------
MONEY MARKET FUNDS-1.32%
STIC Liquid Assets Portfolio(j) 15,696,885 15,696,885
---------------------------------------------------------------
STIC Prime Portfolio(j) 15,696,885 15,696,885
---------------------------------------------------------------
Total Money Market Funds
(Cost $31,393,770) 31,393,770
---------------------------------------------------------------
TOTAL INVESTMENTS-99.28% (Cost
$2,686,949,204) 2,356,457,846
---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.72% 17,028,761
---------------------------------------------------------------
NET ASSETS-100.00% $2,373,486,607
===============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment In Kind
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 07/31/00 was $205,833,581
which represented 8.67% of the Fund's net assets.
(d) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(e) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(f) Non-income producing security.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of the issuer
to have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 07/31/00 represented 0.00% of the Fund's net
assets.
(i) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(j) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-7
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES-88.24%
AEROSPACE/DEFENSE-0.46%
Precision Partners, Inc., Sr.
Unsec. Sub. Notes, 12.00%,
03/15/09 $19,225,000 $ 11,246,625
---------------------------------------------------------------
AIR FREIGHT-0.63%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 15,147,000 15,601,410
---------------------------------------------------------------
AIRLINES-3.30%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 62,086,822 50,477,518
---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 14,045,000 12,956,512
---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 17,960,000 17,690,600
---------------------------------------------------------------
81,124,630
---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.23%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 24,825,000 20,232,375
---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 22,550,000 20,295,000
---------------------------------------------------------------
Venture Holdings Trust, Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
06/01/07 20,250,000 14,276,250
---------------------------------------------------------------
54,803,625
---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-4.24%
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(a) 33,920,000 19,419,200
---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 28,000,000 17,500,000
---------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 44,305,000 24,035,462
---------------------------------------------------------------
Pegasus Communications
Corp.-Series B, Sr. Unsec.
Notes, 12.50%, 08/01/07 17,500,000 18,725,000
---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B,
Sr. Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(a) 50,000,000 24,500,000
---------------------------------------------------------------
104,179,662
---------------------------------------------------------------
BUILDING MATERIALS-1.47%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 22,750,000 23,318,750
---------------------------------------------------------------
Dayton Superior Corp., Sr. Sub.
Notes, 13.00%, 06/15/09
(Acquired 06/09/00; Cost
$12,179,750)(b)(c) 12,500,000 12,406,250
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BUILDING MATERIALS-(CONTINUED)
Imperial Home Decor Group-Series
B, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 03/15/08(d) $19,100,000 $ 286,500
---------------------------------------------------------------
36,011,500
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.27%
Avecia Group PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 14,300,000 14,085,500
---------------------------------------------------------------
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 16,500,000 17,077,500
---------------------------------------------------------------
31,163,000
---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.31%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07(d) 23,770,000 2,495,850
---------------------------------------------------------------
Trans-Resources, Inc.-Series B,
Sr. Unsec. Disc. Notes, 12.00%,
03/15/08(a) 11,750,000 1,233,750
---------------------------------------------------------------
Sr. Unsec. Notes, 10.75%,
03/15/08 19,000,000 3,895,000
---------------------------------------------------------------
7,624,600
---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.42%
Convergent Communications-Series
B, Sr. Unsec. Notes, 13.00%,
04/01/08 23,540,000 16,536,850
---------------------------------------------------------------
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 18,425,000 18,332,875
---------------------------------------------------------------
34,869,725
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.63%
Equinix Inc., Sr. Notes, 13.00%,
12/01/07(b)(e) 15,110,000 15,601,075
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-3.05%
Cybernet Internet Services
International, Inc.,
Conv. Unsec. Sub. Notes,
13.00%, 08/15/09(a)(e) 11,250,000 5,203,125
---------------------------------------------------------------
Sr. Notes, 14.00%, 07/01/09 24,000,000 10,620,000
---------------------------------------------------------------
Earthwatch Inc.,
Sr. Disc. Notes, 13.00%,
07/15/07 (Acquired 07/07/99;
Cost $23,276,740)(a)(b)(c) 34,000,000 23,715,000
---------------------------------------------------------------
Sr. Notes, 12.50%, 03/01/05
(Acquired 03/14/97-09/01/99;
Cost $15,500,000)(c) 22,320,000 15,679,800
---------------------------------------------------------------
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 24,000,000 19,860,000
---------------------------------------------------------------
75,077,925
---------------------------------------------------------------
|
FS-8
PRINCIPAL MARKET
AMOUNT VALUE
CONSTRUCTION (CEMENT & AGGREGATES)-0.40%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 $14,000,000 $ 9,870,000
---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.95%
Fleming Companies, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 27,700,000 23,406,500
---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.73%
Cherokee International LCC-Series
B, Sr. Unsec. Sub. Notes,
10.50%, 05/01/09 20,600,000 17,819,000
---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.67%
Morrison Knudsen Corp., Sr.
Notes, 11.00%, 07/01/10
(Acquired 06/28/00; Cost
$16,467,566)(c) 16,590,000 16,548,525
---------------------------------------------------------------
ENTERTAINMENT-0.51%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $12,500,000)(c) 12,500,000 12,515,625
---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.04%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(e) 17,700,000 16,195,500
---------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Gtd. Sub. Euro Notes,
13.00%, 05/01/09 9,500,000 9,357,500
---------------------------------------------------------------
25,553,000
---------------------------------------------------------------
FOODS-0.45%
Volume Services America Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
03/01/09 12,000,000 11,040,000
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-2.94%
MGM Grand, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 12,240,000 12,484,800
---------------------------------------------------------------
Resort at Summerlin LP-Series B,
Sr. Unsec. Sub. Notes, 13.00%,
12/15/07 25,769,000 16,878,695
---------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 42,200,000 42,833,000
---------------------------------------------------------------
72,196,495
---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.68%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 19,300,000 20,072,000
---------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(e) 20,650,000 21,166,250
---------------------------------------------------------------
41,238,250
---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.37%
Triad Hospitals, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/15/09 8,915,000 9,182,450
---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.48%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
06/15/09 12,400,000 11,873,000
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
HEALTH CARE (SPECIALIZED SERVICES)-0.15%
Team Health Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
03/15/09 $ 4,335,000 $ 3,728,100
---------------------------------------------------------------
HOMEBUILDING-0.27%
Lennar Corp., Sr. Notes, 9.95%,
05/01/10(e) 6,775,000 6,673,375
---------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-1.97%
Falcon Products, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.38%, 06/15/09 12,065,000 11,642,725
---------------------------------------------------------------
O'Sullivan Industries, Inc., Sr.
Sub. Notes, 13.38%,
10/15/09(b)(e) 21,000,000 20,317,500
---------------------------------------------------------------
Winsloew Furniture, Inc.-Series
B, Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 17,870,000 16,529,750
---------------------------------------------------------------
48,489,975
---------------------------------------------------------------
IRON & STEEL-0.71%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(d) 28,939,000 4,485,545
---------------------------------------------------------------
GS Technologies Operating Co.,
Inc., Sr. Gtd. Notes, 12.00%,
09/01/04 13,285,000 3,387,675
---------------------------------------------------------------
Sheffield Steel Corp.-Series B,
First Mortgage Notes, 11.50%,
12/01/05 13,500,000 9,517,500
---------------------------------------------------------------
17,390,720
---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.92%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 29,375,000 22,692,188
---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.54%
National Equipment
Services-Series B, Sr. Unsec.
Sub. Notes, 10.00%, 11/30/04 16,000,000 13,360,000
---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.09%
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 21,085,000 13,810,675
---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(d) 24,915,000 3,612,675
---------------------------------------------------------------
Jordan Industries, Inc.-Series D,
Sr. Unsec. Notes, 10.38%,
08/01/07 10,000,000 9,350,000
---------------------------------------------------------------
26,773,350
---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-5.10%
Berry Plastics Corp.,
Sr. Gtd. Sub. Notes, 12.25%,
04/15/04 13,000,000 12,285,000
---------------------------------------------------------------
Series C, Sr. Gtd. Sub. Notes,
12.25%, 04/15/04 4,750,000 4,530,313
---------------------------------------------------------------
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 20,800,000 18,408,000
---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Unsec. Notes, 11.00%, 02/01/08 22,835,000 13,130,125
---------------------------------------------------------------
Flextronics International Ltd.
(Singapore), Sr. Sub Yankee
Notes, 9.88%, 07/01/10
(Acquired 06/26/00; Cost
$6,151,640)(c) 6,200,000 6,308,500
---------------------------------------------------------------
Knowles Electronics, Inc., Sr.
Sub. Notes, 13.13%, 10/15/09(e) 17,000,000 14,705,000
---------------------------------------------------------------
|
FS-9
PRINCIPAL MARKET
AMOUNT VALUE
MANUFACTURING (SPECIALIZED)-(CONTINUED)
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 $17,640,000 $ 17,375,400
---------------------------------------------------------------
Neenah Corp.,
Series B, Sr. Sub. Notes,
11.13%, 05/01/07 4,000,000 3,080,000
---------------------------------------------------------------
Series D, Sr. Sub. Notes,
11.13%, 05/01/07 15,000,000 11,550,000
---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 16,740,000 15,149,700
---------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/10; Cost $8,580,810)(c) 8,700,000 8,721,750
---------------------------------------------------------------
125,243,788
---------------------------------------------------------------
METALS MINING-1.71%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 28,800,000 23,184,000
---------------------------------------------------------------
Doe Run Resources Corp.
(The)-Series B, Sr. Unsec. Gtd.
Sub. Notes, 11.25%, 03/15/05 21,000,000 8,505,000
---------------------------------------------------------------
Metal Management, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
05/15/08 20,500,000 10,352,500
---------------------------------------------------------------
42,041,500
---------------------------------------------------------------
NATURAL GAS-0.50%
Western Gas Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
06/15/09 12,000,000 12,240,000
---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.36%
Global Imaging Systems, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/07 10,300,000 8,909,500
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.53%
Pride International, Inc., Sr.
Unsec. Notes, 10.00%, 06/01/09 12,735,000 13,053,375
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-4.09%
Abraxas Petroleum Corp.,
Series A, Sr. Gtd. Sub. Notes,
11.50%, 11/01/04 8,644,000 6,958,420
---------------------------------------------------------------
Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 13,000,000 13,422,500
---------------------------------------------------------------
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 17,275,000 17,620,500
---------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 23,750,000 23,868,750
---------------------------------------------------------------
Pioneer Natural Resources Co.,
Sr. Unsec. Gtd. Notes, 9.63%,
04/01/10 13,000,000 13,520,000
---------------------------------------------------------------
Pogo Producing Co.-Series B, Sr.
Unsec. Sub. Notes, 10.38%,
02/15/09 18,335,000 18,793,375
---------------------------------------------------------------
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 13,145,000 6,441,050
---------------------------------------------------------------
100,624,595
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (REFINING & MARKETING)-0.63%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 $17,980,000 $ 15,372,900
---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.78%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 18,370,000 19,265,538
---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.82%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 20,439,125 20,132,538
---------------------------------------------------------------
RAILROADS-1.58%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 16,400,000 15,826,000
---------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 33,150,000 22,956,375
---------------------------------------------------------------
38,782,375
---------------------------------------------------------------
RESTAURANTS-0.14%
AFC Enterprises, Sr. Unsec. Sub.
Notes, 10.25%, 05/15/07 3,625,000 3,480,000
---------------------------------------------------------------
RETAIL (SPECIALTY)-1.54%
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 14,245,000 13,176,625
---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 27,650,000 17,281,250
---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 7,520,000 7,332,000
---------------------------------------------------------------
37,789,875
---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.89%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 17,315,000 16,102,950
---------------------------------------------------------------
J. Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 7,000,000 5,722,500
---------------------------------------------------------------
21,825,450
---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.68%
MDC Corp. Inc. (Canada), Sr.
Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 17,420,000 16,810,300
---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.78%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 18,400,000 19,274,000
---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.58%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 14,930,000 14,183,500
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-9.75%
AirGate PCS, Inc., Sr. Disc. Sub.
Notes, 13.50%, 10/01/09(a)(b) 28,400,000 16,898,000
---------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr.
Unsec. Gtd. Disc. Notes,
12.88%, 02/15/10(a) 25,300,000 13,282,500
---------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 10,000,000 10,200,000
---------------------------------------------------------------
|
FS-10
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-(CONTINUED)
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(a) $18,144,000 $ 13,562,640
---------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes,
14.00%, 07/15/10 (Acquired
06/30/00; Cost
$2,998,839)(a)(b)(c) 5,900,000 3,068,000
---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 18,000,000 15,930,000
---------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 19,650,000 14,049,750
---------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08 29,040,000 31,363,200
---------------------------------------------------------------
Nextel International, Inc., Sr.
Unsec. Disc. Notes, 12.13%,
04/15/08(a) 37,500,000 24,627,375
---------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 20,300,000 11,875,500
---------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 38,000,000 35,429,680
---------------------------------------------------------------
Spectrasite Holdings, Inc.,
Sr. Disc. Notes, 12.00%,
07/15/08(a) 30,300,000 20,149,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%,
04/15/09(a) 21,230,000 12,419,550
---------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd.
Disc. Notes, 14.00%,
04/15/10(a)(b)(e) 28,700,000 16,753,625
---------------------------------------------------------------
239,609,320
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-8.43%
360 networks Inc. (Canada),
Sr. Unsec. Yankee Notes,
12.00%, 08/01/09 17,210,000 16,435,550
---------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 9,065,000 9,336,950
---------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 20,200,000 18,079,000
---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 19,500,000 15,307,500
---------------------------------------------------------------
FirstCom Corp., Sr. Notes,
14.00%, 10/27/07 30,990,000 33,856,575
---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04 20,000,000 16,100,000
---------------------------------------------------------------
RSL Communications PLC (United
Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
12.88%, 03/01/10 (Acquired
02/14/00-03/23/00; Cost
$15,451,800)(c) 15,740,000 11,726,300
---------------------------------------------------------------
12.00%, 11/01/08 14,500,000 10,657,500
---------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands),
Sr. Unsec. Yankee Notes,
13.25%, 05/15/08 12,810,000 13,130,250
---------------------------------------------------------------
Sr. Yankee Notes, 13.25%,
05/15/08 19,100,000 19,577,500
---------------------------------------------------------------
Viatel, Inc.,
Sr. Sec. Notes, 11.25%,
04/15/08 28,250,000 21,328,750
---------------------------------------------------------------
Sr. Unsec. Notes, 11.50%,
03/15/09(e) 28,417,000 21,739,005
---------------------------------------------------------------
207,274,880
---------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE-10.03%
Alestra S.A. (Mexico),
Sr. Unsec. Yankee Notes,
12.13%, 05/15/06(e) $12,000,000 $ 11,160,000
---------------------------------------------------------------
Sr. Yankee Notes, 12.63%,
05/15/09(e) 7,535,000 6,781,500
---------------------------------------------------------------
GT Group Telecom Inc. (Canada),
Sr. Disc. Yankee Notes, 13.25%,
02/01/10(a)(b)(e) 28,900,000 16,039,500
---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(a) 79,650,000 44,288,586
---------------------------------------------------------------
IMPSAT Fiber Networks, Inc., Sr.
Yankee Notes, 13.75%, 02/15/05
(Acquired 02/11/00; Cost
$12,000,000)(c) 12,000,000 10,860,000
---------------------------------------------------------------
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(a) 24,720,000 19,652,400
---------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 53,750,000 18,946,875
---------------------------------------------------------------
NEXTLINK Communications, Inc.,
Sr. Disc. Notes, 12.13%,
12/01/09(a)(e) 23,500,000 13,747,500
---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%,
06/01/09(a) 25,855,000 16,159,375
---------------------------------------------------------------
NTL Communications Corp.-Series
B, Sr. Unsec. Notes, 11.50%,
10/01/08 12,320,000 12,381,600
---------------------------------------------------------------
PF.Net Communications Inc., Sr.
Notes, 13.75%, 05/15/10
(Acquired 05/05/00; Cost
$18,200,000)(b)(c) 18,200,000 18,427,500
---------------------------------------------------------------
PTC International Finance II S.A.
(Luxembourg), Sr. Unsec. Gtd.
Yankee Sub. Notes, 11.25%,
12/01/09 11,400,000 11,628,000
---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 42,500,000 46,431,250
---------------------------------------------------------------
246,504,086
---------------------------------------------------------------
TEXTILES (APPAREL)-0.49%
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 11,975,000 12,034,875
---------------------------------------------------------------
TRUCKERS-0.56%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 13,530,000 13,699,125
---------------------------------------------------------------
TRUCKS & PARTS-1.27%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 10,665,000 7,732,125
---------------------------------------------------------------
North American Van Lines Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(e) 24,750,000 23,388,750
---------------------------------------------------------------
31,120,875
---------------------------------------------------------------
WASTE MANAGEMENT-2.12%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(e) 61,990,000 52,071,600
---------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$2,562,241,584) 2,168,998,325
---------------------------------------------------------------
|
FS-11
MARKET
SHARES VALUE
STOCKS & OTHER EQUITY INTERESTS-5.09%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.16%
UnitedGlobalCom Inc.-Class A(f) 83,896 $ 3,922,138
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.08%
Earthwatch Inc.-Series C, $1.20,
Conv. Pfd. (Acquired 03/14/97;
Cost $4,824)(c) 103,236 1,884,057
---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.03%
Tenet Healthcare Corp.(f) 26,460 714,420
---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.04%
Abraxas Petroleum Corp.(f) 736,227 1,104,340
---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.06%
Convergent Communications,
Inc.(f) 179,280 1,434,240
---------------------------------------------------------------
SHIPPING-0.03%
Pegasus Shipping Hellas Co.
(Bermuda) 15,000 825,000
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-3.11%
AirGate PCS, Inc.(f) 61,003 3,206,470
---------------------------------------------------------------
Celcaribe S.A., Ordinary Trust
Ctfs. (Acquired
05/17/94-01/23/97; Cost
$0)(c)(f) 2,276,400 2,845,500
---------------------------------------------------------------
Clearnet Communications
Inc.-Class A-ADR (Canada)(f) 100,716 2,796,443
---------------------------------------------------------------
Dobson Communications
Corp.-$122.50 PIK Pfd 22,097 22,041,757
---------------------------------------------------------------
Microcell Telecommunications
Inc.-Class B-ADR (Canada)(f) 253,257 9,148,909
---------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 104,390 6,387,363
---------------------------------------------------------------
Powertel, Inc.(f) 45,663 3,239,219
---------------------------------------------------------------
WebLink Wireless, Inc.(f) 1,260,940 16,707,455
---------------------------------------------------------------
World Access, Inc.-Series D,
Conv. Pfd. (Acquired 03/03/00;
Cost $16,365,448)(c)(f) 15,511 9,965,818
---------------------------------------------------------------
76,338,934
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.55%
FirstCom Corp.(f) 804,650 12,120,041
---------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 34,902 868,187
---------------------------------------------------------------
RSL Communications, Ltd.-Class A
(United Kingdom)(f) 179,444 2,052,391
---------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(f) 452,021 19,493,406
---------------------------------------------------------------
Viatel, Inc.(f) 121,387 3,467,116
---------------------------------------------------------------
38,001,141
---------------------------------------------------------------
TELEPHONE-0.03%
ICG Communications, Inc.(f) 39,600 873,675
---------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost
$73,323,866) 125,097,945
---------------------------------------------------------------
|
MARKET
SHARES VALUE
WARRANTS & OTHER INTERESTS-0.35%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Inc., expiring 10/22/07
(Acquired 03/12/98-02/01/00;
Cost $270)(c) 47,295 $ 118,238
---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.00%
Sterling Chemicals Holdings,
expiring 08/15/08 7,500 65,625
---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.00%
Equinix Inc., expiring 12/01/07
(Acquired 05/30/00; Cost
$0)(c)(g) 15,110 0
---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.02%
Cybernet Internet Services
International, Inc., expiring
07/01/09 (Acquired 10/18/99;
Cost $0)(c)(g) 23,000 465,901
---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc., expiring
02/01/04 18,802 19,014
---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.00%
Resort At Summerlin LP, expiring
12/15/07 21,197 0
---------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-0.05%
O'Sullivan Industries, Inc.,
expiring 11/05/09(g) 42,000 945,067
---------------------------------------------------------------
Winsloew Furniture, Inc.,
expiring 08/15/07 (Acquired
12/06/99; Cost $0)(c)(g) 17,870 178,700
---------------------------------------------------------------
1,123,767
---------------------------------------------------------------
IRON & STEEL-0.00%
Bar Technologies, Inc., expiring
04/01/01(g) 6,000 0
---------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(h) 15,990 160
---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.00%
Abraxas Petroleum Corp.-Rts(i) 736,228 0
---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.05%
Cellnet Data System, expiring
10/01/07 (Acquired
09/24/97-10/15/97; Cost
$0)(c)(g) 10,000 2,600
---------------------------------------------------------------
Globalstar Telecom, expiring
02/15/04 (Acquired 01/05/00;
Cost $11,790)(c) 45 0
---------------------------------------------------------------
KMC Telecom Holdings, Inc.,
expiring 04/15/08 35 163
---------------------------------------------------------------
Nextel International, Inc.,
expiring 04/15/07(g) 39,500 1,194,875
---------------------------------------------------------------
1,197,638
---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.00%
Long Distance International,
Inc., expiring 04/13/08(g) 25,620 0
---------------------------------------------------------------
|
FS-12
MARKET
SHARES VALUE
TELEPHONE-0.23%
Esat Telecom Group PLC (Ireland),
expiring 02/01/07 (Acquired
06/16/97-01/05/00; Cost
$7,245)(c) 25,565 $ 5,560,644
---------------------------------------------------------------
Total Warrants & Other
Interests (Cost $414,303) 8,550,987
---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-3.94%
6.63%, 05/31/02 $34,000,000 34,150,620
---------------------------------------------------------------
6.75%, 05/15/05 38,000,000 38,908,580
---------------------------------------------------------------
6.50%, 02/15/10 23,000,000 23,790,740
---------------------------------------------------------------
96,849,940
---------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $96,364,844) 96,849,940
---------------------------------------------------------------
MARKET
SHARES VALUE
MONEY MARKET FUNDS-1.72%
STIC Liquid Assets Portfolio(j) 21,067,923 $ 21,067,923
---------------------------------------------------------------
STIC Prime Portfolio(j) 21,067,923 21,067,923
---------------------------------------------------------------
Total Money Market Funds
(Cost $42,135,846) 42,135,846
---------------------------------------------------------------
TOTAL INVESTMENTS-99.34% (Cost
$2,774,480,443) 2,441,633,043
---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.66% 16,324,930
---------------------------------------------------------------
NET ASSETS-100.00% $2,457,957,973
===============================================================
|
Investment Abbreviations: ADR - American Depositary Receipt PIK - Payment In Kind Conv. - Convertible Rts. - Rights Ctfs. - Certificates Sec. - Secured Deb. - Debentures Sr. - Senior Disc. - Discounted Sub. - Subordinated Gtd. - Guaranteed Unsec. - Unsecured Pfd. - Preferred |
Notes to Schedule of Investments:
(a) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/00 was $160,998,508
which represented 6.55% of the Fund's net assets.
(d) Defaulted security. Currently, the issuer is in default with respect to a
portion of interest payments.
(e) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(f) Non-income producing security.
(g) Acquired as a part of a unit with or in exchange for other securities.
(h) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has not owned enough of the outstanding voting securities of the issuer
to have control (as defined in the Investment Company Act of 1940) of that
issuer. The market value as of 06/30/00 represented 0.00% of the Fund's net
assets.
(i) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(j) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-13
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED)
-------------- --------------
ASSETS:
Investments, at market value (cost
$2,686,949,204 and $2,774,480,443,
respectively) $2,356,457,846 $2,441,633,043
---------------------------------------------------------------------------------------------
Receivables for:
Investments sold 19,441,006 14,666,345
---------------------------------------------------------------------------------------------
Fund shares sold 2,552,311 3,733,151
---------------------------------------------------------------------------------------------
Dividends and interest 58,427,054 57,648,913
---------------------------------------------------------------------------------------------
Investment for deferred compensation plan 87,353 84,858
---------------------------------------------------------------------------------------------
Other assets 262,688 14,989
---------------------------------------------------------------------------------------------
Total assets 2,437,228,258 2,517,781,299
---------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 38,204,370 34,693,114
---------------------------------------------------------------------------------------------
Fund shares reacquired 11,575,972 9,384,520
---------------------------------------------------------------------------------------------
Dividends 10,792,466 11,874,999
---------------------------------------------------------------------------------------------
Deferred compensation plan 87,353 84,858
---------------------------------------------------------------------------------------------
Accrued advisory fees 981,404 993,902
---------------------------------------------------------------------------------------------
Accrued administrative services fees 15,047 14,723
---------------------------------------------------------------------------------------------
Accrued distribution fees 1,517,739 2,408,880
---------------------------------------------------------------------------------------------
Accrued trustees' fees 439 3,233
---------------------------------------------------------------------------------------------
Accrued transfer agent fees 344,285 328,861
---------------------------------------------------------------------------------------------
Accrued operating expenses 222,576 36,236
---------------------------------------------------------------------------------------------
Total liabilities 63,741,651 59,823,326
---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,373,486,607 $2,457,957,973
=============================================================================================
NET ASSETS:
Class A $1,056,453,189 $1,090,533,020
=============================================================================================
Class B $1,206,736,726 $1,252,962,645
=============================================================================================
Class C $ 110,296,692 $ 114,462,308
=============================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 150,860,590 153,636,597
=============================================================================================
Class B 172,126,117 176,303,478
=============================================================================================
Class C 15,771,552 16,145,681
=============================================================================================
Class A:
Net asset value and redemption price per share $ 7.00 $ 7.10
---------------------------------------------------------------------------------------------
Offering price per share:
(Net asset value divided
by 95.25%) $ 7.35 $ 7.45
=============================================================================================
Class B:
Net asset value and offering price per share $ 7.01 $ 7.11
=============================================================================================
Class C:
Net asset value and offering price per share $ 6.99 $ 7.09
=============================================================================================
|
See Notes to Financial Statements.
FS-14
STATEMENT OF OPERATIONS
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30, 2000 YEAR ENDED
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
------------- ------------- -----------------
INVESTMENT INCOME:
Interest $ 180,465,440 $ 155,351,624 $ 375,366,595
---------------------------------------------------------------------------------------------------------------
Dividends -- -- 1,457,300
---------------------------------------------------------------------------------------------------------------
Dividends -- affiliated issuers 2,209,329 2,051,763 936,102
---------------------------------------------------------------------------------------------------------------
Total investment income 182,674,769 157,403,387 377,759,997
---------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,537,550 6,556,146 16,396,698
---------------------------------------------------------------------------------------------------------------
Administrative services fee 107,029 91,982 177,468
---------------------------------------------------------------------------------------------------------------
Custodian fees 81,232 64,443 235,619
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class A 1,735,976 1,506,774 3,885,854
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class B 7,941,484 6,887,276 17,586,035
---------------------------------------------------------------------------------------------------------------
Distribution fees -- Class C 700,789 604,019 1,307,654
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class A 1,019,300 869,910 2,097,314
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class B 1,249,466 1,074,312 2,604,737
---------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class C 110,253 94,233 193,682
---------------------------------------------------------------------------------------------------------------
Trustees' fees 7,321 6,275 27,921
---------------------------------------------------------------------------------------------------------------
Other 550,567 447,527 1,290,693
---------------------------------------------------------------------------------------------------------------
Total expenses 21,040,967 18,202,897 45,803,675
---------------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (45,044) (37,293) (175,176)
---------------------------------------------------------------------------------------------------------------
Net expenses 20,995,923 18,165,604 45,628,499
---------------------------------------------------------------------------------------------------------------
Net investment income 161,678,846 139,237,783 332,131,498
---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
Net realized gain (loss) from investment securities (248,282,272) (212,556,807) (269,838,431)
---------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (113,824,748) (116,180,790) 1,279,047
---------------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (362,107,020) (328,737,597) (268,559,384)
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(200,428,174) $(189,499,814) $ 63,572,114
===============================================================================================================
|
See Notes to Financial Statements.
FS-15
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
SEVEN MONTHS ENDED YEAR YEAR
ENDED JUNE 30, ENDED ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income $ 161,678,846 $ 139,237,783 $ 332,131,498 $ 336,256,233
-------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (248,282,272) (212,556,807) (269,838,431) (188,887,632)
-------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (113,824,748) (116,180,790) 1,279,047 (359,473,146)
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (200,428,174) (189,499,814) 63,572,114 (212,104,545)
-------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (77,895,270) (67,278,486) (159,655,684) (170,021,135)
-------------------------------------------------------------------------------------------------------------------------------
Class B (81,662,712) (70,584,600) (165,609,472) (158,792,161)
-------------------------------------------------------------------------------------------------------------------------------
Class C (7,223,368) (6,207,027) (12,356,480) (6,792,770)
-------------------------------------------------------------------------------------------------------------------------------
Return of capital distributions:
Class A (2,891,943) -- (2,837,931) --
-------------------------------------------------------------------------------------------------------------------------------
Class B (3,303,456) -- (3,209,458) --
-------------------------------------------------------------------------------------------------------------------------------
Class C (292,296) -- (239,296) --
-------------------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- (3,427,039) (520,904) --
-------------------------------------------------------------------------------------------------------------------------------
Class B -- (3,595,446) (589,357) --
-------------------------------------------------------------------------------------------------------------------------------
Class C -- (316,174) (43,823) --
-------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (141,076,710) (121,569,405) (181,118,609) 142,435,247
-------------------------------------------------------------------------------------------------------------------------------
Class B (163,296,867) (133,739,372) (116,020,002) 448,570,951
-------------------------------------------------------------------------------------------------------------------------------
Class C (2,482,351) 135,582 27,659,521 101,384,122
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (680,553,147) (596,081,781) (550,969,381) 144,679,709
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,054,039,754 3,054,039,754 3,605,009,135 3,460,329,426
-------------------------------------------------------------------------------------------------------------------------------
End of period $2,373,486,607 $2,457,957,973 $3,054,039,754 $3,605,009,135
===============================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,422,514,855 $3,480,685,283 $3,735,858,478 $4,011,736,919
-------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (3,613,421) (12,271,700) (100,711) 5,490,138
-------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (714,923,469) (677,608,210) (465,051,403) (194,272,265)
-------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (330,491,358) (332,847,400) (216,666,610) (217,945,657)
-------------------------------------------------------------------------------------------------------------------------------
$2,373,486,607 $2,457,957,973 $3,054,039,754 $3,605,009,135
===============================================================================================================================
|
See Notes to Financial Statements.
FS-16
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Investment
Securities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
separate portfolios, each having an unlimited number of shares of beneficial
interest. Prior to June 1, 2000 the Fund was organized as a series portfolio of
AIM Funds Group. At a meeting held on February 3, 2000, the Board of Trustees of
AIM Funds Group approved an Agreement and Plan of Reorganization (the
"Reorganization") which reorganized the Fund as a series portfolio of the Trust.
Shareholders of the Fund approved the Reorganization at a meeting held on May
31, 2000. Pursuant to the Reorganization, the Fund's fiscal year-end was changed
from December 31 to July 31. This report includes financial information for the
period ended July 31, 2000 (seven months), the six months ended June 30, 2000
and the year ended December 31, 1999. Financial information for the six months
ended June 30, 2000 is unaudited. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is to achieve a high
level of current income. The Fund will also consider the possibility of capital
growth when it purchases and sells securities. Debt securities of less than
investment grade are considered "high-risk" securities (commonly referred to as
junk bonds). These bonds may involve special risks in addition to the risks
associated with higher rated debt securities. High yield bonds may be more
susceptible to real or perceived adverse economic conditions than higher grade
bonds. Also, the secondary market in which high yield bonds are traded may be
less liquid than the market for higher grade bonds.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange
(except convertible bonds) is valued at its last sales price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales on a particular day, the security is
valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On July 31, 2000, undistributed net investment income was increased by
$8,077,489, undistributed net realized gains decreased by $1,589,794 and
paid-in capital was decreased by $6,487,695 a result of differing book/tax
treatment of market discount and other reclassifications. Net assets of the
Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income are declared daily and paid
monthly and are recorded on ex-dividend date. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The
FS-17
Fund may elect to use a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $713,198,778 which may be
carried forward to offset future taxable gains, if any, which expires in
varying increments, if not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.625% on the first
$200 million of the Fund's average daily net assets, plus 0.55% on the next $300
million of the Fund's average daily net assets, plus 0.50% on the next $500
million of the Fund's average daily net assets, plus 0.45% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the year ended December 31, 1999, AIM was
paid $107,029, $91,982 and $177,468, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $1,463,943, $1,272,274 and $2,941,102, respectively, for such
services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the seven-month period ended
July 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
$1,735,976, $7,941,484 and $700,789, respectively, as compensation under the
Plans. For the six months ended June 30, 2000, the Class A, Class B and Class C
shares paid AIM Distributors $1,506,774, $6,887,276 and $604,019, respectively,
as compensation under the Plans. For the year ended December 31, 1999, the Class
A, Class B and Class C shares paid AIM Distributors $3,885,854, $17,586,035 and
$1,307,654, respectively, as compensation under the Plans.
AIM Distributors received commissions of $265,022, $234,338 and $800,330 from
sales of the Class A shares of the Fund during the seven-month period ended July
31, 2000, the six months ended June 30, 2000 and the year ended December 31,
1999, respectively. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM Distributors received
$136,582, $127,185 and $423,986, respectively, in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors. During the seven-month period ended July 31, 2000, the
six months ended June 30, 2000 and the year ended December 31, 1999, the Fund
paid legal fees of $4,817, $3,776 and $9,734, respectively, for services
rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Trust's
trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $18,336, $15,037 and $39,420, respectively, and reductions in custodian fees of $26,708, $22,256 and $135,756, respectively, under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $45,044, $37,293 and $175,176 for the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, respectively.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
FS-18
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. Prior to May 28, 1999, the commitment
fee rate was 0.05%. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the seven-month period ended July 31, 2000 was $586,121,511 and $829,386,205, respectively, and during the six months ended June 30, 2000 was $495,609,987 and $692,814,640, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, is as follows:
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------- -------------
Aggregate unrealized
appreciation of investment
securities $ 109,030,572 $ 103,969,470
-------------------------------------------------------------
Aggregate unrealized
(depreciation) of investment
securities (441,246,620) (440,300,434)
-------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investment
securities $(332,216,048) $(336,330,964)
=============================================================
Cost of investments for tax purposes for the seven months
ended July 31, 2000 and the six months ended June 30, 2000
are $2,688,673,894 and $2,777,964,007, respectively.
|
FS-19
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
--------------------------- --------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ------------- ---------------
Sold:
Class A 29,346,531 $ 221,060,411 27,824,466 $ 210,254,406 87,500,179 $ 744,553,292
-------------------------------------------------------------------------------------------------------------------
Class B 18,742,023 140,014,267 17,869,910 128,818,625 46,805,949 400,392,138
-------------------------------------------------------------------------------------------------------------------
Class C 6,229,247 47,023,748 5,725,634 42,218,363 10,550,688 89,612,238
-------------------------------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 6,800,148 50,644,208 5,938,164 44,606,398 12,419,332 104,772,227
-------------------------------------------------------------------------------------------------------------------
Class B 5,317,053 39,676,757 3,922,082 34,822,144 10,055,937 84,833,641
-------------------------------------------------------------------------------------------------------------------
Class C 623,821 4,641,763 366,455 4,059,693 975,391 8,192,752
-------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (54,468,978) (412,781,329) (49,308,922) (376,430,209) (121,294,314) (1,030,444,128)
-------------------------------------------------------------------------------------------------------------------
Class B (45,276,418) (342,987,891) (38,831,973) (297,380,141) (71,318,813) (601,245,781)
-------------------------------------------------------------------------------------------------------------------
Class C (7,191,956) (54,147,862) (6,056,848) (46,142,474) (8,365,761) (70,145,469)
-------------------------------------------------------------------------------------------------------------------
(39,878,529) $(306,855,928) (32,551,032) $(255,173,195) (32,671,412) $ (269,479,090)
===================================================================================================================
DECEMBER 31, 1998
------------------------------
SHARES AMOUNT
------------ ---------------
Sold:
Class A 113,312,954 $ 1,099,027,598
------------------------------------------------------
Class B 81,983,594 793,346,240
------------------------------------------------------
Class C 31,084,188 309,774,327
------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 11,706,241 112,173,341
------------------------------------------------------
Class B 8,418,057 80,427,189
------------------------------------------------------
Class C 480,845 4,500,556
------------------------------------------------------
Reacquired:
Class A (110,296,515) (1,068,765,692)
------------------------------------------------------
Class B (44,848,230) (425,202,478)
------------------------------------------------------
Class C (21,196,339) (212,890,761)
------------------------------------------------------
70,644,795 $ 692,390,320
======================================================
|
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
----------------------------------------------------------------------------------------------------
SIX MONTHS
SEVEN MONTHS ENDED YEAR ENDED DECEMBER 31,
ENDED JUNE 30, 2000 ------------------------------------------------------------
JULY 31, 2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- ---------- ---------- ---------- ---------- --------
Net asset value, beginning
of period $ 8.07 $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43 $ 8.93
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment
operations:
Net investment income 0.47 0.40 0.85 0.92 0.90 0.92 0.93
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.03) (0.93) (0.66) (1.40) 0.28 0.46 0.52
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment
operations (0.56) (0.53) 0.19 (0.48) 1.18 1.38 1.45
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net
investment income (0.49) (0.44) (0.87) (0.91) (0.90) (0.93) (0.95)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) -- (0.02) -- -- -- --
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.51) (0.44) (0.89) (0.91) (0.90) (0.93) (0.95)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of
period $ 7.00 $ 7.10 $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43
=========================== ========== ========== ========== ========== ========== ========== ========
Total return(a) (7.12)% (6.56)% 2.21% (5.10)% 12.52% 15.44% 16.86%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,056,453 $1,090,533 $1,364,502 $1,670,863 $1,786,352 $1,272,974 $886,106
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of expenses to
average net assets 0.93%(b) 0.93%(b) 0.92% 0.85% 0.90% 0.97% 0.96%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets 10.79%(b) 10.72%(b) 10.06% 9.45% 9.08% 9.67% 9.95%
=========================== ========== ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 19% 79% 76% 80% 77% 61%
=========================== ========== ========== ========== ========== ========== ========== ========
|
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $1,193,177,640 and
$1,212,042,030 for July 31, 2000 and June 30, 2000, respectively.
FS-20
NOTE 8-FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS B
----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ------------------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- ---------- ---------- ---------- ---------- --------
Net asset value, beginning
of period $ 8.07 $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.92
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment
operations:
Net investment income 0.44 0.38 0.79 0.84 0.83 0.85 0.85
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on
securities (both
realized and
unrealized) (1.03) (0.93) (0.66) (1.40) 0.28 0.47 0.52
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment
operations (0.59) (0.55) 0.13 (0.56) 1.11 1.32 1.37
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net
investment income (0.45) (0.41) (0.80) (0.84) (0.83) (0.86) (0.87)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) -- (0.02) -- -- -- --
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.47) (0.41) (0.82) (0.84) (0.83) (0.86) (0.87)
--------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of
period $ 7.01 $ 7.11 $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42
=========================== ========== ========== ========== ========== ========== ========== ========
Total return(a) (7.49)% (6.99)% 1.46% (5.90)% 11.71% 14.68% 15.91%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,206,737 $1,252,963 $1,559,864 $1,820,899 $1,647,801 $1,068,060 $557,926
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of expenses to
average net assets 1.69%(b) 1.69%(b) 1.68% 1.61% 1.65% 1.68% 1.73%
=========================== ========== ========== ========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets 10.03%(b) 9.96%(b) 9.30% 8.69% 8.33% 8.95% 9.18%
=========================== ========== ========== ========== ========== ========== ========== ========
Portfolio turnover rate 23% 19% 79% 76% 80% 77% 61%
=========================== ========== ========== ========== ========== ========== ========== ========
|
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,364,593,065 and
$1,385,023,658 for July 31, 2000 and June 30, 2000, respectively.
CLASS C
--------------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS ENDED YEAR ENDED (DATE SALES
SEVEN MONTHS ENDED JUNE 30, DECEMBER 31, COMMENCED)
JULY 31, 2000 -------------------- TO
2000 (UNAUDITED) 1999 1998(a) 1997
------------------ ---------------- -------- -------- --------------
Net asset value, beginning of period $ 8.05 $ 8.05 $ 8.74 $ 10.14 $ 10.04
----------------------------------------------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.44 0.38 0.78 0.82 0.35
----------------------------------------------- -------- -------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) (1.03) (0.93) (0.65) (1.38) 0.10
----------------------------------------------- -------- -------- -------- -------- -------
Total from investment operations (0.59) (0.55) 0.13 (0.56) 0.45
----------------------------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.45) (0.41) (0.80) (0.84) (0.35)
----------------------------------------------- -------- -------- -------- -------- -------
Return of capital (0.02) -- (0.02) -- --
----------------------------------------------- -------- -------- -------- -------- -------
Total distributions (0.47) (0.41) (0.82) (0.84) (0.35)
----------------------------------------------- -------- -------- -------- -------- -------
Net asset value, end of period $ 6.99 $ 7.09 $ 8.05 $ 8.74 $ 10.14
=============================================== ======== ======== ======== ======== =======
Total return(b) (7.51)% (7.01)% 1.46% (5.92)% 4.49%
=============================================== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,297 $114,462 $129,675 $113,246 $26,177
=============================================== ======== ======== ======== ======== =======
Ratio of expenses to average net assets 1.69%(c) 1.69%(c) 1.68% 1.61% 1.68%(d)
=============================================== ======== ======== ======== ======== =======
Ratio of net investment income to average net
assets 10.03%(c) 9.96%(c) 9.30% 8.69% 8.30%(d)
=============================================== ======== ======== ======== ======== =======
Portfolio turnover rate 23% 19% 79% 76% 80%
=============================================== ======== ======== ======== ======== =======
|
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $120,417,254 and
$121,467,555 for July 31, 2000 and June 30, 2000, respectively.
(d) Annualized.
FS-21
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of AIM Investment Securities Funds:
We have audited the accompanying statement of assets and
liabilities of the AIM High Yield Fund II (a series of AIM
Investment Securities Funds) including the schedule of
investments, as of July 31, 2000, and the related statement of
operations for the year then ended, the statement of changes
in net assets, and the financial highlights for the year then
ended and for the period September 30, 1998 (date operations
commenced) through July 31, 1999. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on
our audits.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
July 31, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of AIM High Yield Fund II as
of July 31, 2000, the results of its operations for the year
then ended, the changes in its net assets, and the financial
highlights for the year then ended and for the period
September 30, 1998 (date operations commenced) through July
31, 1999, in conformity with accounting principles generally
accepted in the United States of America.
/S/ KPMG LLP September 1, 2000 Houston, Texas |
FS-22
SCHEDULE OF INVESTMENTS
July 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS &
NOTES-87.50%
AIR FREIGHT-0.73%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 980,000 $ 1,009,400
--------------------------------------------------------------
AIRLINES-1.87%
Airplanes Pass Through Trust-Series
D, Gtd. Sub. Bonds, 10.88%,
03/15/19 1,975,400 1,587,540
--------------------------------------------------------------
Dunlop Standard Aerospace Holdings
PLC (United Kingdom), Sr. Unsec.
Yankee Sub. Notes, 11.88%,
05/15/09 1,000,000 997,500
--------------------------------------------------------------
2,585,040
--------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.19%
Advance Stores Co., Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 2,000,000 1,645,000
--------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 1,500,000 1,387,500
--------------------------------------------------------------
3,032,500
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-6.02%
Charter Communications Holdings
LLC,
Sr. Unsec. Notes, 10.25%,
01/15/10 1,750,000 1,710,625
--------------------------------------------------------------
Sr. Unsec. Disc. Notes, 9.92%,
04/01/11(a) 1,750,000 1,006,250
--------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Unsec.
Disc. Yankee Notes, 11.75%,
12/15/05(a) 1,250,000 1,193,750
--------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(a) 1,500,000 1,042,500
--------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(a) 2,000,000 1,065,000
--------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B, Sr.
Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(a) 5,000,000 2,325,000
--------------------------------------------------------------
8,343,125
--------------------------------------------------------------
BUILDING MATERIALS-1.78%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 1,250,000 1,268,750
--------------------------------------------------------------
Dayton Superior Corp., Sr. Sub.
Notes, 13.00%, 06/15/09(b)(e) 1,200,000 1,197,000
--------------------------------------------------------------
2,465,750
--------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.51%
Sterling Chemicals, Inc.-Series B,
Sr. Gtd. Sec. Sub. Notes, 12.38%,
07/15/06 2,000,000 2,085,000
--------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.19%
Key Plastics Holdings, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 03/15/07(c) 2,540,000 266,700
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
COMMUNICATIONS EQUIPMENT-1.10%
Dictaphone Corp., Sr. Sub. Gtd.
Notes, 11.75%, 08/01/05 $1,500,000 $ 1,522,500
--------------------------------------------------------------
COMPUTERS (HARDWARE)-0.31%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 8.00%, 05/01/03
(Acquired 03/07/00; Cost
$480,000)(d) 600,000 435,000
--------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.64%
Earthwatch Inc., Sr. Disc. Notes,
13.00%, 07/15/07 (Acquired
07/07/99; Cost
$1,711,525)(a)(b)(d) 2,500,000 1,743,750
--------------------------------------------------------------
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 2,420,000 1,917,850
--------------------------------------------------------------
3,661,600
--------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.78%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 1,550,000 1,073,375
--------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.25%
Fleming Cos., Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.63%,
07/31/07 2,000,000 1,735,000
--------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.80%
Morrison Knudsen Corp., Sr. Notes,
11.00%, 07/01/10(e) 1,100,000 1,105,500
--------------------------------------------------------------
ENTERTAINMENT-0.92%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $1,300,000)(d) 1,300,000 1,277,250
--------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.37%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(e) 2,000,000 1,810,000
--------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Gtd. Sub. Euro Notes, 13.00%,
05/01/09 1,500,000 1,477,500
--------------------------------------------------------------
3,287,500
--------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-3.40%
Hollywood Casino Corp., Sr. Sec.
Gtd. Sub. Notes, 11.25%, 05/01/07 1,000,000 1,025,000
--------------------------------------------------------------
MGM Grand, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 1,110,000 1,140,525
--------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 2,500,000 2,537,500
--------------------------------------------------------------
4,703,025
--------------------------------------------------------------
|
FS-23
PRINCIPAL MARKET
AMOUNT VALUE
HEALTH CARE (DRUGS-GENERIC &
OTHER)-2.67%
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 $2,000,000 $ 2,150,000
--------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(e) 1,500,000 1,552,500
--------------------------------------------------------------
3,702,500
--------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.10%
DJ Orthopedics, LLC, Sr. Unsec.
Gtd. Sub. Notes, 12.63%, 06/15/09 1,600,000 1,528,000
--------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.17%
Team Health Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
03/15/09 275,000 234,437
--------------------------------------------------------------
HOMEBUILDING-0.73%
Lennar Corp., Sr. Notes, 9.95%,
05/01/10(e) 1,000,000 1,010,000
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-2.11%
Falcon Products, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
06/15/09 1,085,000 1,049,737
--------------------------------------------------------------
O'Sullivan Industries, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
13.38%, 10/15/09(b) 1,000,000 940,000
--------------------------------------------------------------
Winsloew Furniture, Inc.-Series B,
Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 1,000,000 935,000
--------------------------------------------------------------
2,924,737
--------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.11%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 1,910,000 1,532,775
--------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.02%
Actuant Corp., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 05/01/09 (Acquired
07/21/00; Cost $986,750)(d) 1,000,000 1,005,000
--------------------------------------------------------------
Anthony Crane Rentals LP-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 3,250,000 1,795,625
--------------------------------------------------------------
2,800,625
--------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-3.29%
Brand Scaffold Services, Inc., Sr.
Unsec. Notes, 10.25%, 02/15/08 1,850,000 1,651,125
--------------------------------------------------------------
Flextronics International Ltd.
(Singapore), Sr. Sub Yankee
Notes, 9.88%, 07/01/10 (Acquired
06/26/00; Cost $654,852)(d) 660,000 678,975
--------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 1,225,000 1,206,625
--------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/00; Cost $986,300)(d) 1,000,000 1,025,000
--------------------------------------------------------------
4,561,725
--------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-4.23%
Chesapeake Energy Corp., Series B,
Sr. Unsec. Gtd. Sub. Notes,
9.63%, 05/01/05 1,500,000 1,492,500
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (EXPLORATION &
PRODUCTION)-4.23%-(CONTINUED)
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 $1,250,000 $ 1,281,250
--------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 2,000,000 2,085,000
--------------------------------------------------------------
Pioneer Natural Resources Co., Sr.
Unsec. Gtd. Notes, 9.63%,
04/01/10 955,000 1,000,362
--------------------------------------------------------------
5,859,112
--------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.76%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 1,000,000 1,055,000
--------------------------------------------------------------
PUBLISHING-0.74%
Ziff Davis Media, Inc., Sr. Sub.
Notes, 12.00%, 07/15/10(e) 1,000,000 1,020,000
--------------------------------------------------------------
RAILROADS-1.74%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 1,350,000 1,248,750
--------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes, 11.75%,
06/15/09(a) 1,500,000 1,162,500
--------------------------------------------------------------
2,411,250
--------------------------------------------------------------
RETAIL (SPECIALTY)-0.83%
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 800,000 626,000
--------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 890,000 520,650
--------------------------------------------------------------
1,146,650
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.18%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 1,550,000 1,639,125
--------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.67%
MSX International, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.38%, 01/15/08 975,000 921,375
--------------------------------------------------------------
SHIPPING-1.09%
Transportacion Maritima Mexicana
S.A. de C.V. (Mexico),
Sr. Yankee Unsec. Notes, 10.00%,
11/15/06 1,000,000 765,000
--------------------------------------------------------------
Yankee Notes, 8.50%, 10/15/00 750,000 744,375
--------------------------------------------------------------
1,509,375
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-12.94%
AirGate PCS, Inc., Sr. Disc. Sub.
Notes, 13.50%, 10/01/09(a)(b) 1,400,000 815,500
--------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr.
Unsec. Gtd. Disc. Notes, 12.88%,
02/15/10(a) 3,300,000 1,732,500
--------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 500,000 515,000
--------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(a) 1,500,000 1,151,250
--------------------------------------------------------------
|
FS-24
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-12.94%-(CONTINUED)
IPCS, Inc., Sr. Disc. Notes,
14.00%, 07/15/10(a)(b)(e) $1,000,000 $ 557,500
--------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 1,500,000 1,342,500
--------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 3,000,000 2,505,000
--------------------------------------------------------------
Nextel International, Inc.,
Sr. Notes, 12.75%, 08/01/10
(Acquired 07/26/00; Cost
$986,220)(d) 1,000,000 997,500
--------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.13%,
04/15/08(a) 2,500,000 1,658,150
--------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%, 01/15/07 1,700,000 1,045,500
--------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(a) 2,000,000 1,879,960
--------------------------------------------------------------
Spectrasite Holdings, Inc., Sr.
Unsec. Disc. Notes, 11.25%,
04/15/09(a) 1,900,000 1,168,500
--------------------------------------------------------------
TeleCorp PCS, Inc., Sr. Sub. Notes,
10.63%, 07/15/10(e) 1,350,000 1,377,000
--------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd.
Disc. Notes, 14.00%,
04/15/10(a)(b)(e) 2,000,000 1,180,000
--------------------------------------------------------------
17,925,860
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-5.51%
360networks Inc. (Canada), Sr.
Unsec. Yankee Notes, 12.00%,
08/01/09 1,060,000 991,100
--------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 200,000 175,000
--------------------------------------------------------------
FirstCom Corp., Sr. Notes, 14.00%,
10/27/07 2,000,000 2,245,000
--------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Unsec. Notes, 12.75%,
10/15/09 2,100,000 1,291,500
--------------------------------------------------------------
Versatel Telecom International N.V.
(Netherlands), Sr. Yankee Notes,
13.25%, 05/15/08 1,000,000 1,030,000
--------------------------------------------------------------
Viatel, Inc., Sr. Unsec. Notes,
11.50%, 03/15/09(e) 2,744,000 1,907,080
--------------------------------------------------------------
7,639,680
--------------------------------------------------------------
TELEPHONE-12.82%
Alestra S.A. (Mexico), Sr. Yankee
Notes, 12.63%, 05/15/09(e) 1,585,000 1,541,413
--------------------------------------------------------------
CFW Communications Co., Sr. Notes,
13.00%, 08/15/10 (Acquired
07/21/00; Cost $1,380,540)(d) 1,400,000 1,400,000
--------------------------------------------------------------
GT Group Telecom Inc. (Canada), Sr.
Disc. Yankee Notes, 13.25%,
02/01/10(a)(b)(e) 3,000,000 1,575,000
--------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(a) 3,000,000 1,686,720
--------------------------------------------------------------
IMPSAT Fiber Networks, Inc.,
Sr. Gtd. Notes, 12.13%, 07/15/03 575,000 508,875
--------------------------------------------------------------
Sr. Yankee Notes, 13.75%,
02/15/05 (Acquired 02/11/00;
Cost $1,725,000)(d) 1,725,000 1,569,750
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE-12.82%-(CONTINUED)
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(a) $3,875,000 $ 2,615,625
--------------------------------------------------------------
Jazztel PLC (United Kingdom), Sr.
Unsec. Yankee Notes, 14.00%,
04/01/09 500,000 472,500
--------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 2,295,000 579,488
--------------------------------------------------------------
NTL Communications Corp.-Series B,
Sr. Unsec. Notes, 12.38%,
10/01/08 1,900,000 1,249,250
--------------------------------------------------------------
NTL Inc.-Series B, Sr. Disc. Notes,
11.50%, 02/01/06(a) 1,000,000 940,000
--------------------------------------------------------------
PF.Net Communications Inc., Sr.
Notes, 13.75%, 05/15/10(b)(e) 1,500,000 1,147,500
--------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec. Notes,
15.00%, 07/01/08 2,270,000 2,479,975
--------------------------------------------------------------
17,766,096
--------------------------------------------------------------
TRUCKERS-1.36%
North American Van Lines Inc., Sr.
Sub. Notes, 13.38%, 12/01/09(e) 2,000,000 1,890,000
--------------------------------------------------------------
TRUCKS & PARTS-0.68%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 1,410,000 948,225
--------------------------------------------------------------
WASTE MANAGEMENT-1.89%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09 2,980,000 2,614,950
--------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$129,737,189) 121,229,762
--------------------------------------------------------------
|
SHARES
STOCKS & OTHER EQUITY
INTERESTS-5.41%
AIR FREIGHT-0.06%
Atlas Air, Inc.(f) 2,000 88,750
--------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.24%
Cybernet Internet Services
International, Inc.(f) 5,000 23,125
--------------------------------------------------------------
Cybernet Internet Services
International, Inc.-Wts.,
expiring 07/01/09(g) 1,000 10,250
--------------------------------------------------------------
GT Group Telecom Inc.-Class B
(Canada)(f) 18,000 293,625
--------------------------------------------------------------
327,000
--------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.20%
King Pharmaceuticals, Inc.(f) 9,000 271,125
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.03%
O'Sullivan Industries, Inc.-Wts.,
expiring 11/05/09 (Acquired
06/13/00; Cost $0)(d)(g) 2,000 30,000
--------------------------------------------------------------
Winsloew Furniture, Inc.-Wts.,
expiring 08/15/07(e)(g) 1,000 10,000
--------------------------------------------------------------
40,000
--------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.15%
Pride International, Inc.(f) 10,000 208,125
--------------------------------------------------------------
|
FS-25
MARKET
SHARES VALUE
OIL & GAS (EXPLORATION &
PRODUCTION)-0.20%
Comstock Resources, Inc.(f) 20,000 $ 138,750
--------------------------------------------------------------
Pogo Producing Co. 7,000 139,125
--------------------------------------------------------------
277,875
--------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.01%
Convergent Communications, Inc.(f) 1,620 8,302
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-2.63%
AirGate PCS, Inc.(f) 923 46,381
--------------------------------------------------------------
Alamosa PCS Holdings, Inc.(f) 7,000 140,000
--------------------------------------------------------------
Clearnet Communications Inc.-Class
A-ADR (Canada)(f) 6,500 182,812
--------------------------------------------------------------
Crown Castle International Corp.(f) 3,000 102,000
--------------------------------------------------------------
Dobson Communications Corp.,(f) 5,000 109,375
--------------------------------------------------------------
Microcell Telecommunications
Inc.-Class B-ADR (Canada)(f) 12,000 381,750
--------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 8,000 447,500
--------------------------------------------------------------
WebLink Wireless, Inc.(f) 100,500 1,011,281
--------------------------------------------------------------
World Access, Inc.-Series D, Conv.
Pfd. (Acquired 03/03/00; Cost
$1,900,625)(d) 1,998 1,223,775
--------------------------------------------------------------
3,644,874
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.41%
Call-Net Enterprises, Inc.(f) 15,000 30,000
--------------------------------------------------------------
FirstCom Corp.(f) 100,000 1,387,500
--------------------------------------------------------------
Long Distance International,
Inc.-Wts., expiring 04/13/08(g) 670 0
--------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 8,000 130,500
--------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(f) 8,000 256,000
--------------------------------------------------------------
Viatel, Inc.(f) 11,270 157,083
--------------------------------------------------------------
1,961,083
--------------------------------------------------------------
|
MARKET
SHARES VALUE
TELEPHONE-0.47%
ICG Communications, Inc.(f) 8,300 $ 126,575
--------------------------------------------------------------
Intermedia Communications Inc.(f) 4,500 79,312
--------------------------------------------------------------
NEXTLINK Communications, Inc.-Class
A(f) 3,000 99,188
--------------------------------------------------------------
PF.Net Communications Inc.-Wts,
expiring 05/15/10 (Acquired
07/19/00; Cost $0)(d)(g) 1,500 352,500
--------------------------------------------------------------
657,575
--------------------------------------------------------------
WASTE MANAGEMENT-0.01%
Allied Waste North America Inc.(f) 1,000 9,313
--------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost $5,865,712) 7,494,022
--------------------------------------------------------------
|
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-2.74%
6.75%, 05/15/05 $3,000,000 3,074,520
--------------------------------------------------------------
6.50%, 02/15/10 700,000 723,296
--------------------------------------------------------------
Total U.S. Treasury Notes (Cost
$3,773,133) 3,797,816
--------------------------------------------------------------
|
SHARES
MONEY MARKET FUNDS-3.40%
STIC Liquid Assets Portfolio(h) 2,351,478 2,351,478
--------------------------------------------------------------
STIC Prime Portfolio(h) 2,351,478 2,351,478
--------------------------------------------------------------
Total Money Market Funds (Cost
$4,702,956) 4,702,956
--------------------------------------------------------------
TOTAL INVESTMENTS-99.05% (Cost
$144,078,990) 137,224,556
--------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.95% 1,319,756
--------------------------------------------------------------
NET ASSETS-100.00% $138,544,312
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Wts. - Warrants
Notes to Schedule of Investments:
(a)Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b)Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(c)Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 07/31/00 was $11,738,500 which
represented 8.47% of the Fund's net assets.
(e)Represents a security sold under Rule 144A, which is exempt from registration
and may be resold to qualified institutional buyers in accordance with the
provisions of Rule 144A under the Securities Act of 1993, as amended.
(f)Non-income producing security.
(g)Acquired as part of a unit with or in exchange for other securities.
(h)The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-26
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
ASSETS:
Investments, at market value (cost
$144,078,990) $137,224,556
------------------------------------------------------------
Receivables for:
Investments sold 744,445
------------------------------------------------------------
Fund shares sold 1,286,945
------------------------------------------------------------
Dividends and interest 3,023,829
------------------------------------------------------------
Principal paydowns 15,996
------------------------------------------------------------
Investment for deferred compensation plan 9,552
------------------------------------------------------------
Other assets 687
------------------------------------------------------------
Total assets 142,306,010
------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,972,970
------------------------------------------------------------
Fund shares reacquired 1,058,157
------------------------------------------------------------
Dividends 557,763
------------------------------------------------------------
Deferred compensation plan 9,552
------------------------------------------------------------
Accrued advisory fees 43,714
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 83,466
------------------------------------------------------------
Accrued trustees' fees 1,329
------------------------------------------------------------
Accrued transfer agent fees 10,381
------------------------------------------------------------
Accrued operating expenses 20,131
------------------------------------------------------------
Total liabilities 3,761,698
------------------------------------------------------------
Net assets applicable to shares outstanding $138,544,312
============================================================
NET ASSETS:
Class A $ 59,932,447
============================================================
Class B $ 67,140,371
============================================================
Class C $ 11,471,494
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 5,980,900
============================================================
Class B 6,710,694
============================================================
Class C 1,147,715
============================================================
Class A:
Net asset value and redemption price per
share $ 10.02
------------------------------------------------------------
Offering price per share:
(Net asset value of $10.02 divided
by 95.25%) $ 10.52
============================================================
Class B:
Net asset value and offering price per share $ 10.00
============================================================
Class C:
Net asset value and offering price per share $ 10.00
============================================================
|
STATEMENT OF OPERATIONS
For the year ended July 31, 2000
INVESTMENT INCOME:
Interest $ 11,052,412
------------------------------------------------------------
Dividends -- affiliated issuers 322,436
------------------------------------------------------------
Dividends 1,946
------------------------------------------------------------
Total investment income 11,376,794
------------------------------------------------------------
EXPENSES:
Advisory fees 618,330
------------------------------------------------------------
Administrative services fee 45,890
------------------------------------------------------------
Custodian fees 29,597
------------------------------------------------------------
Distribution fees -- Class A 116,793
------------------------------------------------------------
Distribution fees -- Class B 451,249
------------------------------------------------------------
Distribution fees -- Class C 70,906
------------------------------------------------------------
Transfer agent fees -- Class A 55,409
------------------------------------------------------------
Transfer agent fees -- Class B 52,957
------------------------------------------------------------
Transfer agent fees -- Class C 8,320
------------------------------------------------------------
Trustee's fees 7,516
------------------------------------------------------------
Registration and filing fees 87,264
------------------------------------------------------------
Other 89,252
------------------------------------------------------------
Total expenses 1,633,483
------------------------------------------------------------
Less: Fees waived (251,914)
------------------------------------------------------------
Expenses paid indirectly (12,769)
------------------------------------------------------------
Net expenses 1,368,800
------------------------------------------------------------
Net investment income 10,007,994
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES
Net realized gain (loss) from investment
securities (4,184,754)
------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (8,210,697)
------------------------------------------------------------
Net gain (loss) on investment securities (12,395,451)
------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (2,387,457)
============================================================
|
See Notes to Financial Statements.
FS-27
STATEMENT OF CHANGES IN NET ASSETS
JULY 31, JULY 31,
2000 1999
------------ -----------
OPERATIONS:
Net investment income $ 10,007,994 $ 2,231,058
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (4,184,754) 1,689,995
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (8,210,697) 1,356,263
-----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,387,457) 5,277,316
-----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (4,862,629) (1,710,595)
-----------------------------------------------------------------------------------------
Class B (4,371,506) (446,277)
-----------------------------------------------------------------------------------------
Class C (688,979) (70,876)
-----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (812,826) (22,467)
-----------------------------------------------------------------------------------------
Class B (819,787) (421)
-----------------------------------------------------------------------------------------
Class C (117,753) (64)
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A 31,472,427 32,499,124
-----------------------------------------------------------------------------------------
Class B 52,638,735 20,530,581
-----------------------------------------------------------------------------------------
Class C 9,369,182 3,068,584
-----------------------------------------------------------------------------------------
Net increase in net assets 79,419,407 59,124,905
-----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 59,124,905 --
-----------------------------------------------------------------------------------------
End of year $138,544,312 $59,124,905
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $149,564,881 $56,080,847
-----------------------------------------------------------------------------------------
Undistributed net investment income 100,666 20,746
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (4,266,801) 1,667,049
-----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (6,854,434) 1,356,263
-----------------------------------------------------------------------------------------
$138,544,312 $59,124,905
=========================================================================================
|
See Notes to Financial Statements.
FS-28
NOTES TO FINANCIAL STATEMENTS
July 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund II (the "Fund") is a series portfolio of AIM Investment
Securities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management company consisting of seven separate
portfolios each having unlimited number of shares of beneficial interests. The
Fund currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B and Class C shares are sold with a contingent deferred sales
charge. Matters affecting each portfolio or class are voted on exclusively by
the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's investment
objective is to achieve a high level of current income by investing primarily in
publicly traded, non-investment grade debt securities. The Fund will also
consider the possibility of capital growth when it purchases and sells
securities. Debt securities of less than investment grade are considered
"high-risk" securities (commonly referred to as junk bonds). These bonds may
involve special risks in addition to the risks associated with higher rated debt
securities. High yield bonds may be more susceptible to real or perceived
adverse economic conditions than higher grade bonds. Also, the secondary market
in which high yield bonds are traded may be less liquid than the market for
higher grade bonds.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of discounts on investments, is
recorded on the accrual basis from settlement date. It is the policy of the
Fund not to amortize bond premiums for financial reporting purposes. On July
31, 2000, undistributed net investment income was decreased by $4,960,
undistributed net realized gains increased by $1,270 and paid-in capital was
increased by $3,690 a result of differing book/tax treatment
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- It is the policy of the Fund to declare daily dividends from
net investment income. Such distributions are paid monthly. Distributions
from net realized capital gains, if any, are generally paid annually and
recorded on ex-dividend date. The Fund may elect to use a portion of the
proceeds from redemptions as distributions for Federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
FS-29
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% on
the first $500 million of the Fund's average daily net assets, plus 0.55% on the
next $500 million of Fund's average daily net assets, plus 0.50% on the Fund's
average daily net assets in excess of $1 billion. During the year ended July 31,
2000, AIM waived fees of $251,914.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2000, AIM was paid
$45,890 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended July 31, 2000, AFS was paid
$56,527 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended July 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $116,793, $451,249
and $70,906, respectively, as compensation under the Plans.
AIM Distributors received commissions of $177,396 from sales of the Class A
shares of the Fund during the year ended July 31, 2000. Such commissions are not
an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended July 31, 2000, AIM
Distributors received $15,557 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended July 31, 2000, the Fund paid legal fees of $2,949 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended July 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,076 and reductions in custodian fees of $11,693 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $12,769.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended July 31, 2000,
the Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.09% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 2000 was
$173,269,358 and $86,523,800, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of July 31, 2000 was as follows:
Aggregate unrealized appreciation of investment securities $ 6,549,816 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (13,411,863) --------------------------------------------------------- Net unrealized appreciation (depreciation) of investment securities $ (6,862,047) ========================================================= Cost of investments for tax purposes is $144,086,603. |
FS-30
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 2000 and 1999 were as follows:
2000 1999
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
Sold:
Class A 6,219,653 $ 67,705,096 3,879,343 $40,951,231
--------------------------------------------------------------------------------------------------------------------
Class B 6,916,159 75,069,344 2,156,519 23,713,819
--------------------------------------------------------------------------------------------------------------------
Class C 1,071,505 11,566,013 322,660 3,551,731
--------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 340,326 3,674,382 99,704 1,082,276
--------------------------------------------------------------------------------------------------------------------
Class B 294,647 3,168,494 23,551 261,935
--------------------------------------------------------------------------------------------------------------------
Class C 45,665 488,435 3,953 43,955
--------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (3,689,603) (39,907,051) (868,523) (9,534,383)
--------------------------------------------------------------------------------------------------------------------
Class B (2,369,468) (25,599,103) (310,714) (3,445,173)
--------------------------------------------------------------------------------------------------------------------
Class C (249,183) (2,685,266) (46,885) (527,102)
--------------------------------------------------------------------------------------------------------------------
8,579,701 $ 93,480,344 5,259,608 $56,098,289
====================================================================================================================
|
NOTES 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A CLASS B CLASS C
------------------------------- ------------------------------ ------------------------------
SEPTEMBER 30, 1998 NOVEMBER 20, 1998 NOVEMBER 20, 1998
(DATE OPERATIONS (DATE SALES (DATE SALES
YEAR ENDED COMMENCED) YEAR ENDED COMMENCED) YEAR ENDED COMMENCED)
JULY 31, TO JULY 31, JULY 31, TO JULY 31, JULY 31, TO JULY 31,
2000 1999 2000 1999 2000 1999
---------- ------------------ ---------- ----------------- ---------- -----------------
Net asset value, beginning of
year $ 11.25 $ 10.00 $ 11.23 $ 10.59 $ 11.22 $10.59
------------------------------ ------- ------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 1.12 0.90 1.03 0.68 1.03 0.68
------------------------------ ------- ------- ------- ------- ------- ------
Net gains on securities
(both realized and
unrealized) (1.00) 1.26 (1.00) 0.65 (0.99) 0.64
------------------------------ ------- ------- ------- ------- ------- ------
Total from investment
operations 0.12 2.16 0.03 1.33 0.04 1.32
------------------------------ ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (1.12) (0.90) (1.03) (0.68) (1.03) (0.68)
------------------------------ ------- ------- ------- ------- ------- ------
Distributions from net
realized gains (0.23) (0.01) (0.23) (0.01) (0.23) (0.01)
------------------------------ ------- ------- ------- ------- ------- ------
Total distributions (1.35) (0.91) (1.26) (0.69) (1.26) (0.69)
------------------------------ ------- ------- ------- ------- ------- ------
Net asset value, end of year $ 10.02 $ 11.25 $ 10.00 $ 11.23 $ 10.00 $11.22
============================== ======= ======= ======= ======= ======= ======
Total return(a) 0.77% 22.39% (0.03)% 13.03% 0.08% 12.93%
============================== ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of year (000s
omitted) $59,932 $34,992 $67,140 $20,994 $11,471 $3,139
============================== ======= ======= ======= ======= ======= ======
Ratio of expenses to average
net assets:
With fee waivers 1.00%(b) 1.00%(c) 1.75%(b) 1.75%(c) 1.75%(b) 1.75%(c)
------------------------------ ------- ------- ------- ------- ------- ------
Without fee waivers 1.25%(b) 1.58%(c) 2.00%(b) 2.33%(c) 2.00%(b) 2.33%(c)
============================== ======= ======= ======= ======= ======= ======
Ratio of net investment income
to average net assets 10.51%(b) 9.74%(c) 9.76%(b) 8.99%(c) 9.76%(b) 8.99%(c)
============================== ======= ======= ======= ======= ======= ======
Portfolio turnover rate 94% 223% 94% 223% 94% 223%
============================== ======= ======= ======= ======= ======= ======
|
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average net assets of $46,717,368, $45,124,885, and
$7,090,552, for Class A, Class B and Class C, respectively.
(c) Annualized.
FS-31
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of AIM Income Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Income Fund (a portfolio of AIM Investment Securities Funds), including the
schedule of investments, as of July 31, 2000, and the related statement of
operations for the seven months ended July 31, 2000 and the year ended December
31, 1999, the statement of changes in net assets for the seven months ended July
31, 2000 and the two-years ended December 31, 1999, and the financial highlights
for the seven months ended July 31, 2000 and for each of the years in the
five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Income Fund as of July 31, 2000, the results of its operations for the seven
months ended July 31, 2000 and the year ended December 31, 1999, the changes in
its net assets for the seven months ended July 31, 2000 and the two-years ended
December 31, 1999, and the financial highlights for the seven months ended July
31, 2000 and for each of the years in the five-year period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-32
SCHEDULE OF INVESTMENTS
July 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS &
NOTES-84.76%
AIR FREIGHT-0.70%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 3,970,000 $ 4,089,100
--------------------------------------------------------------
AIRLINES-3.64%
Air 2 US-Series C, Equipment Trust
Ctfs., 10.13%, 10/01/20
(Acquired 10/28/99; Cost
$3,750,000)(a) 3,750,000 3,853,350
--------------------------------------------------------------
Airplanes Pass Through
Trust-Series D, Gtd. Sub. Bonds,
10.88%, 03/15/19 1,787,737 1,436,724
--------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 700,000 696,038
--------------------------------------------------------------
10.38%, 12/15/22 4,000,000 4,399,560
--------------------------------------------------------------
Equipment Trust Ctfs., 10.50%,
04/30/16 5,000,000 5,713,650
--------------------------------------------------------------
Dunlop Standard Aerospace Holdings
PLC (United Kingdom), Sr. Unsec.
Yankee Sub. Notes, 11.88%,
05/15/09 2,700,000 2,693,250
--------------------------------------------------------------
United Air Lines, Inc.-Series
95A2, Pass Through Ctfs., 9.56%,
10/19/18 2,325,000 2,594,793
--------------------------------------------------------------
21,387,365
--------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.78%
Advance Stores Co., Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 2,585,000 2,126,162
--------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 2,640,000 2,442,000
--------------------------------------------------------------
4,568,162
--------------------------------------------------------------
AUTOMOBILES-0.40%
DaimlerChrysler N.A. Holding
Corp., Gtd. Notes, 8.00%,
06/15/10 2,300,000 2,341,492
--------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.39%
BB&T Corp., Putable Sub. Notes,
6.38%, 06/30/05 1,000,000 937,240
--------------------------------------------------------------
Crestar Financial Corp., Sub.
Notes, 8.75%, 11/15/04 645,000 670,503
--------------------------------------------------------------
Midland Bank PLC (United Kingdom),
Yankee Sub. Notes, 7.65%,
05/01/25 1,870,000 1,869,177
--------------------------------------------------------------
Regions Financial Corp., Putable
Sub. Notes, 7.75%, 09/15/24 3,650,000 3,674,163
--------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 2,750,000 3,044,882
--------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 2,500,000 2,751,850
--------------------------------------------------------------
Union Planters Bank N.A., Unsec.
Sub. Notes, 6.50%, 03/15/08 1,240,000 1,092,353
--------------------------------------------------------------
14,040,168
--------------------------------------------------------------
BANKS (MONEY CENTER)-1.55%
First Union Corp., Putable Sub.
Deb.,
6.55%, 10/15/35 660,000 624,842
--------------------------------------------------------------
7.50%, 04/15/35 5,000,000 4,940,750
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BANKS (MONEY CENTER)-(CONTINUED)
NCNB Corp., Sub. Notes, 9.38%,
09/15/09 $ 3,200,000 $ 3,525,856
--------------------------------------------------------------
9,091,448
--------------------------------------------------------------
BANKS (REGIONAL)-2.10%
Banponce Trust I-Series A, Gtd.
Notes, 8.33%, 02/01/27 3,000,000 2,705,550
--------------------------------------------------------------
Mercantile Bancorp., Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 3,585,000 3,496,952
--------------------------------------------------------------
NBD Bank N.A. Michigan, Putable
Sub. Deb., 8.25%, 11/01/24 2,800,000 2,934,512
--------------------------------------------------------------
Riggs Capital Trust II-Series C,
Gtd. Sec. Bonds, 8.88%, 03/15/27 3,800,000 3,216,358
--------------------------------------------------------------
12,353,372
--------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.70%
J Seagram & Sons, Gtd. Deb.,
9.65%, 08/15/18 3,500,000 4,122,615
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-8.33%
AT&T Corp.-Liberty Media Group,
Bonds, 7.88%, 07/15/09 1,500,000 1,464,870
--------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 3,400,000 3,264,748
--------------------------------------------------------------
British Sky Broadcasting Group PLC
(United Kingdom), Sr. Unsec.
Gtd. Yankee Notes, 8.20%,
07/15/09 5,400,000 4,983,984
--------------------------------------------------------------
CF Cable TV Inc. (Canada), Sr.
Sec. Priority Yankee Notes,
9.13%, 07/15/07 2,000,000 2,117,460
--------------------------------------------------------------
Charter Communications Holdings,
LLC/Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(b) 2,500,000 1,437,500
--------------------------------------------------------------
Comcast Cable Communications,
Notes, 8.88%, 05/01/17 5,000,000 5,412,400
--------------------------------------------------------------
Sr. Unsec. Notes, 8.50%,
05/01/27 3,000,000 3,164,640
--------------------------------------------------------------
Cox Enterprises, Inc., Notes,
8.00%, 02/15/07 (Acquired
02/16/00; Cost $3,771,614)(a) 3,800,000 3,818,810
--------------------------------------------------------------
CSC Holdings Inc., Sr. Unsec.
Deb.,
7.63%, 07/15/18 3,250,000 2,951,357
--------------------------------------------------------------
7.88%, 02/15/18 1,000,000 931,380
--------------------------------------------------------------
Sr. Unsec. Notes, 7.88%,
12/15/07 6,850,000 6,666,831
--------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(b) 3,930,000 2,731,350
--------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(b) 4,100,000 2,183,250
--------------------------------------------------------------
Lenfest Communications, Inc., Sr.
Unsec. Sub. Notes, 8.25%,
02/15/08 5,000,000 4,989,050
--------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B, Sr.
Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(b) 6,000,000 2,790,000
--------------------------------------------------------------
48,907,630
--------------------------------------------------------------
|
FS-33
PRINCIPAL MARKET
AMOUNT VALUE
BUILDING MATERIALS-0.48%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 $ 2,750,000 $ 2,791,250
--------------------------------------------------------------
CHEMICALS-0.49%
Sterling Chemicals, Inc.-Series B,
Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 2,750,000 2,866,875
--------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.02%
Key Plastics Holdings, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 03/15/07(c) 1,325,000 139,125
--------------------------------------------------------------
COMPUTERS (HARDWARE)-0.25%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/20/98; Cost
$2,000,000)(a) 2,000,000 1,450,000
--------------------------------------------------------------
COMPUTERS (NETWORKING)-0.35%
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 2,025,000 2,025,000
--------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.51%
Equinix Inc., Sr. Unsec. Notes,
13.00%, 12/01/07 3,540,000 3,009,000
--------------------------------------------------------------
CONSUMER FINANCE-2.76%
Capital One Bank,
Sr. Notes, 6.65%, 03/15/04 1,600,000 1,520,176
--------------------------------------------------------------
Unsec. Notes, 7.25%, 05/01/06 2,500,000 2,313,850
--------------------------------------------------------------
CitiFinancial Credit Co., Putable
Notes, 7.88%, 02/01/25 1,400,000 1,415,162
--------------------------------------------------------------
Countrywide Home Loans,
Inc.-Series H, Unsec. Gtd.
Medium Term Sub Notes, 6.25%,
04/15/09 1,600,000 1,411,296
--------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 5.75%, 11/10/03 2,500,000 2,392,575
--------------------------------------------------------------
Household Finance Corp., Unsec.
Notes, 8.00%, 07/15/10 2,000,000 1,996,940
--------------------------------------------------------------
MBNA Capital I-Series A, Gtd.
Bonds, 8.28%, 12/01/26 6,065,000 5,165,560
--------------------------------------------------------------
16,215,559
--------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.24%
Fleming Cos., Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.63%,
07/31/07 1,600,000 1,388,000
--------------------------------------------------------------
ELECTRIC COMPANIES-7.16%
Cilcorp Inc., Bonds, 9.38%,
10/15/29 2,100,000 2,254,266
--------------------------------------------------------------
Cleveland Electric Illuminating
Co. (The)- Series D, Sr. Sec.
Notes, 7.88%, 11/01/17 3,800,000 3,709,777
--------------------------------------------------------------
CMS Energy Corp., Sr. Unsec.
Notes, 8.13%, 05/15/02 850,000 846,158
--------------------------------------------------------------
El Paso Electric Co.-Series E,
Sec. First Mortgage Bonds,
9.40%, 05/01/11 3,000,000 3,170,760
--------------------------------------------------------------
Indiana Michigan Power Co.-Series
F, Sec. Lease Obligation Bonds,
9.82%, 12/07/22 4,967,714 5,434,977
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC COMPANIES-(CONTINUED)
Niagara Mohawk Holdings Inc.,
First Mortgage Notes, 7.75%,
05/15/06 $ 4,300,000 $ 4,273,082
--------------------------------------------------------------
Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(b) 10,000,000 7,678,800
--------------------------------------------------------------
Public Service Company of New
Mexico- Series A, Sr. Unsec.
Notes, 7.10%, 08/01/05 1,200,000 1,168,872
--------------------------------------------------------------
Southern Energy, Inc., Sr. Notes,
7.90%, 07/15/09 (Acquired
07/21/99-12/03/99; Cost
$5,978,820)(a) 6,000,000 5,566,380
--------------------------------------------------------------
Texas-New Mexico Power Co., Sr.
Sec. Notes, 6.25%, 01/15/09 4,050,000 3,476,965
--------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes, 7.13%, 08/01/09 5,352,000 4,468,706
--------------------------------------------------------------
42,048,743
--------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.56%
Israel Electric Corp. Ltd.
(Israel),
Series E, Sr. Sec. Medium Term
Yankee Notes, 7.75%, 03/01/09
(Acquired 04/13/00; Cost
$2,138,136)(a) 2,200,000 2,130,634
--------------------------------------------------------------
Yankee Deb., 7.75%, 12/15/27
(Acquired 06/09/00; Cost
$1,141,374)(a) 1,300,000 1,178,541
--------------------------------------------------------------
3,309,175
--------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.39%
Morrison Knudsen Corp., Sr. Notes,
11.00%, 07/01/10 (Acquired
06/28/00; Cost $2,233,395)(a) 2,250,000 2,261,250
--------------------------------------------------------------
ENTERTAINMENT-2.34%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $1,100,000)(a) 1,100,000 1,080,750
--------------------------------------------------------------
Time Warner Inc., Deb.,
9.13%, 01/15/13 5,000,000 5,460,900
--------------------------------------------------------------
9.15%, 02/01/23 6,500,000 7,218,055
--------------------------------------------------------------
13,759,705
--------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-3.46%
Associates Corp. of North America,
Sr. Deb., 6.95%, 11/01/18 1,000,000 903,540
--------------------------------------------------------------
Beaver Valley Funding Corp., Sec.
Lease Obligations Deb., 9.00%,
06/01/17 1,500,000 1,503,045
--------------------------------------------------------------
Citicorp Lease-Class A2, Series
1999-1, Pass Through Ctfs.,
8.04%, 12/15/19 (Acquired
06/01/00-07/14/00; Cost
$2,974,186)(a) 3,000,000 3,037,380
--------------------------------------------------------------
Citigroup Inc., Deb., 6.63%,
01/15/28 1,150,000 998,844
--------------------------------------------------------------
General Electric Capital
Corp.-Series A, Medium Term
Notes, 7.38%, 01/19/10 5,600,000 5,660,032
--------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec.
Notes,
7.38%, 11/01/09 1,750,000 1,661,765
--------------------------------------------------------------
8.00%, 06/15/05 2,300,000 2,308,694
--------------------------------------------------------------
Hutchison Delta Finance
Ltd.-Series REGS (Cayman
Islands), Conv. Unsec. Euro
Notes, 7.00%, 11/08/02 2,000,000 2,380,000
--------------------------------------------------------------
|
FS-34
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Source One Mortgage Services
Corp., Deb., 9.00%, 06/01/12 $ 1,130,000 $ 1,199,570
--------------------------------------------------------------
Sun Canada Financial Co., Gtd.
Sub. Notes, 6.63%, 12/15/07
(Acquired 10/14/99; Cost
$654,311)(a) 700,000 667,169
--------------------------------------------------------------
20,320,039
--------------------------------------------------------------
FOODS-0.85%
Grand Metropolitan Investment
Corp, Gtd. Bonds, 7.45%,
04/15/35 5,000,000 4,990,900
--------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.81%
Hollywood Casino Corp., Sr. Sec.
Gtd. Sub. Notes, 11.25%,
05/01/07 1,200,000 1,230,000
--------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 3,500,000 3,552,500
--------------------------------------------------------------
4,782,500
--------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.35%
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(d) 2,000,000 2,070,000
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.48%
O'Sullivan Industries, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
13.38%, 10/15/09 3,000,000 2,820,000
--------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.45%
Procter & Gamble Co. (The),
Putable Deb., 8.00%, 09/01/24 2,500,000 2,665,875
--------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.07%
American General Finance Corp.,
Sr. Notes, 8.45%, 10/15/09 2,100,000 2,157,414
--------------------------------------------------------------
Americo Life, Inc., Sr. Sub.
Notes, 9.25%, 06/01/05 1,000,000 945,000
--------------------------------------------------------------
John Hancock Global Funding II,
Sec. Medium Term Notes, 7.90%,
07/02/10 (Acquired 06/23/00;
Cost $1,995,220)(a) 2,000,000 2,011,820
--------------------------------------------------------------
Torchmark Corp., Notes, 7.88%,
05/15/23 1,325,000 1,142,799
--------------------------------------------------------------
6,257,033
--------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.43%
AIG SunAmerica Global Financing
II, Sr. Sec. Notes, 7.60%,
06/15/05 (Acquired 06/08/00;
Cost $2,500,000)(a) 2,500,000 2,526,875
--------------------------------------------------------------
INSURANCE (PROPERTY &
CASUALTY)-1.50%
GE Global Insurance Holdings
Corp., Notes, 7.75%, 06/15/30 4,800,000 4,864,320
--------------------------------------------------------------
Terra Nova Insurance PLC (United
Kingdom), Sr. Unsec. Gtd. Yankee
Notes,
7.00%, 05/15/08 2,000,000 1,872,940
--------------------------------------------------------------
7.20%, 08/15/07 2,200,000 2,094,070
--------------------------------------------------------------
8,831,330
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
INVESTMENT BANKING/BROKERAGE-1.92%
Lehman Brothers Holdings Inc.,
Notes, 8.50%, 08/01/15 $ 4,490,000 $ 4,546,484
--------------------------------------------------------------
Sr. Sub. Notes, 7.38%, 01/15/07 3,585,000 3,450,312
--------------------------------------------------------------
Series E, Medium Term Notes,
9.34%, 02/10/28(e) 8,700,000 707,745
--------------------------------------------------------------
Putable Sr. Notes, 8.80%,
03/01/15 1,640,000 1,687,265
--------------------------------------------------------------
Merrill Lynch & Co., Unsec. Notes,
6.88%, 11/15/18 1,000,000 904,270
--------------------------------------------------------------
11,296,076
--------------------------------------------------------------
IRON & STEEL-0.07%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(c) 3,240,000 437,400
--------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.28%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 2,075,000 1,665,187
--------------------------------------------------------------
LODGING-HOTELS-0.31%
John Q. Hammons Hotels, Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 2,000,000 1,800,000
--------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.41%
Actuant Corp., Sr. Unsec. Gtd.
Sub. Notes, 13.00%, 05/01/09
(Acquired 07/21/00; Cost
$1,164,365)(a) 1,180,000 1,185,900
--------------------------------------------------------------
Anthony Crane Rentals LP-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 1,500,000 828,750
--------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(c) 2,310,000 392,700
--------------------------------------------------------------
2,407,350
--------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.55%
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 2,070,000 2,038,950
--------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/00; Cost $1,163,834)(a) 1,180,000 1,209,500
--------------------------------------------------------------
3,248,450
--------------------------------------------------------------
METALS MINING-0.90%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 2,500,000 1,937,500
--------------------------------------------------------------
Rio Algom Ltd. (Canada), Unsec.
Yankee Deb., 7.05%, 11/01/05 3,500,000 3,332,945
--------------------------------------------------------------
5,270,445
--------------------------------------------------------------
NATURAL GAS-3.15%
Dynegy Inc., Sr. Unsec. Deb.,
7.13%, 05/15/18 3,550,000 3,166,280
--------------------------------------------------------------
Enron Corp.,
Sr. Sub. Deb., 8.25%, 09/15/12 4,100,000 4,196,637
--------------------------------------------------------------
Series A, Medium Term Notes,
8.38%, 05/23/05 1,750,000 1,812,877
--------------------------------------------------------------
KN Capital Trust III, Gtd. Sub.
Bonds, 7.63%, 04/15/28 2,500,000 2,204,650
--------------------------------------------------------------
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 3,000,000 3,166,920
--------------------------------------------------------------
|
FS-35
PRINCIPAL MARKET
AMOUNT VALUE
NATURAL GAS-(CONTINUED)
Sonat Inc., Unsec. Notes, 7.63%,
07/15/11 $ 4,000,000 $ 3,933,040
--------------------------------------------------------------
18,480,404
--------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.55%
NRG Energy, Inc., Sr. Unsec.
Notes, 7.50%, 06/01/09 3,400,000 3,242,138
--------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-2.11%
Den Norske Stats Oljeselskap A.S.
(Norway), Yankee Deb., 7.38%,
05/01/16 (Acquired 06/01/00;
Cost $2,064,678)(a) 2,200,000 2,108,194
--------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%,
08/15/06 3,500,000 3,489,325
--------------------------------------------------------------
Talisman Energy Inc. (Canada),
Yankee Deb., 7.13%, 06/01/07 3,750,000 3,581,212
--------------------------------------------------------------
Union Pacific Resources Group
Inc., Unsec. Deb., 7.50%,
10/15/26 3,350,000 3,196,737
--------------------------------------------------------------
12,375,468
--------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-1.32%
Petroleos Mexicanos-Series P
(Mexico), Unsub. Yankee Notes,
9.50%, 09/15/27 2,600,000 2,697,110
--------------------------------------------------------------
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 2,010,000 1,778,850
--------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%,
01/01/27 3,400,000 3,301,706
--------------------------------------------------------------
7,777,666
--------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-1.27%
Amerada Hess Corp., Bonds, 7.88%,
10/01/29 3,000,000 2,929,170
--------------------------------------------------------------
Occidental Petroleum Corp., Sr.
Deb., 9.25%, 08/01/19 4,100,000 4,496,716
--------------------------------------------------------------
7,425,886
--------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.60%
YPF Sociedad Anonima (Argentina),
Yankee Bonds, 9.13%, 02/24/09 3,500,000 3,546,620
--------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.67%
Domtar, Inc. (Canada), Unsec.
Yankee Deb., 9.50%, 08/01/16 3,750,000 3,914,063
--------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.40%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 2,220,000 2,342,100
--------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.48%
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20 (Acquired
04/30/98; Cost $2,004,940)(a) 1,977,000 1,823,980
--------------------------------------------------------------
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 985,892 971,103
--------------------------------------------------------------
2,795,083
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
PUBLISHING (NEWSPAPERS)-2.33%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 $ 7,000,000 $ 7,144,270
--------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 5,250,000 5,585,895
--------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds,
7.43%, 10/01/26 1,000,000 973,470
--------------------------------------------------------------
13,703,635
--------------------------------------------------------------
RAILROADS-1.21%
CSX Corp., Sr. Unsec. Putable
Deb., 7.25%, 05/01/27 7,250,000 7,090,573
--------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-0.88%
ERP Operating L.P., Unsec. Notes,
7.13%, 10/15/17 2,400,000 2,084,784
--------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.63%, 03/15/08 1,500,000 1,244,160
--------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Deb., 7.35%, 12/01/17 2,000,000 1,807,080
--------------------------------------------------------------
5,136,024
--------------------------------------------------------------
RETAIL (SPECIALTY)-0.98%
Amazon.com, Inc., Conv. Deb.,
4.75%, 02/01/09 (Acquired
01/29/99; Cost $2,507,500)(a) 2,500,000 1,368,750
--------------------------------------------------------------
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 715,000 559,488
--------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 5,190,000 3,036,150
--------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 820,000 795,400
--------------------------------------------------------------
5,759,788
--------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.25%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 1,625,000 1,482,813
--------------------------------------------------------------
SAVINGS & LOAN COMPANIES-2.04%
Dime Capital Trust I-Series A,
Gtd. Bonds, 9.33%, 05/06/27 2,020,000 1,876,035
--------------------------------------------------------------
Sovereign Bancorp, Inc., Medium
Term Sub. Notes, 8.00%, 03/15/03 5,050,000 4,827,245
--------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec.
Notes, 7.13%, 02/15/04 1,500,000 1,449,915
--------------------------------------------------------------
Washington Mutual Cap I,
Sec. Gtd. Bonds, 8.38%, 06/01/27 1,485,000 1,340,703
--------------------------------------------------------------
Sub. Notes, 8.25%, 04/01/10 2,500,000 2,491,125
--------------------------------------------------------------
11,985,023
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.33%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 1,850,000 1,956,375
--------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.32%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 1,980,000 1,871,100
--------------------------------------------------------------
|
FS-36
PRINCIPAL MARKET
AMOUNT VALUE
SOVEREIGN DEBT-1.58%
Newfoundland (Province of)
(Canada), Unsec. Yankee Deb.,
9.00%, 06/01/19 $ 4,000,000 $ 4,569,160
--------------------------------------------------------------
Quebec (Province of)
(Canada)-Series A, Medium Term
Putable Yankee Notes, 6.29%,
03/06/26(g) 4,800,000 4,693,824
--------------------------------------------------------------
9,262,984
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.47%
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 1,100,000 1,133,000
--------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 1,940,000 1,619,900
--------------------------------------------------------------
Nextel Communications, Inc.,
Sr. Notes, 12.00%, 11/01/08 3,375,000 3,645,000
--------------------------------------------------------------
Sr. Notes, 12.75%, 08/01/10
(Acquired 07/26/00; Cost
$986,220)(a) 1,000,000 997,500
--------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 2,000,000 1,230,000
--------------------------------------------------------------
8,625,400
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-3.50%
360networks Inc. (Canada),
Sr. Unsec. Yankee Notes, 12.00%,
08/01/09 1,000,000 935,000
--------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 1,430,000 1,426,425
--------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 3,500,000 3,062,500
--------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 1,500,000 1,087,500
--------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Unsec. Notes,
11.25%, 01/15/09 3,500,000 2,152,500
--------------------------------------------------------------
12.75%, 10/15/09 1,560,000 959,400
--------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%,
10/15/19 2,500,000 2,873,125
--------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands), Sr. Yankee
Notes, 13.25%, 05/15/08 1,370,000 1,411,100
--------------------------------------------------------------
Williams Communications Group,
Inc., Sr. Unsec. Notes, 10.70%,
10/01/07 3,000,000 2,910,000
--------------------------------------------------------------
WorldCom, Inc., Notes, 8.00%,
05/15/06 3,650,000 3,720,701
--------------------------------------------------------------
20,538,251
--------------------------------------------------------------
TELEPHONE-5.19%
Alestra S.A. (Mexico), Sr. Yankee
Notes, 12.63%, 05/15/09 2,380,000 2,314,550
--------------------------------------------------------------
AT&T Canada Inc. (Canada), Sr.
Unsec. Yankee Notes 7.65%,
09/15/06 2,800,000 2,792,871
--------------------------------------------------------------
Bell Atlantic Financial Services,
Inc.- Series REGS, Conv. Bonds,
4.25%, 09/15/05 2,700,000 3,170,100
--------------------------------------------------------------
CFW Communications Co., Sr. Notes,
13.00%, 08/15/10 (Acquired
07/21/00; Cost $1,750,328)(a)(f) 1,775,000 1,775,000
--------------------------------------------------------------
Deutsche Telekom International
Finance B.V. (Netherlands),
Unsec. Unsub. Yankee Bonds,
8.00%, 06/15/10 2,700,000 2,725,299
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE-(CONTINUED)
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(b) $ 4,000,000 $ 2,248,960
--------------------------------------------------------------
Intermedia Communications,
Inc.-Series B, Sr. Disc. Notes,
11.25%, 07/15/07(b) 2,300,000 1,552,500
--------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 1,000,000 252,500
--------------------------------------------------------------
NTL Inc.-Series B, Sr. Disc.
Notes, 11.50%, 02/01/06(b) 1,475,000 1,386,500
--------------------------------------------------------------
Qwest Communications International
Inc., Sr. Unsec. Notes, 7.50%,
11/01/08 3,050,000 2,984,212
--------------------------------------------------------------
Telefonos de Mexico S.A. de C.V.
(Mexico), Conv. Yankee Notes,
4.25%, 06/15/04 3,000,000 3,817,500
--------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 5,000,000 5,462,500
--------------------------------------------------------------
30,482,492
--------------------------------------------------------------
TRUCKERS-1.18%
North American Van Lines Inc., Sr.
Sub. Notes, 13.38%, 12/01/09(d) 5,000,000 4,725,000
--------------------------------------------------------------
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 2,180,000 2,207,250
--------------------------------------------------------------
6,932,250
--------------------------------------------------------------
WASTE MANAGEMENT-2.97%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(d) 4,920,000 4,317,300
--------------------------------------------------------------
Browning-Ferris Industries, Inc.,
Deb.,
7.40%, 09/15/35 1,200,000 774,000
--------------------------------------------------------------
9.25%, 05/01/21 2,570,000 2,197,350
--------------------------------------------------------------
Waste Management, Inc., Sr. Unsec.
Notes,
7.13%, 10/01/07 3,710,000 3,388,158
--------------------------------------------------------------
7.13%, 12/15/17 935,000 796,583
--------------------------------------------------------------
Unsec. Putable Notes, 7.10%,
08/01/26 6,270,000 5,984,339
--------------------------------------------------------------
17,457,730
--------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$526,526,492) 497,738,360
--------------------------------------------------------------
|
PRINCIPAL
AMOUNT(h)
NON-U.S. DOLLAR DENOMINATED BONDS
& NOTES-9.00%
AUSTRALIA-0.36%
State Bank New South Wales-Series
E (Banks-Major Regional), Sr.
Unsec. Gtd. Medium Term Notes,
8.63%, 08/20/01 AUD 3,600,000 2,126,493
--------------------------------------------------------------
CANADA-3.39%
AT&T Canada Inc. (Telephone), Sr.
Unsec. Notes, 7.15%, 09/23/04CAD 1,150,000 780,007
--------------------------------------------------------------
Bell Mobility Cellular Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 CAD 2,250,000 1,478,020
--------------------------------------------------------------
|
FS-37
PRINCIPAL MARKET
AMOUNT(h) VALUE
CANADA-(CONTINUED)
Canadian Pacific Ltd.-Series D
(Manufacturing-Diversified),
Unsec. Medium Term Notes, 5.85%,
03/30/09 (Acquired 03/24/99;
Cost $2,149,150)(a) CAD 3,250,000 $ 2,029,397
--------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes,
10.40%, 05/15/08(b) CAD 9,050,000 3,698,039
--------------------------------------------------------------
11.75%, 08/13/07(b) CAD 8,200,000 3,847,111
--------------------------------------------------------------
Export Development Corp.
(Sovereign Debt), Sr. Unsec.
Unsub. Notes, 6.50%, 12/21/04NZD 2,150,000 933,761
--------------------------------------------------------------
Microcell Telecommunications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.13%,
10/15/07(b) CAD 3,500,000 1,653,831
--------------------------------------------------------------
Ontario (Province of) (Sovereign
Debt), Unsec. Unsub. Notes,
6.25%, 12/03/08 NZD 2,500,000 1,019,756
--------------------------------------------------------------
Rogers Cablesystems
(Broadcasting-Television, Radio
& Cable), Sr. Sec. Second
Priority Deb., 9.65%,
01/15/14 CAD 3,300,000 2,352,862
--------------------------------------------------------------
TransCanada Pipelines-Series Q
(Natural Gas), Deb., 10.63%,
10/20/09 CAD 1,750,000 1,449,438
--------------------------------------------------------------
Westcoast Energy Inc.-Series V
(Natural Gas), Unsec. Deb.,
6.45%, 12/18/06 (Acquired
12/03/96; Cost $739,169)(a) CAD 1,000,000 664,721
--------------------------------------------------------------
19,906,943
--------------------------------------------------------------
CAYMAN ISLANDS-0.52%
Sutton Bridge Financial Ltd.
(Power Producers-Independent),
Gtd. Euro Bonds, 8.63%,
06/30/22(d) GBP 2,000,000 3,079,298
--------------------------------------------------------------
FRANCE-0.51%
Vivendi Environment (Waste
Management), Conv. Bonds, 1.50%,
01/01/05 EUR 1,050,000 2,973,891
--------------------------------------------------------------
NETHERLANDS-1.23%
Grapes Communications N.V.
(Telecommunications-Cellular/Wireless),
Sr. Notes, 13.50%, 05/15/10
(Acquired 05/03/00; Cost
$12,085,640)(a)(f) 2,300,000 1,919,822
--------------------------------------------------------------
Tecnost International
N.V.-(Telephone) Series E, Gtd.
Medium Term Notes, 6.13%,
07/30/09 EUR 2,050,000 1,769,144
--------------------------------------------------------------
Tele1 Europe B.V.
(Telecommunications-Long
Distance), Sr. Notes, 11.88%,
12/01/09 EUR 3,750,000 3,504,022
--------------------------------------------------------------
7,192,988
--------------------------------------------------------------
NEW ZEALAND-0.35%
Inter-American Development Bank
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 4,750,000 2,029,258
--------------------------------------------------------------
NORWAY-0.39%
Enitel ASA
(Telecommunications-Long
Distance), Sr. Notes, 12.50%,
04/15/10 EUR 2,500,000 2,272,253
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT(h) VALUE
UNITED KINGDOM-2.25%
Airtours PLC (Services-Commercial
& Consumer), Conv. Sub. Notes,
5.75%, 01/05/04 (Acquired
12/09/98; Cost $3,091,887)(a)GBP 1,869,000 $ 2,566,138
--------------------------------------------------------------
British Sky Broadcasting Group PLC
(Broadcasting-Television, Radio
& Cable), Sr. Gtd. Unsec. Unsub.
Notes, 7.75%, 07/09/09 GBP 1,750,000 2,528,772
--------------------------------------------------------------
Energis PLC (Telephone), Sr.
Notes, 9.13%, 03/15/10 GBP 3,000,000 4,320,176
--------------------------------------------------------------
Jazztel PLC (Telephone), Sr.
Unsec. Notes, 13.25%,
12/15/09 EUR 2,260,000 1,907,394
--------------------------------------------------------------
Scotia Holdings PLC (Health
Care-Drugs- Generic & Other),
Conv. Unsec. Notes, 8.50%,
03/26/02 GBP 1,500,000 1,915,604
--------------------------------------------------------------
13,238,084
--------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Bonds & Notes
(Cost $60,180,822) 52,819,208
--------------------------------------------------------------
|
SHARES
STOCKS & OTHER EQUITY
INTERESTS-2.72%
BANKS (REGIONAL)-1.06%
First Republic Capital
Corp.-Series A-Pfd. (Acquired
05/26/99; Cost $3,500,000)(a) 3,500 3,141,250
--------------------------------------------------------------
Westpac Banking Corp., STRYPES
Trust-$3.14 Conv. Pfd. 95,000 3,069,688
--------------------------------------------------------------
6,210,938
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.00%
Knology Inc.-Wts., expiring
10/22/07 (Acquired 03/12/98;
Cost $0)(a)(i) 4,100 10,250
--------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.04%
Equinix Inc.-Wts., expiring
12/01/07 (Acquired 05/30/00;
Cost $0)(a)(i) 3,540 247,800
--------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.24%
Microsoft Corp.(j) 20,291 1,416,582
--------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc.-Wts.,
expiring 02/01/04(i) 3,630 3,630
--------------------------------------------------------------
FOODS-0.13%
Ralston Purina Group.-$4.34 Conv.
Pfd. 23,000 764,750
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.02%
O'Sullivan Industries, Inc.-Wts.,
expiring 11/05/09 (Acquired
06/13/00; Cost $0)(a)(i) 6,000 90,000
--------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc.-Wts.,
expiring 04/15/03(i) 1,650 --
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.33%
Cendant Corp.-$3.75 Conv. PRIDES 78,000 1,579,500
--------------------------------------------------------------
|
FS-38
MARKET
SHARES VALUE
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Cendant Corp.-Rts., expiring
02/14/01(i) 50,000 $ 375,000
--------------------------------------------------------------
1,954,500
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.38%
Clearnet Communications Inc.-Class
A-ADR (Canada)(j) 5,874 165,206
--------------------------------------------------------------
Loral Space & Communications
Ltd.(j) 2,059 10,681
--------------------------------------------------------------
WebLink Wireless, Inc.(j) 204,685 2,059,643
--------------------------------------------------------------
2,235,530
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.52%
Enitel ASA (Norway)-Wts., expiring
04/05/05(i) 2,500 23,186
--------------------------------------------------------------
Versatel Telecom International
N.V.-ADR (Netherlands)(j) 17,663 565,216
--------------------------------------------------------------
Viatel, Inc., $3.88 Conv. Pfd.
(Acquired 04/07/00; Cost
$5,000,000)(a) 100,000 2,462,500
--------------------------------------------------------------
3,050,902
--------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost $21,633,642) 15,984,882
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY NOTES-1.47%
6.63%, 05/31/02 $ 3,000,000 $ 3,013,710
--------------------------------------------------------------
6.75%, 05/15/05 5,500,000 5,636,620
--------------------------------------------------------------
8,650,330
--------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $8,629,961) 8,650,330
--------------------------------------------------------------
|
SHARES
MONEY MARKET FUNDS-0.48%
STIC Liquid Assets Portfolio(k) 1,416,926 1,416,926
--------------------------------------------------------------
STIC Prime Portfolio(k) 1,416,926 1,416,926
--------------------------------------------------------------
Total Money Market Funds (Cost
$2,833,852) 2,833,852
--------------------------------------------------------------
TOTAL INVESTMENTS-98.43% (Cost
$619,804,769) 578,026,632
--------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.57% 9,202,630
--------------------------------------------------------------
NET ASSETS-100.00% $587,229,262
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt AUD - Australian Dollar CAD - Canadian Dollar Conv. - Convertible Ctfs. - Certificates Deb. - Debentures Disc. - Discounted EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred PRIDES - Preferred Redemption Increase Dividend Equity Security REIT - Real Estate Investment Trust REGS - Regulation S Rts. - Rights Sec. - Secured Sr. - Senior |
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 07/31/00 was $53,183,661 which
represented 9.06% of the Fund's net assets.
(b)Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(c)Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d)Represents a security sold under Rule 144A, which is exempt from registration
and may be resold to qualified institutional buyers in accordance with the
provisions of Rule 144A under the Securities Act of 1993, as amended.
(e)Zero coupon bond issued at a discount. The interest rate shown represents the
rate of original issue discount.
(f)Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(g)Step-up bond. The interest rate represents the coupon rate at which the bond
will accrue at a specified future date.
(h)Foreign denominated security. Par value is denominated in currency indicated.
(i)Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(j)Non-income producing security.
(k)The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-39
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS &
NOTES-83.31%
AIR FREIGHT-0.69%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 3,970,000 $ 4,089,100
--------------------------------------------------------------
AIRLINES-4.21%
Air 2 US-Series C, Equipment Trust
Ctfs., 10.13%, 10/01/20
(Acquired 10/28/99; Cost
$3,750,000)(a) 3,750,000 3,898,200
--------------------------------------------------------------
Airplanes Pass Through
Trust-Series D, Gtd. Sub. Bonds,
10.88%, 03/15/19 1,787,737 1,453,457
--------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 700,000 674,170
--------------------------------------------------------------
10.38%, 12/15/22 4,000,000 4,287,040
--------------------------------------------------------------
Equipment Trust Ctfs., 10.50%,
04/30/16 5,000,000 5,721,450
--------------------------------------------------------------
Dunlop Standard Aerospace Holdings
PLC (United Kingdom), Sr. Unsec.
Yankee Sub. Notes, 11.88%,
05/15/09 2,700,000 2,659,500
--------------------------------------------------------------
United Air Lines, Inc.,
Deb., 9.75%, 08/15/21 (Acquired
09/23/99; Cost $4,205,475)(a) 3,750,000 3,618,562
--------------------------------------------------------------
Series 95A2, Pass Through Ctfs.,
9.56%, 10/19/18 2,325,000 2,565,823
--------------------------------------------------------------
24,878,202
--------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.76%
Advance Stores Co., Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 2,585,000 2,106,775
--------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 2,640,000 2,376,000
--------------------------------------------------------------
4,482,775
--------------------------------------------------------------
AUTOMOBILES-0.40%
DaimlerChrysler N.A. Holding
Corp., Gtd. Notes, 8.00%,
06/15/10 2,300,000 2,340,710
--------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.37%
BB&T Corp., Putable Sub. Notes,
6.38%, 06/30/05 1,000,000 935,650
--------------------------------------------------------------
Crestar Financial Corp., Sub.
Notes, 8.75%, 11/15/04 645,000 669,097
--------------------------------------------------------------
Midland Bank PLC (United Kingdom),
Yankee Sub. Notes, 7.65%,
05/01/25 1,870,000 1,864,222
--------------------------------------------------------------
Regions Financial Corp., Putable
Sub. Notes, 7.75%, 09/15/24 3,650,000 3,667,666
--------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 2,750,000 3,044,002
--------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 2,500,000 2,735,775
--------------------------------------------------------------
Union Planters Bank N.A., Unsec.
Sub. Notes, 6.50%, 03/15/08 1,240,000 1,085,769
--------------------------------------------------------------
14,002,181
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BANKS (MONEY CENTER)-1.53%
First Union Corp., Putable Sub.
Deb.,
6.55%, 10/15/35 $ 660,000 $ 622,783
--------------------------------------------------------------
7.50%, 04/15/35 5,000,000 4,931,650
--------------------------------------------------------------
NCNB Corp., Sub. Notes, 9.38%,
09/15/09 3,200,000 3,493,056
--------------------------------------------------------------
9,047,489
--------------------------------------------------------------
BANKS (REGIONAL)-2.06%
Banponce Trust I-Series A, Gtd.
Notes, 8.33%, 02/01/27 3,000,000 2,660,760
--------------------------------------------------------------
Mercantile Bancorp., Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 3,585,000 3,461,748
--------------------------------------------------------------
NBD Bank N.A. Michigan, Putable
Sub. Deb., 8.25%, 11/01/24 2,800,000 2,885,792
--------------------------------------------------------------
Riggs Capital Trust II-Series C,
Gtd. Sec. Bonds, 8.88%, 03/15/27 3,800,000 3,121,662
--------------------------------------------------------------
12,129,962
--------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.67%
J Seagram & Sons, Gtd. Deb.,
9.65%, 08/15/18 3,500,000 3,976,805
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-7.74%
AT&T Corp.-Liberty Media Group,
Bonds, 7.88%, 07/15/09 1,500,000 1,447,530
--------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 3,400,000 3,140,750
--------------------------------------------------------------
British Sky Broadcasting Group PLC
(United Kingdom), Sr. Unsec.
Gtd. Yankee Notes, 8.20%,
07/15/09 5,400,000 5,094,198
--------------------------------------------------------------
CF Cable TV Inc. (Canada), Sr.
Sec. Priority Yankee Notes,
9.13%, 07/15/07 2,000,000 2,116,360
--------------------------------------------------------------
Charter Communications Holdings,
LLC/Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(b) 2,500,000 1,431,250
--------------------------------------------------------------
Comcast Cable Communications,
Notes, 8.88%, 05/01/17 5,000,000 5,371,000
--------------------------------------------------------------
Sr. Unsec. Notes, 8.50%,
05/01/27 3,000,000 3,145,080
--------------------------------------------------------------
Cox Enterprises, Inc., Notes,
8.00%, 02/15/07 (Acquired
02/16/00; Cost $3,771,614)(a) 3,800,000 3,781,418
--------------------------------------------------------------
CSC Holdings Inc., Sr. Unsec.
Deb.,
Sr. Unsec. Deb., 7.88%, 02/15/18 1,000,000 922,940
--------------------------------------------------------------
Sr. Unsec. Notes, 7.88%,
12/15/07 6,850,000 6,641,280
--------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(b) 3,930,000 2,456,250
--------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(b) 4,100,000 2,224,250
--------------------------------------------------------------
Lenfest Communications, Inc., Sr.
Unsec. Sub. Notes, 8.25%,
02/15/08 5,000,000 4,953,350
--------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B, Sr.
Unsec. Disc. Yankee Notes,
13.38%, 11/01/09(b) 6,000,000 2,940,000
--------------------------------------------------------------
45,665,656
--------------------------------------------------------------
|
FS-40
PRINCIPAL MARKET
AMOUNT VALUE
BUILDING MATERIALS-0.48%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 $ 2,750,000 $ 2,818,750
--------------------------------------------------------------
CHEMICALS-0.48%
Sterling Chemicals, Inc.-Series B,
Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 2,750,000 2,846,250
--------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.02%
Key Plastics Holdings, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 03/15/07(c) 1,325,000 139,125
--------------------------------------------------------------
COMPUTERS (HARDWARE)-0.37%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/20/98; Cost
$2,000,000)(a) 2,000,000 1,450,000
--------------------------------------------------------------
Lattice Semiconductor Corp., Conv.
Notes, 4.75%, 11/01/06 (Acquired
12/03/99; Cost $538,200)(a) 390,000 705,412
--------------------------------------------------------------
2,155,412
--------------------------------------------------------------
COMPUTERS (NETWORKING)-0.34%
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 2,025,000 2,014,875
--------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.62%
Equinix Inc., Sr. Notes, 13.00%,
12/01/07(d)(e) 3,540,000 3,655,050
--------------------------------------------------------------
CONSUMER FINANCE-2.56%
Capital One Financial Corp.,
Unsec. Notes, 7.25%, 05/01/06 2,500,000 2,306,150
--------------------------------------------------------------
CitiFinancial Credit Co., Putable
Notes, 7.88%, 02/01/25 1,400,000 1,410,738
--------------------------------------------------------------
Countrywide Home Loans,
Inc.-Series H, Unsec. Gtd.
Medium Term Sub Notes, 6.25%,
04/15/09 1,600,000 1,397,712
--------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 5.75%, 11/10/03 2,500,000 2,386,100
--------------------------------------------------------------
Household Finance Corp., Sr.
Unsec. Notes, 8.00%, 05/09/05 2,500,000 2,519,125
--------------------------------------------------------------
MBNA Capital I-Series A, Gtd.
Bonds, 8.28%, 12/01/26 6,065,000 5,084,047
--------------------------------------------------------------
15,103,872
--------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.23%
Fleming Companies, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 1,600,000 1,352,000
--------------------------------------------------------------
ELECTRIC COMPANIES-6.69%
Cleveland Electric Illuminating
Co. (The)- Series D, Sr. Sec.
Notes, 7.88%, 11/01/17 3,800,000 3,638,895
--------------------------------------------------------------
CMS Energy Corp., Sr. Unsec.
Notes, 8.13%, 05/15/02 850,000 847,033
--------------------------------------------------------------
El Paso Electric Co.-Series E,
Sec. First Mortgage Bonds,
9.40%, 05/01/11 3,000,000 3,163,560
--------------------------------------------------------------
Indiana Michigan Power Co.-Series
F, Sec. Lease Obligation Bonds,
9.82%, 12/07/22 4,967,714 5,374,371
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC COMPANIES-(CONTINUED)
Niagara Mohawk Holdings Inc.,
First Mortgage Notes, 7.75%,
05/15/06 $ 4,300,000 $ 4,262,031
--------------------------------------------------------------
Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(b) 10,000,000 7,649,300
--------------------------------------------------------------
Public Service Company of New
Mexico- Series A, Sr. Unsec.
Notes, 7.10%, 08/01/05 1,200,000 1,166,412
--------------------------------------------------------------
Southern Energy, Inc., Sr. Notes,
7.90%, 07/15/09 (Acquired
07/21/99-12/03/99; Cost
$5,978,820)(a) 6,000,000 5,551,320
--------------------------------------------------------------
Texas-New Mexico Power Co., Sr.
Sec. Notes, 6.25%, 01/15/09 4,050,000 3,476,317
--------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes, 7.13%, 08/01/09 5,352,000 4,384,572
--------------------------------------------------------------
39,513,811
--------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.55%
Israel Electric Corp. Ltd.
(Israel),
Series E, Sr. Sec. Medium Term
Yankee Notes, 7.75%, 03/01/09
(Acquired 04/13/00; Cost
$2,138,136)(a) 2,200,000 2,125,200
--------------------------------------------------------------
Yankee Deb., 7.75%, 12/15/27
(Acquired 06/09/00; Cost
$1,141,374)(a) 1,300,000 1,138,878
--------------------------------------------------------------
3,264,078
--------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.38%
Morrison Knudsen Corp., Sr. Notes,
11.00%, 07/01/10 (Acquired
06/28/00; Cost $2,233,395)(a) 2,250,000 2,244,375
--------------------------------------------------------------
ENTERTAINMENT-2.32%
Callahan Nordrhein Westfalen
(Denmark), Sr. Yankee Notes,
14.00%, 07/15/10 (Acquired
06/29/00; Cost $1,100,000)(a) 1,100,000 1,101,375
--------------------------------------------------------------
Time Warner Inc., Deb.,
9.13%, 01/15/13 5,000,000 5,434,900
--------------------------------------------------------------
9.15%, 02/01/23 6,500,000 7,133,620
--------------------------------------------------------------
13,669,895
--------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-3.86%
Associates Corp. of North America,
Sr. Deb., 6.95%, 11/01/18 1,000,000 884,380
--------------------------------------------------------------
Beaver Valley Funding Corp., Sec.
Lease Obligations Deb., 9.00%,
06/01/17 1,500,000 1,483,665
--------------------------------------------------------------
Citicorp Lease-Class A2, Series
1999-1, Pass Through Ctfs.,
8.04%, 12/15/19 (Acquired
06/01/00; Cost $2,172,874)(a) 2,200,000 2,193,576
--------------------------------------------------------------
General Electric Capital
Corp.-Series A, Medium Term
Notes, 7.38%, 01/19/10 5,600,000 5,650,064
--------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec.
Notes,
7.38%, 11/01/09 1,750,000 1,647,520
--------------------------------------------------------------
8.00%, 06/15/05 2,300,000 2,295,009
--------------------------------------------------------------
Hutchison Delta Finance
Ltd.-Series REGS (Cayman
Islands), Conv. Unsec. Euro
Notes, 7.00%, 11/08/02 2,000,000 2,350,000
--------------------------------------------------------------
Source One Mortgage Services
Corp., Deb., 9.00%, 06/01/12 1,130,000 1,200,627
--------------------------------------------------------------
|
FS-41
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Sumitomo Bank International
Finance N.V. (Japan), Gtd. Sub.
Yankee Notes, 8.50%, 06/15/09 $ 4,350,000 $ 4,407,289
--------------------------------------------------------------
Sun Canada Financial Co., Gtd.
Sub. Notes, 6.63%, 12/15/07
(Acquired 10/14/99; Cost
$654,311)(a) 700,000 667,533
--------------------------------------------------------------
22,779,663
--------------------------------------------------------------
FOODS-0.85%
Grand Metropolitan Investment,
Gtd. Bonds, 7.45%, 04/15/35 5,000,000 5,006,000
--------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.60%
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 3,500,000 3,552,500
--------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.35%
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Notes, 12.63%, 02/15/08(d) 2,000,000 2,050,000
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.49%
O'Sullivan Industries, Inc., Sr.
Sub. Notes, 13.38%, 10/15/09 3,000,000 2,902,500
--------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.45%
Procter & Gamble Co. (The),
Putable Deb., 8.00%, 09/01/24 2,500,000 2,646,125
--------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.06%
American General Finance Corp.,
Sr. Notes, 8.45%, 10/15/09 2,100,000 2,159,472
--------------------------------------------------------------
Americo Life, Inc., Sr. Sub.
Notes, 9.25%, 06/01/05 1,000,000 945,000
--------------------------------------------------------------
John Hancock Global Funding II,
Sec. Medium Term Notes, 7.90%,
07/02/10 (Acquired 06/23/00;
Cost $1,995,220)(a) 2,000,000 2,013,800
--------------------------------------------------------------
Torchmark Corp., Notes, 7.88%,
05/15/23 1,325,000 1,127,668
--------------------------------------------------------------
6,245,940
--------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.43%
AIG SunAmerica Global Financing
II, Sr. Sec. Notes, 7.60%,
06/15/05 (Acquired 06/08/00;
Cost $2,500,000)(a) 2,500,000 2,518,025
--------------------------------------------------------------
INSURANCE (PROPERTY &
CASUALTY)-1.48%
GE Global Insurance Holdings
Corp., Notes, 7.75%, 06/15/30 4,800,000 4,760,112
--------------------------------------------------------------
Terra Nova Insurance PLC (United
Kingdom), Sr. Unsec. Gtd. Yankee
Notes,
7.00%, 05/15/08 2,000,000 1,873,480
--------------------------------------------------------------
7.20%, 08/15/07 2,200,000 2,094,466
--------------------------------------------------------------
8,728,058
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
INVESTMENT BANKING/BROKERAGE-1.72%
Lehman Brothers Holdings Inc.,
Notes, 8.50%, 08/01/15 $ 4,490,000 $ 4,426,691
--------------------------------------------------------------
Sr. Sub. Notes, 7.38%, 01/15/07 3,585,000 3,403,025
--------------------------------------------------------------
Series E, Medium Term Notes,
9.09%, 02/10/28(f) 8,700,000 679,557
--------------------------------------------------------------
Putable Sr. Notes, 8.80%,
03/01/15 1,640,000 1,657,417
--------------------------------------------------------------
10,166,690
--------------------------------------------------------------
IRON & STEEL-0.15%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(c) 3,240,000 502,200
--------------------------------------------------------------
GS Technologies Operating Co.,
Inc., Sr. Gtd. Notes, 12.00%,
09/01/04 1,585,000 404,175
--------------------------------------------------------------
906,375
--------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.27%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 2,075,000 1,602,937
--------------------------------------------------------------
LODGING-HOTELS-0.30%
John Q. Hammons Hotels, Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 2,000,000 1,760,000
--------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.22%
Anthony Crane Rentals LP-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 1,500,000 982,500
--------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07(c) 2,310,000 334,950
--------------------------------------------------------------
1,317,450
--------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.79%
Brand Scaffold Services, Inc., Sr.
Unsec. Notes, 10.25%, 02/15/08 1,600,000 1,416,000
--------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 2,070,000 2,038,950
--------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes,
12.75%, 06/15/10 (Acquired
06/15/00; Cost $1,163,834)(a) 1,180,000 1,182,950
--------------------------------------------------------------
4,637,900
--------------------------------------------------------------
METALS MINING-0.90%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 2,500,000 2,012,500
--------------------------------------------------------------
Rio Algom Ltd. (Canada), Unsec.
Yankee Deb., 7.05%, 11/01/05 3,500,000 3,325,280
--------------------------------------------------------------
5,337,780
--------------------------------------------------------------
NATURAL GAS-3.10%
Dynegy Inc., Sr. Unsec. Deb.,
7.13%, 05/15/18 3,550,000 3,121,764
--------------------------------------------------------------
Enron Corp.,
Series A, Medium Term Notes,
8.38%, 05/23/05 1,750,000 1,797,198
--------------------------------------------------------------
Sr. Sub. Deb., 8.25%, 09/15/12 4,100,000 4,184,870
--------------------------------------------------------------
KN Capital Trust III, Gtd. Sub.
Bonds, 7.63%, 04/15/28 2,500,000 2,150,475
--------------------------------------------------------------
|
FS-42
PRINCIPAL MARKET
AMOUNT VALUE
NATURAL GAS-(CONTINUED)
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 $ 3,000,000 $ 3,134,430
--------------------------------------------------------------
Sonat Inc., Unsec. Notes, 7.63%,
07/15/11 4,000,000 3,921,440
--------------------------------------------------------------
18,310,177
--------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.54%
NRG Energy, Inc., Sr. Unsec.
Notes, 7.50%, 06/01/09 3,400,000 3,203,344
--------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-2.08%
Den Norske Stats Oljeselskap
(Norway), Yankee Deb., 7.38%,
05/01/16 (Acquired 06/01/00;
Cost $2,064,678)(a) 2,200,000 2,081,860
--------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%,
08/15/06 3,500,000 3,491,040
--------------------------------------------------------------
Talisman Energy Inc. (Canada),
Yankee Deb., 7.13%, 06/01/07 3,750,000 3,582,338
--------------------------------------------------------------
Union Pacific Resources Group
Inc., Unsec. Deb., 7.50%,
10/15/26 3,350,000 3,148,565
--------------------------------------------------------------
12,303,803
--------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.85%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 2,010,000 1,718,550
--------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%,
01/01/27 3,400,000 3,291,914
--------------------------------------------------------------
5,010,464
--------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-1.26%
Amerada Hess Corp., Bonds, 7.88%,
10/01/29 3,000,000 2,933,220
--------------------------------------------------------------
Occidental Petroleum Corp., Sr.
Deb., 9.25%, 08/01/19 4,100,000 4,472,854
--------------------------------------------------------------
7,406,074
--------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.60%
YPF Sociedad Anonima (Argentina),
Yankee Bonds, 9.13%, 02/24/09 3,500,000 3,559,675
--------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.66%
Domtar, Inc. (Canada), Unsec.
Yankee Deb., 9.50%, 08/01/16 3,750,000 3,914,063
--------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.40%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 2,220,000 2,328,225
--------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.47%
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20 (Acquired
04/30/98; Cost $1,981,883)(a) 1,977,000 1,799,129
--------------------------------------------------------------
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 985,892 971,103
--------------------------------------------------------------
2,770,232
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
PUBLISHING (NEWSPAPERS)-2.32%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 $ 7,000,000 $ 7,121,310
--------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 5,250,000 5,621,175
--------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds,
7.43%, 10/01/26 1,000,000 961,540
--------------------------------------------------------------
13,704,025
--------------------------------------------------------------
RAILROADS-1.19%
CSX Corp., Sr. Unsec. Putable
Deb., 7.25%, 05/01/27 7,250,000 7,045,623
--------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-0.84%
ERP Operating L.P., Unsec. Notes,
7.13%, 10/15/17 2,400,000 1,987,872
--------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.63%, 03/15/08 1,500,000 1,243,290
--------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Deb., 7.35%, 12/01/17 2,000,000 1,751,580
--------------------------------------------------------------
4,982,742
--------------------------------------------------------------
RETAIL (SPECIALTY)-1.07%
Amazon.com, Inc., Conv. Deb.,
4.75%, 02/01/09 (Acquired
01/29/99; Cost $2,507,500)(a) 2,500,000 1,584,375
--------------------------------------------------------------
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 715,000 661,375
--------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 5,190,000 3,243,750
--------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 820,000 799,500
--------------------------------------------------------------
6,289,000
--------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.26%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 1,625,000 1,511,250
--------------------------------------------------------------
SAVINGS & LOAN COMPANIES-2.07%
Dime Capital Trust I-Series A,
Gtd. Bonds, 9.33%, 05/06/27 2,380,000 2,176,629
--------------------------------------------------------------
Sovereign Bancorp, Inc., Medium
Term Sub. Notes, 8.00%, 03/15/03 5,050,000 4,789,925
--------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec.
Notes, 7.13%, 02/15/04 1,500,000 1,446,345
--------------------------------------------------------------
Washington Mutual Cap I,
Sec. Gtd. Bonds, 8.38%, 06/01/27 1,485,000 1,331,778
--------------------------------------------------------------
Sub. Notes, 8.25%, 04/01/10 2,500,000 2,484,900
--------------------------------------------------------------
12,229,577
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.33%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 1,850,000 1,937,875
--------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.32%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 1,980,000 1,881,000
--------------------------------------------------------------
|
FS-43
PRINCIPAL MARKET
AMOUNT VALUE
SOVEREIGN DEBT-1.56%
Newfoundland (Province of)
(Canada), Unsec. Yankee Deb.,
9.00%, 06/01/19 $ 4,000,000 $ 4,511,080
--------------------------------------------------------------
Quebec (Province of)
(Canada)-Series A, Medium Term
Putable Yankee Notes, 6.29%,
03/06/26(g) 4,800,000 4,684,368
--------------------------------------------------------------
9,195,448
--------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.24%
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 1,100,000 1,122,000
--------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes,
11.88%, 06/15/05 1,940,000 1,387,100
--------------------------------------------------------------
Nextel Communications, Inc., Sr.
Notes, 12.00%, 11/01/08 3,375,000 3,645,000
--------------------------------------------------------------
Orion Network Systems, Inc., Sr.
Gtd. Sub. Notes, 11.25%,
01/15/07 2,000,000 1,170,000
--------------------------------------------------------------
7,324,100
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-4.31%
360networks Inc. (Canada),
Sr. Unsec. Yankee Notes, 12.00%,
08/01/09 1,000,000 955,000
--------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 1,430,000 1,472,900
--------------------------------------------------------------
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 3,500,000 3,132,500
--------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 1,500,000 1,177,500
--------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Unsec. Notes,
11.25%, 01/15/09 3,500,000 2,747,500
--------------------------------------------------------------
12.75%, 10/15/09 1,560,000 1,255,800
--------------------------------------------------------------
RSL Communications PLC (United
Kingdom), Sr. Unsec. Gtd. Yankee
Notes, 12.88%, 03/01/10
(Acquired 02/14/00; Cost
$4,965,000)(a) 5,000,000 3,725,000
--------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%,
10/15/19 2,500,000 2,841,150
--------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands), Sr. Yankee
Notes, 13.25%, 05/15/08 1,370,000 1,404,250
--------------------------------------------------------------
Williams Communications Group,
Inc., Sr. Unsec. Notes, 10.70%,
10/01/07 3,000,000 2,985,000
--------------------------------------------------------------
WorldCom, Inc., Notes, 8.00%,
05/15/06 3,650,000 3,703,546
--------------------------------------------------------------
25,400,146
--------------------------------------------------------------
TELEPHONE-4.39%
Alestra S.A. (Mexico), Sr. Yankee
Notes, 12.63%, 05/15/09 2,380,000 2,142,000
--------------------------------------------------------------
AT&T Canada Inc. (Canada), Sr.
Unsec. Yankee Notes 7.65%,
09/15/06 2,800,000 2,775,962
--------------------------------------------------------------
Bell Atlantic Financial Services,
Inc.- Series REGS, Conv. Bonds,
4.25%, 09/15/05 2,700,000 3,268,480
--------------------------------------------------------------
Deutsche Telekom International
Finance B.V. (Netherlands),
Unsec. Unsub. Yankee Bonds,
8.00%, 06/15/10 2,700,000 2,729,889
--------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%, 02/15/08(b) 4,000,000 2,224,160
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE-(CONTINUED)
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 $ 1,000,000 $ 352,500
--------------------------------------------------------------
Qwest Communications International
Inc., Sr. Unsec. Notes, 7.50%,
11/01/08 3,050,000 2,947,062
--------------------------------------------------------------
Telefonos de Mexico S.A. de C.V.
(Mexico), Conv. Yankee Notes,
4.25%, 06/15/04 3,000,000 4,035,000
--------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 5,000,000 5,462,500
--------------------------------------------------------------
25,937,553
--------------------------------------------------------------
TRUCKERS-1.17%
North American Van Lines Inc., Sr.
Sub. Notes, 13.38%, 12/01/09(d) 5,000,000 4,725,000
--------------------------------------------------------------
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 2,180,000 2,207,250
--------------------------------------------------------------
6,932,250
--------------------------------------------------------------
WASTE MANAGEMENT-2.89%
Allied Waste North America
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 08/01/09(d) 4,920,000 4,132,800
--------------------------------------------------------------
Browning-Ferris Industries, Inc.,
Deb.,
7.40%, 09/15/35 1,200,000 750,000
--------------------------------------------------------------
9.25%, 05/01/21 2,570,000 2,068,850
--------------------------------------------------------------
Waste Management, Inc., Sr. Unsec.
Notes,
7.13%, 10/01/07 3,710,000 3,395,318
--------------------------------------------------------------
7.13%, 12/15/17 935,000 772,974
--------------------------------------------------------------
Unsec. Putable Notes, 7.10%,
08/01/26 6,270,000 5,967,284
--------------------------------------------------------------
17,087,226
--------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$523,626,173) 491,812,188
--------------------------------------------------------------
|
PRINCIPAL
AMOUNT(h)
NON-U.S. DOLLAR DENOMINATED BONDS
& NOTES-9.08%
AUSTRALIA-0.37%
State Bank New South Wales-Series
E (Banks-Major Regional), Sr.
Unsec. Gtd. Medium Term Notes,
8.63%, 08/20/01 AUD 3,600,000 2,200,827
--------------------------------------------------------------
CANADA-3.38%
AT&T Canada Inc. (Telephone), Sr.
Unsec. Notes, 7.15%, 09/23/04CAD 1,150,000 785,929
--------------------------------------------------------------
Bell Mobility Cellular Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 CAD 2,250,000 1,491,097
--------------------------------------------------------------
Canadian Pacific Ltd.-Series D
(Manufacturing-Diversified),
Unsec. Medium Term Notes, 5.85%,
03/30/09 (Acquired 03/24/99;
Cost $2,149,250)(a) CAD 3,250,000 2,037,336
--------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes,
10.40%, 05/15/08(b) CAD 9,050,000 3,716,789
--------------------------------------------------------------
11.75%, 08/13/07(b) CAD 8,200,000 3,852,758
--------------------------------------------------------------
|
FS-44
PRINCIPAL MARKET
AMOUNT(h) VALUE
CANADA-(CONTINUED)
Export Development Corp.
(Sovereign Debt), Sr. Unsec.
Unsub. Notes, 6.50%, 12/21/04NZD 2,150,000 $ 960,413
--------------------------------------------------------------
Microcell Telecommunications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.13%,
10/15/07(b) CAD 3,500,000 1,567,570
--------------------------------------------------------------
Ontario (Province of) (Sovereign
Debt), Unsec. Unsub. Notes,
6.25%, 12/03/08 NZD 2,500,000 1,044,765
--------------------------------------------------------------
Rogers Cablesystems
(Broadcasting-Television, Radio
& Cable), Sr. Sec. Second
Priority Deb., 9.65%,
01/15/14 CAD 3,300,000 2,348,060
--------------------------------------------------------------
TransCanada Pipelines-Series Q
(Natural Gas), Deb., 10.63%,
10/20/09 CAD 1,750,000 1,458,077
--------------------------------------------------------------
Westcoast Energy Inc.-Series V
(Natural Gas), Unsec. Deb.,
6.45%, 12/18/06 (Acquired
12/03/96; Cost $739,169)(a) CAD 1,000,000 670,072
--------------------------------------------------------------
19,932,866
--------------------------------------------------------------
CAYMAN ISLANDS-0.53%
Sutton Bridge Financial Ltd.
(Power Producers-Independent),
Gtd. Euro Bonds, 8.63%,
06/30/22(d) GBP 2,000,000 3,106,341
--------------------------------------------------------------
FRANCE-0.54%
Vivendi Environment (Waste
Management), Conv. Bonds, 1.50%,
01/01/05 EUR 1,050,000 3,194,010
--------------------------------------------------------------
NETHERLANDS-1.24%
Grapes Communications N.V.
(Telecommunications-Cellular/Wireless),
Sr. Notes, 13.50%, 05/15/10
(Acquired 05/03/00; Cost
$2,085,640)(a)(e) EUR 2,300,000 2,049,104
--------------------------------------------------------------
Tecnost International
N.V.-(Telephone) Series E, Gtd.
Medium Term Notes, 6.13%,
07/30/09 EUR 2,050,000 1,753,828
--------------------------------------------------------------
Tele1 Europe B.V.
(Telecommunications-Long
Distance), Sr. Notes, 11.88%,
12/01/09 (Acquired 12/08/99;
Cost $3,834,750)(a) EUR 3,750,000 3,519,590
--------------------------------------------------------------
7,322,522
--------------------------------------------------------------
NEW ZEALAND-0.35%
Inter-American Development Bank
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 4,750,000 2,086,729
--------------------------------------------------------------
NORWAY-0.39%
Enitel ASA
(Telecommunications-Long
Distance), Sr. Notes, 12.50%,
04/15/10 (Acquired 03/30/00;
Cost $2,380,375)(a)(e) EUR 2,500,000 2,334,482
--------------------------------------------------------------
UNITED KINGDOM-2.28%
Airtours PLC (Services-Commercial
& Consumer), Conv. Sub. Notes,
5.75%, 01/05/04 (Acquired
12/09/98; Cost $3,091,887)(a)GBP 1,869,000 2,703,902
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT(h) VALUE
UNITED KINGDOM-(CONTINUED)
British Sky Broadcasting Group PLC
(Broadcasting-Television, Radio
& Cable), Sr. Gtd. Unsec. Unsub.
Notes, 7.75%, 07/09/09 GBP 1,750,000 $ 2,552,268
--------------------------------------------------------------
Energis PLC (Telephone), Sr.
Notes, 9.13%, 03/15/10 (Acquired
02/07/00; Cost $4,767,300)(a)GBP 3,000,000 4,316,054
--------------------------------------------------------------
Jazztel PLC (Telephone), Sr.
Unsec. Notes, 13.25%,
12/15/09 EUR 2,260,000 1,948,864
--------------------------------------------------------------
Scotia Holdings PLC (Health
Care-Drugs- Generic & Other),
Conv. Unsec. Notes, 8.50%,
03/26/02 GBP 1,500,000 1,921,273
--------------------------------------------------------------
13,442,361
--------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Bonds & Notes
(Cost $60,059,331) 53,620,138
--------------------------------------------------------------
|
SHARES
STOCKS & OTHER EQUITY
INTERESTS-3.09%
BANKS (REGIONAL)-1.05%
First Republic Capital
Corp.-Series A-Pfd. (Acquired
05/26/99; Cost $3,500,000)(a) 3,500 3,081,750
--------------------------------------------------------------
Westpac Banking Corp., STRYPES
Trust-$3.14 Conv. Pfd. 95,000 3,135,000
--------------------------------------------------------------
6,216,750
--------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.00%
Knology Inc.-Wts., expiring
10/22/07 (Acquired 03/12/98;
Cost $0)(a)(i) 4,100 10,250
--------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.00%
Equinix Inc.-Wts., expiring
12/01/07 (Acquired 05/30/00;
Cost $0)(a)(i) 3,540 36
--------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.28%
Microsoft Corp.(i) 20,291 1,623,280
--------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc.-Wts.,
expiring 02/01/04(i) 3,630 3,630
--------------------------------------------------------------
FOODS-0.11%
Ralston Purina Group.-$4.34 Conv.
Pfd. 23,000 652,625
--------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.02%
O'Sullivan Industries, Inc.-Wts.,
expiring 11/05/09 (Acquired
06/13/00; Cost $0)(a)(i) 6,000 135,000
--------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc.-Wts.,
expiring 04/15/03(i) 1,650 17
--------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.36%
Cendant Corp.-$3.75 Conv. PRIDES 78,000 1,696,500
--------------------------------------------------------------
Cendant Corp.-Rts., expiring
02/14/01(i) 50,000 421,875
--------------------------------------------------------------
2,118,375
--------------------------------------------------------------
|
FS-45
MARKET
SHARES VALUE
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.49%
Clearnet Communications Inc.-Class
A-ADR (Canada)(j) 5,874 $ 163,095
--------------------------------------------------------------
Loral Space & Communications
Ltd.(j) 2,059 14,284
--------------------------------------------------------------
WebLink Wireless, Inc.(j) 204,685 2,712,076
--------------------------------------------------------------
2,889,455
--------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.78%
Versatel Telecom International
N.V.-ADR (Netherlands)(j) 17,663 761,717
--------------------------------------------------------------
Viatel, Inc., $3.88 Conv. Pfd.
(Acquired 04/07/00; Cost
$5,000,000)(a) 100,000 3,825,000
--------------------------------------------------------------
4,586,717
--------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost $21,633,642) 18,236,135
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY NOTES-1.38%
6.63%, 05/31/02 $ 3,000,000 $ 3,013,290
--------------------------------------------------------------
6.75%, 05/15/05 3,000,000 3,071,730
--------------------------------------------------------------
6.50%, 02/15/10 2,000,000 2,068,760
--------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $8,113,242) 8,153,780
--------------------------------------------------------------
|
SHARES
MONEY MARKET FUNDS-2.14%
STIC Liquid Assets Portfolio(k) 6,316,692 6,316,692
--------------------------------------------------------------
STIC Prime Portfolio(k) 6,316,692 6,316,692
--------------------------------------------------------------
Total Money Market Funds (Cost
$12,633,384) 12,633,384
--------------------------------------------------------------
TOTAL INVESTMENTS-99.00% (Cost
$626,065,772) 584,455,625
--------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.00% 5,920,060
--------------------------------------------------------------
NET ASSETS-100.00% $590,375,685
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt AUD - Australian Dollar CAD - Canadian Dollar Conv. - Convertible Ctfs. - Certificates Deb. - Debentures Disc. - Discounted EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred PRIDES - Preferred Redemption Increase Dividend Equity Security REIT - Real Estate Investment Trust REGS - Regulation S Rts. - Rights Sec. - Secured Sr. - Senior |
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/00 was $75,712,864 which
represented 12.83% of the Fund's net assets.
(b)Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(c)Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d)Represents a security sold under Rule 144A, which is exempt from registration
and may be resold to qualified institutional buyers in accordance with the
provisions of Rule 144A under the Securities Act of 1993, as amended.
(e)Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable the
holder to purchase shares of the issuer at a predetermined price.
(f)Zero coupon bond issued at a discount. The interest rate shown represents the
rate of original issue discount.
(g)Step-up bond. The interest rate represents the coupon rate at which the bond
will accrue at a specified future date.
(h)Foreign denominated security. Par value is denominated in currency indicated.
(i)Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(j)Non-income producing security.
(k)The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-46
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------ ------------
ASSETS:
Investments, at market value (cost $619,804,769 and
$626,065,772, respectively) $578,026,632 $584,455,625
-----------------------------------------------------------------------------------------
Foreign currencies, at value (cost $83 and $160,926,
respectively) 82 163,675
-----------------------------------------------------------------------------------------
Receivables for:
Investments sold 1,733,489 1,437,500
-----------------------------------------------------------------------------------------
Fund shares sold 1,154,862 1,062,228
-----------------------------------------------------------------------------------------
Dividends and interest 12,236,502 12,367,451
-----------------------------------------------------------------------------------------
Foreign currency contracts outstanding 110,436 --
-----------------------------------------------------------------------------------------
Investment for deferred compensation plan 72,796 71,144
-----------------------------------------------------------------------------------------
Other assets 83,246 47,748
-----------------------------------------------------------------------------------------
Total assets 593,418,045 599,605,371
-----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 3,173,618 6,024,134
-----------------------------------------------------------------------------------------
Fund shares reacquired 1,410,536 1,461,242
-----------------------------------------------------------------------------------------
Dividends 787,035 747,496
-----------------------------------------------------------------------------------------
Foreign currency contracts outstanding 13,281 160,217
-----------------------------------------------------------------------------------------
Deferred compensation plan 72,796 71,144
-----------------------------------------------------------------------------------------
Accrued advisory fees 208,724 205,649
-----------------------------------------------------------------------------------------
Accrued administrative services fees 10,386 10,048
-----------------------------------------------------------------------------------------
Accrued distribution fees 297,122 508,206
-----------------------------------------------------------------------------------------
Accrued transfer agent fees 126,597 25,226
-----------------------------------------------------------------------------------------
Accrued trustees' fees 2,940 1,975
-----------------------------------------------------------------------------------------
Accrued operating expenses 85,748 14,349
-----------------------------------------------------------------------------------------
Total liabilities 6,188,783 9,229,686
-----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $587,229,262 $590,375,685
=========================================================================================
NET ASSETS:
Class A $346,482,284 $348,151,991
=========================================================================================
Class B $213,926,095 $215,588,680
=========================================================================================
Class C $ 26,820,883 $ 26,635,014
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 48,538,788 48,430,694
=========================================================================================
Class B 29,967,838 29,992,412
=========================================================================================
Class C 3,764,038 3,712,180
=========================================================================================
Class A:
Net asset value and redemption price per share $ 7.14 $ 7.19
-----------------------------------------------------------------------------------------
Offering price per share:
(Net asset value / 95.25%) $ 7.50 $ 7.55
=========================================================================================
Class B:
Net asset value and offering price per share $ 7.14 $ 7.19
=========================================================================================
Class C:
Net asset value and offering price per share $ 7.13 $ 7.18
=========================================================================================
|
See Notes to Financial Statements.
FS-47
STATEMENT OF OPERATIONS
SIX MONTHS
SEVEN MONTHS ENDED YEAR
ENDED JUNE 30, ENDED
JULY 31, 2000 DECEMBER 31,
2000 (UNAUDITED) 1999
------------ ------------ ------------
INVESTMENT INCOME:
Interest $30,576,443 $ 26,203,763 $ 52,455,832
---------------------------------------------------------------------------------------------------------
Dividends 911,287 715,119 838,880
---------------------------------------------------------------------------------------------------------
Dividends -- affiliated issuers 694,358 653,607 185,198
---------------------------------------------------------------------------------------------------------
Total investment income 32,182,088 27,572,489 53,479,910
---------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,512,830 1,304,106 2,785,338
---------------------------------------------------------------------------------------------------------
Administrative services fee 72,169 61,783 111,839
---------------------------------------------------------------------------------------------------------
Custodian fees 65,213 46,970 102,279
---------------------------------------------------------------------------------------------------------
Distribution fees -- Class A 529,667 456,012 1,006,620
---------------------------------------------------------------------------------------------------------
Distribution fees -- Class B 1,299,325 1,116,968 2,401,345
---------------------------------------------------------------------------------------------------------
Distribution fees -- Class C 156,134 133,454 244,571
---------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class A 432,953 320,021 649,179
---------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class B 275,244 205,547 405,725
---------------------------------------------------------------------------------------------------------
Transfer agent fees -- Class C 33,074 24,561 41,321
---------------------------------------------------------------------------------------------------------
Trustees' fees 5,541 2,636 10,727
---------------------------------------------------------------------------------------------------------
Other 186,723 130,067 306,728
---------------------------------------------------------------------------------------------------------
Total expenses 4,568,873 3,802,125 8,065,672
---------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (15,928) (13,190) (12,978)
---------------------------------------------------------------------------------------------------------
Net expenses 4,552,945 3,788,935 8,052,694
---------------------------------------------------------------------------------------------------------
Net investment income 27,629,143 23,783,554 45,427,216
---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FOREIGN CURRENCY CONTRACTS
AND FUTURES CONTRACTS
Net realized gain (loss) from:
Investment securities (28,885,502) (24,377,258) (21,513,111)
---------------------------------------------------------------------------------------------------------
Foreign currencies (584,731) (566,812) (246,991)
---------------------------------------------------------------------------------------------------------
Foreign currency contracts 1,402,270 1,331,070 1,947,070
---------------------------------------------------------------------------------------------------------
Futures contracts (854,156) (854,156) (76,650)
---------------------------------------------------------------------------------------------------------
(28,922,119) (24,467,156) (19,889,682)
---------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (10,459,347) (10,291,356) (47,772,599)
---------------------------------------------------------------------------------------------------------
Foreign currencies (48,107) (48,243) (1,694)
---------------------------------------------------------------------------------------------------------
Foreign currency contracts (238,061) (495,433) (36,322)
---------------------------------------------------------------------------------------------------------
(10,745,515) (10,835,032) (47,810,615)
---------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign
currencies, foreign currency contracts and futures
contracts (39,667,634) (35,302,188) (67,700,297)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(12,038,491) $(11,518,634) $(22,273,081)
=========================================================================================================
|
See Notes to Financial Statements.
FS-48
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
SEVEN MONTHS ENDED YEAR YEAR
ENDED JUNE 30, ENDED ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income $27,629,143 $ 23,783,554 $45,427,216 $ 35,484,095
-----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts and
futures contracts (28,922,119) (24,467,156) (19,889,682) (2,670,536)
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, foreign
currency contracts and futures contracts (10,745,515) (10,835,032) (47,810,615) (8,393,729)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (12,038,491) (11,518,634) (22,273,081) 24,419,830
-----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (12,352,865) (9,986,195) (27,905,932) (24,056,371)
-----------------------------------------------------------------------------------------------------------------------
Class B (6,412,480) (5,114,084) (14,665,005) (9,376,348)
-----------------------------------------------------------------------------------------------------------------------
Class C (772,178) (612,189) (1,497,538) (561,222)
-----------------------------------------------------------------------------------------------------------------------
Return of capital distributions:
Class A (3,591,530) -- -- --
-----------------------------------------------------------------------------------------------------------------------
Class B (2,203,866) -- -- --
-----------------------------------------------------------------------------------------------------------------------
Class C (265,128) -- -- --
-----------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- (3,737,159) -- (2,510,957)
-----------------------------------------------------------------------------------------------------------------------
Class B -- (2,290,070) -- (1,354,867)
-----------------------------------------------------------------------------------------------------------------------
Class C -- (273,821) -- (120,997)
-----------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (24,315,697) (25,082,235) 33,756,872 67,975,662
-----------------------------------------------------------------------------------------------------------------------
Class B (17,373,034) (17,193,094) 49,567,754 97,469,590
-----------------------------------------------------------------------------------------------------------------------
Class C 225,211 (146,154) 11,280,738 17,151,361
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (79,100,058) (75,953,635) 28,263,808 169,035,681
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 666,329,320 666,329,320 638,065,512 469,029,831
-----------------------------------------------------------------------------------------------------------------------
End of period $587,229,262 $590,375,685 $666,329,320 $638,065,512
=======================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $671,562,117 $676,664,678 $719,086,161 $624,536,057
-----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (405,470) 422,211 (1,347,825) 68,804
-----------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts and futures contracts (42,216,290) (44,910,592) (20,443,436) (3,384,384)
-----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, foreign currency
contracts and futures contracts (41,711,095) (41,800,612) (30,965,580) 16,845,035
-----------------------------------------------------------------------------------------------------------------------
$587,229,262 $590,375,685 $666,329,320 $638,065,512
=======================================================================================================================
|
See Notes to Financial Statements.
FS-49
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Income Fund (the "Fund") is a series portfolio of AIM Investment Securities
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of seven separate portfolios,
each having an unlimited number of shares of beneficial interest. Prior to June
1, 2000 the Fund was organized as a series portfolio of AIM Funds Group. At a
meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
approved an Agreement and Plan of Reorganization (the "Reorganization") which
reorganized the Fund as a series portfolio of the Trust. Shareholders of the
Fund approved the Reorganization at a meeting held on May 31, 2000. Pursuant to
the Reorganization, the Fund's fiscal year-end was changed from December 31 to
July 31. This report includes financial information for the period ended July
31, 2000 (seven months), the six months ended June 30, 2000 and the year ended
December 31, 1999. Financial information for the six months ended June 30, 2000
is unaudited. The Fund currently offers three different classes of shares: Class
A shares, Class B shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to achieve a high level of current
income consistent with reasonable concern for safety of principal.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such securities
used in computing the net asset value of the Fund's shares are determined as
of such times. Foreign currency exchange rates are also generally determined
prior to the close of the NYSE. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the customary trading session of the NYSE
which would not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On July 31, 2000, undistributed net investment income was decreased by
$1,088,741, undistributed net realized gains increased by $7,149,265 and
paid-in capital decreased by $6,060,524 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- It is the policy of the Fund to declare dividends from net investment income daily and pay monthly. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income
FS-50
(including net realized capital gains) which is distributed to shareholders.
Therefore, no provision for federal income taxes is recorded in the financial
statements.
The Fund has a capital loss carryforward of $42,072,428 which may be
carried forward to offset future taxable gains, if any, which expires in
varying increments, if not previously utilized, in the year 2008.
E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding foreign currency contracts at July 31, 2000 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ------------------------ APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
--------------------- -------- ---------- ----------- ----------- --------------
08/04/00 CAD 14,000,000 $ 9,410,898 $ 9,417,720 $ (6,822)
-----------------------------------------------------------------------------------------
10/26/00 EUR 6,000,000 5,629,319 5,593,092 36,227
-----------------------------------------------------------------------------------------
10/24/00 GBP 6,000,000 9,071,200 9,003,450 67,750
-----------------------------------------------------------------------------------------
26,000,000 $24,111,417 $24,014,262 $ 97,155
-----------------------------------------------------------------------------------------
|
Outstanding foreign currency contracts at June 30, 2000 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ------------------------ APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
--------------------- -------- ---------- ----------- ----------- --------------
07/26/00 EUR 8,000,000 $ 7,538,400 $ 7,636,320 $ (97,920)
-----------------------------------------------------------------------------------------
08/04/00 CAD 14,000,000 9,410,898 9,473,195 (62,297)
-----------------------------------------------------------------------------------------
22,000,000 $16,949,298 $17,109,515 $(160,217)
-----------------------------------------------------------------------------------------
|
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged.
H. Bond Premiums -- It is the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes.
I. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.50% on the first
$200 million of the Fund's average daily net assets, plus 0.40% on the next $300
million of the Fund's average daily net assets, plus 0.35% on the next $500
million of the Fund's average daily net assets, plus 0.30% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the year ended December 31, 1999, AIM was
paid $72,169, $61,783 and $111,839, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $383,909, $331,354 and $668,106, respectively, for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing
FS-51
personal shareholder services to their customers who purchase and own the
appropriate class of shares of the Fund. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the seven-month period ended
July 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
$529,667, $1,299,325 and $156,134, respectively, as compensation under the
Plans. For the six months ended June 30, 2000, the Class A, Class B and Class C
shares paid AIM Distributors $456,012, $1,116,968 and $133,454, respectively, as
compensation under the Plans. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $1,006,620, $2,401,345, and
$244,571, respectively, as compensation under the Plans.
AIM Distributors received commissions of $133,679, $122,603 and $358,051 from
sales of the Class A shares of the Fund during the seven-month period ended July
31, 2000, the six months ended June 30, 2000 and the year ended December 31,
1999, respectively. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM Distributors received
$23,462, $24,692 and $48,455, respectively, in contingent deferred sales charges
imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the seven-month period ended July 31, 2000, the six months ended June
30, 2000 and the year ended December 31, 1999, the Fund paid legal fees of
$2,820, $2,181 and $4,426, respectively, for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Trust's trustees. A member of that firm
is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30,
2000 and the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $4,165, $3,387 and
$7,504, respectively, and reductions in custodian fees of $11,763, $9,803 and
$5,474, respectively, under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $15,928, $13,190 and $12,978 for the
seven-month period ended July 31, 2000, the six months ended June 30, 2000 and
the year ended December 31, 1999, respectively.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. Prior to May 28, 1999, the commitment
fee rate was 0.05%. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the seven-month period ended July 31, 2000 was $292,979,835 and $327,575,067, respectively, and during the six months ended June 30, 2000 was $263,297,463 and $305,548,063, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, is as follows:
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------ ------------
Aggregate unrealized
appreciation of investment
securities $ 7,751,605 $ 7,681,015
-------------------------------------------------------------
Aggregate unrealized
(depreciation) of investment
securities (49,576,450) (49,292,204)
-------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investment
securities $(41,824,845) $(41,611,189)
=============================================================
Cost of investments for tax purposes at July 31, 2000 and
June 30, 2000 were $619,851,477 and $626,066,814,
respectively.
|
FS-52
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
--------------------------- --------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ----------- -------------
Sold:
Class A 7,718,634 $ 56,674,366 6,815,059 $ 50,176,822 19,309,632 $ 154,855,498
------------------------------------------------------------------------------------------------------------------
Class B 4,326,094 31,759,218 3,836,635 28,237,367 14,308,868 114,665,985
------------------------------------------------------------------------------------------------------------------
Class C 1,046,350 7,655,971 915,255 6,715,122 2,744,473 21,843,332
------------------------------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 1,780,355 13,014,300 1,531,606 11,237,603 2,892,178 22,930,219
------------------------------------------------------------------------------------------------------------------
Class B 880,732 6,435,623 756,406 5,547,494 1,404,212 11,107,962
------------------------------------------------------------------------------------------------------------------
Class C 113,060 824,514 96,588 706,920 150,804 1,188,183
------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (12,794,917) (94,004,363) (11,750,687) (86,496,660) (18,052,165) (144,028,845)
------------------------------------------------------------------------------------------------------------------
Class B (7,508,184) (55,567,875) (6,869,825) (50,977,955) (9,612,004) (76,206,193)
------------------------------------------------------------------------------------------------------------------
Class C (1,120,567) (8,255,274) (1,024,858) (7,568,196) (1,483,247) (11,750,777)
------------------------------------------------------------------------------------------------------------------
(5,558,443) $(41,463,520) (5,693,821) $(42,421,483) 11,662,751 $ 94,605,364
------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
----------------------------
SHARES AMOUNT
----------- -------------
Sold:
Class A 18,358,462 $ 156,866,536
----------------------------------------------------
Class B 15,156,529 128,945,810
----------------------------------------------------
Class C 2,530,069 21,507,916
----------------------------------------------------
Issued as reinvestment
of dividends:
Class A 2,575,274 21,978,433
----------------------------------------------------
Class B 956,975 8,134,643
----------------------------------------------------
Class C 65,508 553,356
----------------------------------------------------
Reacquired:
Class A (12,996,807) (110,869,307)
----------------------------------------------------
Class B (4,664,899) (39,610,863)
----------------------------------------------------
Class C (581,112) (4,909,911)
----------------------------------------------------
21,399,999 $ 182,596,613
----------------------------------------------------
|
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- -------- -------- -------- -------- --------
Net asset value, beginning of
period $ 7.59 $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.34 0.29 0.57 0.57 0.55 0.57 0.58
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.47) (0.41) (0.81) (0.16) 0.39 0.09 1.00
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations (0.13) (0.12) (0.24) 0.41 0.94 0.66 1.58
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.25) (0.28) (0.55) (0.55) (0.52) (0.59) (0.61)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Distributions from net realized
gains -- -- -- (0.05) (0.09) -- --
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Return of capital (0.07) -- -- -- -- -- --
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.32) (0.28) (0.55) (0.60) (0.61) (0.59) (0.61)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.14 $ 7.19 $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total return(a) (1.70)% (1.65)% (2.92)% 4.94% 11.92% 8.58% 22.77%
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $346,482 $348,152 $393,414 $399,701 $340,608 $286,183 $251,280
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to average net
assets 0.97%(b) 0.93%(b) 0.91% 0.91% 0.94% 0.98% 0.98%
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Ratio of net investment income to
average net assets 8.03%(b) 8.04%(b) 7.11% 6.69% 6.55% 7.13% 7.52%
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Portfolio turnover rate 43% 45% 78% 41% 54% 80% 227%
----------------------------------- -------- -------- -------- -------- -------- -------- --------
|
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $364,052,981 and
$366,814,168 for July 31, 2000 and June 30, 2000, respectively.
FS-53
NOTE 8-FINANCIAL HIGHLIGHTS - (CONTINUED)
CLASS B
------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 --------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- -------- -------- -------- ------- -------
Net asset value, beginning of period $ 7.58 $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.31 0.27 0.50 0.50 0.48 0.50 0.53
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) (0.47) (0.42) (0.80) (0.15) 0.38 0.11 0.98
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Total from investment operations (0.16) (0.15) (0.30) 0.35 0.86 0.61 1.51
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net investment
income (0.21) (0.24) (0.49) (0.48) (0.45) (0.53) (0.54)
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Distributions from net realized
gains -- -- -- (0.05) (0.09) -- --
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Return of capital (0.07) -- -- -- -- -- --
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Total distributions (0.28) (0.24) (0.49) (0.53) (0.54) (0.53) (0.54)
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Net asset value, end of period $ 7.14 $ 7.19 $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Total return(a) (2.09)% (1.96)% (3.72)% 4.20% 10.89% 7.87% 21.72%
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $213,926 $215,589 $244,713 $219,033 $125,871 $85,343 $44,304
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Ratio of expenses to average net
assets 1.73%(b) 1.69%(b) 1.66% 1.66% 1.69% 1.80% 1.79%
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Ratio of net investment income to
average net assets 7.28%(b) 7.29%(b) 6.36% 5.94% 5.80% 6.30% 6.71%
------------------------------------- -------- -------- -------- -------- -------- ------- -------
Portfolio turnover rate 43% 45% 78% 41% 54% 80% 227%
------------------------------------- -------- -------- -------- -------- -------- ------- -------
|
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $223,264,239 and
$224,621,090 for July 31, 2000 and June 30, 2000, respectively.
CLASS C
----------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 4, 1997
SEVEN MONTHS ENDED JUNE 30, DECEMBER 31, (DATE SALES COMMENCED)
JULY 31, 2000 ----------------- TO DECEMBER 31,
2000 (UNAUDITED) 1999 1998 1997
------------------ ---------------- ------- ------- ----------------------
Net asset value, beginning of period $ 7.57 $ 7.57 $ 8.36 $ 8.54 $ 8.38
--------------------------------------------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.31 0.27 0.50 0.50 0.19
--------------------------------------------- ------- ------- ------- ------- ------
Net gains (losses) on securities (both
realized and unrealized) (0.47) (0.42) (0.80) (0.15) 0.22
--------------------------------------------- ------- ------- ------- ------- ------
Total from investment operations (0.16) (0.15) (0.30) 0.35 0.41
--------------------------------------------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.21) (0.24) (0.49) (0.48) (0.16)
--------------------------------------------- ------- ------- ------- ------- ------
Distributions from net realized gains -- -- -- (0.05) (0.09)
--------------------------------------------- ------- ------- ------- ------- ------
Return of capital (0.07) -- -- -- --
--------------------------------------------- ------- ------- ------- ------- ------
Total distributions (0.28) (0.24) (0.49) (0.53) (0.25)
--------------------------------------------- ------- ------- ------- ------- ------
Net asset value, end of period $ 7.13 $ 7.18 $ 7.57 $ 8.36 $ 8.54
--------------------------------------------- ------- ------- ------- ------- ------
Total return(a) (2.09)% (1.96)% (3.71)% 4.21% 4.96%
--------------------------------------------- ------- ------- ------- ------- ------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,821 $26,635 $28,202 $19,332 $2,552
--------------------------------------------- ------- ------- ------- ------- ------
Ratio of expenses to average net assets 1.73%(b) 1.69%(b) 1.66% 1.66% 1.69%(c)
--------------------------------------------- ------- ------- ------- ------- ------
Ratio of net investment income to average net
assets 7.28%(b) 7.29%(b) 6.36% 5.94% 5.80%(c)
--------------------------------------------- ------- ------- ------- ------- ------
Portfolio turnover rate 43% 45% 78% 41% 54%
--------------------------------------------- ------- ------- ------- ------- ------
|
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are annualized and based on average net assets of $26,828,719 and
$26,837,492 for July 31, 2000 and June 30, 2000, respectively.
(c) Annualized.
FS-54
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of AIM Intermediate Government Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Intermediate Government Fund (a portfolio of AIM Investment Securities Funds),
including the schedule of investments, as of July 31, 2000, and the related
statement of operations for the seven months ended July 31, 2000 and the year
ended December 31, 1999, the statement of cash flows for the seven months ended
July 31, 2000, the statement of changes in net assets for the seven months ended
July 31, 2000 and the two-years ended December 31, 1999 and the financial
highlights for the seven months ended July 31, 2000 and for each of the years in
the five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Intermediate Government Fund as of July 31, 2000, the results of its operations
for the seven months ended July 31, 2000 and the year ended December 31, 1999,
the statement of cash flows for the seven months ended July 31, 2000, the
changes in its net assets for the seven months ended July 31, 2000 and the
two-years ended December 31, 1999 and the financial highlights for the seven
months ended July 31, 2000 and for each of the years in the five-year period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-55
SCHEDULE OF INVESTMENTS
July 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. GOVERNMENT AGENCY
SECURITIES-78.83%
FEDERAL FARM CREDIT BANK-0.16%
Debentures,
6.15%, 09/01/00 $ 700,000 $ 699,776
--------------------------------------------------------------
FEDERAL HOME LOAN BANK-6.27%
Debentures,
7.31%, 07/06/01 4,000,000 4,008,880
--------------------------------------------------------------
7.13%, 11/15/01 10,000,000 10,006,200
--------------------------------------------------------------
7.36%, 07/01/04 2,800,000 2,834,384
--------------------------------------------------------------
8.00%, 05/24/05 4,140,000 4,167,200
--------------------------------------------------------------
8.10%, 05/24/05 6,060,000 6,113,328
--------------------------------------------------------------
27,129,992
--------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-21.25%
Pass through certificates,
6.50%, 07/01/01 to 01/01/28 6,557,413 6,285,655
--------------------------------------------------------------
9.00%, 12/01/05 to 04/01/25 2,933,806 3,053,040
--------------------------------------------------------------
8.00%, 07/01/06 to 01/01/30 56,608,266 57,008,115
--------------------------------------------------------------
8.50%, 07/01/07 to 12/01/26 10,215,323 10,486,327
--------------------------------------------------------------
10.50%, 09/01/09 to 01/01/21 1,011,930 1,095,779
--------------------------------------------------------------
7.00%, 11/01/10 to 04/01/11 890,436 878,943
--------------------------------------------------------------
10.00%, 11/01/11 to 04/01/20 6,650,471 7,094,611
--------------------------------------------------------------
12.00%, 02/01/13 12,167 13,726
--------------------------------------------------------------
9.50%, 11/01/20 to 04/01/25 5,771,278 6,075,378
--------------------------------------------------------------
91,991,574
--------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-37.23%
Debentures,
7.25%, 01/15/10 9,500,000 9,589,300
--------------------------------------------------------------
8.25%, 12/18/00 5,000,000 5,028,350
--------------------------------------------------------------
7.50%, 02/11/02 9,000,000 9,071,640
--------------------------------------------------------------
7.13%, 03/15/07 9,110,000 9,151,359
--------------------------------------------------------------
Medium term notes,
7.57%, 04/06/04 5,000,000 4,994,050
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA")-(CONTINUED)
Pass through certificates,
8.50%, 01/01/07 to 11/01/26 $49,327,003 $ 50,205,566
--------------------------------------------------------------
8.00%, 05/01/10 to 02/01/30 39,301,008 39,585,062
--------------------------------------------------------------
7.50%, 06/01/10 to 03/01/27 12,538,282 12,494,043
--------------------------------------------------------------
7.00%, 05/01/11 to 10/01/12 6,392,562 6,299,979
--------------------------------------------------------------
6.50%, 05/01/13 to 11/01/28 7,387,049 7,195,757
--------------------------------------------------------------
6.00%, 10/01/13 to 04/01/24 70,082 65,249
--------------------------------------------------------------
9.50%, 07/01/16 to 08/01/22 1,141,977 1,191,456
--------------------------------------------------------------
10.00%, 12/20/19 to 12/20/21 5,802,013 6,277,530
--------------------------------------------------------------
161,149,341
--------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-13.92%
Pass through certificates,
6.00%, 10/15/08 to 11/15/08 394,900 379,104
--------------------------------------------------------------
6.50%, 10/15/08 348,625 341,760
--------------------------------------------------------------
7.00%, 10/15/08 to 07/15/28 15,062,396 14,708,850
--------------------------------------------------------------
9.00%, 10/15/08 to 04/15/21 955,537 996,787
--------------------------------------------------------------
9.50%, 06/15/09 to 03/15/23 3,368,017 3,502,407
--------------------------------------------------------------
10.00%, 11/15/09 to 07/15/24 7,097,426 7,602,534
--------------------------------------------------------------
11.00%, 12/15/09 to 12/15/15 59,880 65,534
--------------------------------------------------------------
13.50%, 07/15/10 to 04/15/15 200,157 233,119
--------------------------------------------------------------
12.50%, 11/15/10 80,034 90,813
--------------------------------------------------------------
13.00%, 01/15/11 to 05/15/15 218,048 249,878
--------------------------------------------------------------
12.00%, 01/15/13 to 07/15/15 338,107 380,274
--------------------------------------------------------------
10.50%, 07/15/13 to 02/15/16 80,586 87,606
--------------------------------------------------------------
8.00%, 01/15/22 to 06/15/27 25,218,157 25,604,943
--------------------------------------------------------------
7.50%, 03/15/26 to 08/15/28 6,047,207 6,017,444
--------------------------------------------------------------
60,261,053
--------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost
$347,049,196) 341,231,736
--------------------------------------------------------------
U.S. TREASURY SECURITIES-14.17%
U.S. TREASURY NOTES-7.22%
7.50%, 02/15/05 20,000,000 20,991,600
--------------------------------------------------------------
6.75%, 05/15/05(a) 10,000,000 10,248,400
--------------------------------------------------------------
31,240,000
--------------------------------------------------------------
|
FS-56
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY BONDS-5.06%
7.50%, 11/15/16 $ 5,500,000 $ 6,270,605
--------------------------------------------------------------
7.25%, 08/15/22 1,100,000 1,252,944
--------------------------------------------------------------
6.25%, 05/15/30 13,500,000 14,383,845
--------------------------------------------------------------
21,907,394
--------------------------------------------------------------
U.S. TREASURY STRIPS-1.89%(b)
6.61%, 05/15/06 8,000,000 5,623,440
--------------------------------------------------------------
6.78%, 11/15/18 7,750,000 2,582,223
--------------------------------------------------------------
8,205,663
--------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $60,594,157) 61,353,057
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS-8.81%(c)
Bank of America Securities, 3.15%,
01/03/00 (Cost $38,138,868)(d) $38,138,868 $ 38,138,868
--------------------------------------------------------------
TOTAL INVESTMENTS-101.81% (Cost
$445,782,221) 440,723,661
--------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(1.81%) (7,849,460)
--------------------------------------------------------------
NET ASSETS-100.00% $432,874,201
==============================================================
|
Investment Abbreviations:
STRIPS - Separately Traded Interest and Principal Security
Notes to Schedule of Investments:
(a)Principal amount has been deposited in escrow with custodian as collateral
for reverse repurchase agreements outstanding at 07/31/00.
(b)STRIPS are traded on a discount basis. In such cases, the interest rate shown
represents the rate of discount paid or received at the time of purchase by
the Fund.
(c)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d)Joint repurchase agreement entered into 07/31/00 with a maturing value of
$750,138,333 and collateralized by U.S. Government obligations.
See Notes to Financial Statements.
FS-57
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
U.S. GOVERNMENT AGENCY
SECURITIES-80.21%
FEDERAL FARM CREDIT BANK-0.16%
Debentures,
6.15%, 09/01/00 $ 700,000 $ 699,440
--------------------------------------------------------------
FEDERAL HOME LOAN BANK-6.22%
Debentures,
7.31%, 07/06/01 4,000,000 4,007,160
--------------------------------------------------------------
7.13%, 11/15/01 10,000,000 9,997,900
--------------------------------------------------------------
7.36%, 07/01/04 2,800,000 2,829,820
--------------------------------------------------------------
8.00%, 05/24/05 4,140,000 4,182,683
--------------------------------------------------------------
8.10%, 05/24/05 6,060,000 6,136,053
--------------------------------------------------------------
27,153,616
--------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-23.53%
Debentures,
6.45%, 04/29/09 10,000,000 9,327,400
--------------------------------------------------------------
Pass through certificates,
6.50%, 07/01/01 to 01/01/28 6,665,632 6,378,045
--------------------------------------------------------------
9.00%, 12/01/05 to 04/01/25 3,009,612 3,130,339
--------------------------------------------------------------
8.00%, 07/01/06 to 01/01/30 57,157,008 57,597,731
--------------------------------------------------------------
8.50%, 07/01/07 to 12/01/26 10,405,944 10,701,653
--------------------------------------------------------------
10.50%, 09/01/09 to 01/01/21 1,027,806 1,112,085
--------------------------------------------------------------
7.00%, 11/01/10 to 04/01/11 897,927 885,771
--------------------------------------------------------------
10.00%, 11/01/11 to 04/01/20 6,739,406 7,200,291
--------------------------------------------------------------
12.00%, 02/01/13 13,638 15,364
--------------------------------------------------------------
9.50%, 11/01/20 to 04/01/25 5,953,604 6,278,507
--------------------------------------------------------------
102,627,186
--------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-36.25%
Debentures,
8.25%, 12/18/00 5,000,000 5,039,800
--------------------------------------------------------------
7.50%, 02/11/02 9,000,000 9,069,120
--------------------------------------------------------------
6.63%, 04/15/02 5,000,000 4,977,200
--------------------------------------------------------------
7.13%, 03/15/07 9,110,000 9,136,510
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA")-(CONTINUED)
Medium term notes,
7.57%, 04/06/04 $ 5,000,000 $ 5,000,100
--------------------------------------------------------------
Pass through certificates,
8.50%, 01/01/07 to 11/01/26 49,893,193 50,875,102
--------------------------------------------------------------
8.00%, 05/01/10 to 02/01/30 39,691,478 39,995,051
--------------------------------------------------------------
7.50%, 06/01/10 to 03/01/27 12,734,066 12,679,834
--------------------------------------------------------------
7.00%, 05/01/11 to 10/01/12 6,471,311 6,373,523
--------------------------------------------------------------
6.50%, 05/01/13 to 11/01/28 7,447,241 7,244,814
--------------------------------------------------------------
6.00%, 10/01/13 to 04/01/24 70,631 65,529
--------------------------------------------------------------
9.50%, 07/01/16 to 08/01/22 1,157,065 1,209,360
--------------------------------------------------------------
10.00%, 12/20/19 to 12/20/21 5,919,270 6,415,476
--------------------------------------------------------------
158,081,419
--------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-14.05%
Pass through certificates,
6.00%, 10/15/08 to 11/15/08 398,585 382,267
--------------------------------------------------------------
6.50%, 10/15/08 357,347 349,865
--------------------------------------------------------------
7.00%, 10/15/08 to 07/15/28 15,271,970 14,917,912
--------------------------------------------------------------
9.00%, 10/15/08 to 04/15/21 968,782 1,013,631
--------------------------------------------------------------
9.50%, 06/15/09 to 03/15/23 3,438,173 3,584,013
--------------------------------------------------------------
10.00%, 11/15/09 to 07/15/24 7,270,160 7,785,116
--------------------------------------------------------------
11.00%, 12/15/09 to 12/15/15 61,608 67,406
--------------------------------------------------------------
13.50%, 07/15/10 to 04/15/15 209,850 244,340
--------------------------------------------------------------
12.50%, 11/15/10 80,512 91,330
--------------------------------------------------------------
13.00%, 01/15/11 to 05/15/15 218,554 250,389
--------------------------------------------------------------
12.00%, 01/15/13 to 07/15/15 342,187 384,758
--------------------------------------------------------------
10.50%, 07/15/13 to 02/15/16 80,773 87,784
--------------------------------------------------------------
8.00%, 01/15/22 to 06/15/27 25,643,358 26,084,065
--------------------------------------------------------------
7.50%, 03/15/26 to 08/15/28 6,054,273 6,032,045
--------------------------------------------------------------
61,274,921
--------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost
$356,126,161) 349,836,582
--------------------------------------------------------------
|
FS-58
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY SECURITIES-10.41%
U.S. TREASURY NOTES-4.81%
7.50%, 02/15/05 $20,000,000 $ 20,977,800
--------------------------------------------------------------
U.S. TREASURY BONDS-3.75%
7.50%, 11/15/16 5,500,000 6,199,380
--------------------------------------------------------------
7.25%, 08/15/22 1,100,000 1,235,421
--------------------------------------------------------------
6.25%, 05/15/30 8,500,000 8,923,045
--------------------------------------------------------------
16,357,846
--------------------------------------------------------------
U.S. TREASURY STRIPS-1.85%(a)
6.61%, 05/15/06 8,000,000 5,595,520
--------------------------------------------------------------
6.78%, 11/15/18 7,750,000 2,487,053
--------------------------------------------------------------
8,082,573
--------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $45,052,298) 45,418,219
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENT-7.82%(b)
UBS Warburg, 6.85%, 07/03/00 (Cost
$34,086,602)(c) $34,086,602 $ 34,086,602
--------------------------------------------------------------
TOTAL INVESTMENTS-98.44% (Cost
$435,265,061) 429,341,403
--------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.56% 6,793,676
--------------------------------------------------------------
NET ASSETS-100.00% $436,135,079
==============================================================
|
Abbreviations:
STRIPS - Separately Traded Registered Interest and Principal Security
Notes to Schedule of Investments:
(a)STRIPS are traded on a discount basis. In such cases, the interest rate shown
represents the rate of discount paid or received at the time of purchase by
the Fund.
(b)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(c)Joint repurchase agreement entered into 06/30/00 with a maturing value of
$250,142,708 and collateralized by U.S. Government obligations.
See Notes to Financial Statements.
FS-59
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------ ------------
ASSETS:
Investments, at market value (cost $445,782,221 and
$435,265,061, respectively) $440,723,661 $429,341,403
-----------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 1,126,802 6,312,913
-----------------------------------------------------------------------------------------
Interest 4,537,057 4,189,265
-----------------------------------------------------------------------------------------
Principal paydowns 229,042 149,558
-----------------------------------------------------------------------------------------
Investment for deferred compensation plan 44,645 43,202
-----------------------------------------------------------------------------------------
Other assets 73,903 9,322
-----------------------------------------------------------------------------------------
Total assets 446,735,110 440,045,663
-----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 2,237,973 2,610,674
-----------------------------------------------------------------------------------------
Dividends 631,114 624,097
-----------------------------------------------------------------------------------------
Reverse repurchase agreements 10,387,500 --
-----------------------------------------------------------------------------------------
Interest expense 6,261 --
-----------------------------------------------------------------------------------------
Deferred compensation plan 44,645 43,202
-----------------------------------------------------------------------------------------
Accrued advisory fees 160,597 157,593
-----------------------------------------------------------------------------------------
Accrued administrative services fees 9,013 8,678
-----------------------------------------------------------------------------------------
Accrued distribution fees 264,692 402,500
-----------------------------------------------------------------------------------------
Accrued trustees' fees 921 2,154
-----------------------------------------------------------------------------------------
Accrued transfer agent fees 51,549 55,200
-----------------------------------------------------------------------------------------
Accrued operating expenses 66,644 6,486
-----------------------------------------------------------------------------------------
Total liabilities 13,860,909 3,910,584
-----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $432,874,201 $436,135,079
=========================================================================================
NET ASSETS:
Class A $221,636,262 $223,090,975
=========================================================================================
Class B $177,031,878 $178,738,656
=========================================================================================
Class C $ 34,206,061 $ 34,305,448
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 25,258,561 25,429,238
=========================================================================================
Class B 20,131,968 20,330,912
=========================================================================================
Class C 3,902,004 3,914,233
=========================================================================================
Class A:
Net asset value and redemption price per share $ 8.77 $ 8.77
-----------------------------------------------------------------------------------------
Offering price per share:
(Net asset value divided by 95.25%) $ 9.21 $ 9.21
=========================================================================================
Class B:
Net asset value and offering price per share $ 8.79 $ 8.79
=========================================================================================
Class C:
Net asset value and offering price per share $ 8.77 $ 8.76
=========================================================================================
|
See Notes to Financial Statements.
FS-60
STATEMENT OF OPERATIONS
SIX MONTHS
SEVEN MONTHS ENDED YEAR
ENDED JUNE 30, ENDED
JULY 31, 2000 DECEMBER 31,
2000 (UNAUDITED) 1999
------------ ----------- ------------
INVESTMENT INCOME:
Interest $18,958,479 $16,195,011 $ 39,664,653
-------------------------------------------------------------------------------------------------------
Dividends - affiliated issuers 1,419,678 1,419,678 1,139,420
-------------------------------------------------------------------------------------------------------
Total investment income 20,378,157 17,614,689 40,804,073
-------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,153,654 993,057 2,310,621
-------------------------------------------------------------------------------------------------------
Administrative services fee 63,465 54,453 97,900
-------------------------------------------------------------------------------------------------------
Custodian fees 45,311 39,978 68,252
-------------------------------------------------------------------------------------------------------
Distribution fees - Class A 318,066 270,752 622,422
-------------------------------------------------------------------------------------------------------
Distribution fees - Class B 1,118,113 967,895 2,414,889
-------------------------------------------------------------------------------------------------------
Distribution fees - Class C 202,776 174,108 411,484
-------------------------------------------------------------------------------------------------------
Interest 699,935 677,466 984,822
-------------------------------------------------------------------------------------------------------
Transfer agent fees - Class A 215,029 185,747 318,908
-------------------------------------------------------------------------------------------------------
Transfer agent fees - Class B 203,030 178,299 341,419
-------------------------------------------------------------------------------------------------------
Transfer agent fees - Class C 36,818 32,079 59,001
-------------------------------------------------------------------------------------------------------
Trustee's fees 4,499 3,927 10,971
-------------------------------------------------------------------------------------------------------
Other 177,472 159,325 255,687
-------------------------------------------------------------------------------------------------------
Total expenses 4,238,168 3,737,086 7,896,376
-------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (3,009) (2,440) (6,776)
-------------------------------------------------------------------------------------------------------
Net expenses 4,235,159 3,734,646 7,889,600
-------------------------------------------------------------------------------------------------------
Net investment income 16,142,998 13,880,043 32,914,473
-------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES
Net realized gain (loss) from investment securities (8,156,637) (7,362,795) (27,037,801)
-------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 6,328,795 5,463,697 (17,820,871)
-------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (1,827,842) (1,899,098) (44,858,672)
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $14,315,156 $11,980,945 $(11,944,199)
=======================================================================================================
|
See Notes to Financial Statements.
FS-61
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
SEVEN MONTHS ENDED YEAR YEAR
ENDED JUNE 30, ENDED ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income $16,142,998 $ 13,880,043 $32,914,473 $ 21,481,081
-----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (8,156,637) (7,362,795) (27,037,801) 6,570,449
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 6,328,795 5,463,697 (17,820,871) (2,570,929)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 14,315,156 11,980,945 (11,944,199) 25,480,601
-----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (8,371,950) (7,157,816) (16,289,770) (12,395,672)
-----------------------------------------------------------------------------------------------------------------------
Class B (6,448,874) (5,600,030) (13,961,515) (7,690,274)
-----------------------------------------------------------------------------------------------------------------------
Class C (1,172,877) (1,010,558) (2,201,216) (1,395,135)
-----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders in excess of net investment
income:
Class A -- -- -- (247,750)
-----------------------------------------------------------------------------------------------------------------------
Class B -- -- -- (176,643)
-----------------------------------------------------------------------------------------------------------------------
Class C -- -- -- (32,108)
-----------------------------------------------------------------------------------------------------------------------
Return of capital distributions
Class A -- -- (133,023) --
-----------------------------------------------------------------------------------------------------------------------
Class B -- -- (129,047) --
-----------------------------------------------------------------------------------------------------------------------
Class C -- -- (21,986) --
-----------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (16,487,253) (14,977,294) 14,339,321 76,269,628
-----------------------------------------------------------------------------------------------------------------------
Class B (51,077,582) (49,325,820) 11,152,000 147,670,216
-----------------------------------------------------------------------------------------------------------------------
Class C (4,681,894) (4,573,823) 4,431,396 35,531,445
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (73,925,274) (70,664,396) (14,758,039) 263,014,308
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 506,799,475 506,799,475 521,557,514 258,543,206
-----------------------------------------------------------------------------------------------------------------------
End of period $432,874,201 $436,135,079 $506,799,475 $521,557,514
=======================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $481,727,062 $485,096,854 $553,973,791 $524,340,223
-----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (19,532) 59,156 (52,483) (42,488)
-----------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (43,774,769) (43,097,273) (35,734,478) (9,173,737)
-----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (5,058,560) (5,923,658) (11,387,355) 6,433,516
-----------------------------------------------------------------------------------------------------------------------
$432,874,201 $436,135,079 $506,799,475 $521,557,514
=======================================================================================================================
|
See Notes to Financial Statements.
FS-62
STATEMENT OF CASH FLOWS
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------- -------------
CASH FLOWS FROM OPERATIONS:
Interest and dividends $ 20,378,157 $ 17,614,689
----------------------------------------------------------------------------------------------------------
Expenses (4,235,159) (3,734,646)
----------------------------------------------------------------------------------------------------------
Net investment income 16,142,998 13,880,043
----------------------------------------------------------------------------------------------------------
ADJUSTMENTS TO RECONCILE NET INVESTMENT INCOME TO NET CASH
PROVIDED BY OPERATIONS:
Purchases of securities* (273,733,038) (248,629,355)
----------------------------------------------------------------------------------------------------------
Proceeds from sales of securities and principal payments* 332,923,342 315,039,272
----------------------------------------------------------------------------------------------------------
Net proceeds from short term securities 68,247,951 72,300,217
----------------------------------------------------------------------------------------------------------
Change in receivable for investments sold and principal
payments 75,723,867 75,803,351
----------------------------------------------------------------------------------------------------------
Change in receivable for fund shares sold 130,370 (5,055,741)
----------------------------------------------------------------------------------------------------------
Change in receivable for dividends and interest 3,054,939 3,402,731
----------------------------------------------------------------------------------------------------------
Change in other assets (24,333) 41,688
----------------------------------------------------------------------------------------------------------
Change in payables for investments purchased (76,453,125) (76,453,125)
----------------------------------------------------------------------------------------------------------
Change in payables for fund shares reacquired (771,927) (399,226)
----------------------------------------------------------------------------------------------------------
Change in payables for dividends (168,677) (175,694)
----------------------------------------------------------------------------------------------------------
Change in accrued expenses (320,022) (248,531)
----------------------------------------------------------------------------------------------------------
Amortization (266,915) (227,791)
----------------------------------------------------------------------------------------------------------
Net cash provided by operations 144,485,430 149,277,839
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to shareholders (15,993,701) (13,768,404)
----------------------------------------------------------------------------------------------------------
Dividends reinvested 11,316,186 9,750,914
----------------------------------------------------------------------------------------------------------
Capital stock sold 195,806,930 152,827,225
----------------------------------------------------------------------------------------------------------
Capital stock reacquired (279,369,845) (231,455,076)
----------------------------------------------------------------------------------------------------------
Borrowings (56,245,000) (66,632,500)
----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (144,485,430) (149,277,841)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash -- (2)
----------------------------------------------------------------------------------------------------------
Cash at beginning of period -- 2
----------------------------------------------------------------------------------------------------------
Cash at end of period $ -- $ --
==========================================================================================================
|
* Other than short-term securities
See Notes to Financial Statements.
FS-63
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Intermediate Government Fund (the "Fund") is a series portfolio of AIM
Investment Securities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
separate portfolios, each having an unlimited number of shares of beneficial
interest. Prior to June 1, 2000, the Fund was organized as a series portfolio of
AIM Funds Group. At a meeting held on February 3, 2000, the Board of Trustees of
AIM Funds Group approved an Agreement and Plan of Reorganization (the
"Reorganization") which reorganized the Fund as a series portfolio of the Trust.
Shareholders of the Fund approved the Reorganization at a meeting held on May
31, 2000. Pursuant to the Reorganization, the Fund's fiscal year-end was changed
from December 31 to July 31. This report includes financial information for the
period ended July 31, 2000 (seven months), the six months ended June 30, 2000
and the year ended December 31, 1999. Financial information for the six months
ended June 30, 2000 is unaudited. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is to achieve a high
level of current income consistent with reasonable concern for safety of
principal.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate, maturity and seasoning differential. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE").
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. The Fund may engage in dollar roll
transactions with respect to mortgage backed securities issued by GNMA, FNMA
and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed
security held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with varying
prepayment histories. During the period between the sale and repurchase, the
Fund will not be entitled to receive interest and principal payments on
securities sold. Proceeds of the sale will be invested in short-term
instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the
Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation
to repurchase the securities.
Realized gains or losses on sales are computed on the basis of specific
identification of the securities sold. Interest income is recorded on the
accrual basis from settlement date. Dividend income is recorded on the
ex-dividend date.
On July 31, 2000, undistributed net investment income was decreased by
$116,346 and undistributed net realized gains increased by $116,346 as a
result of differing book/tax treatment of paydowns and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
FS-64
C. Distributions -- It is the policy of the Fund to declare dividends from net investment income daily and pay monthly. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $43,320,823 which may be
carried forward to offset future taxable gains, if any, which expires in
varying increments, if not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses directly attributable to a class of shares are charged to those classes' operations. All other expenses which are attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.50% on the first
$200 million of the Fund's average daily net assets, plus 0.40% on the next $300
million of the Fund's average daily net assets, plus 0.35% on the next $500
million of the Fund's average daily net assets, plus 0.30% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the year ended December 31, 1999, AIM was
paid $63,465, $54,453 and $97,900, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $222,407, $192,781 and $398,305, respectively, for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the seven-month period ended
July 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
318,066, 1,118,113 and 202,776, respectively, as compensation under the Plans.
For the six months ended June 30, 2000, the Class A, Class B and Class C shares
paid AIM Distributors $270,752, $967,895 and $174,108, respectively, as
compensation under the Plans. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $622,422, $2,414,889, and
$411,484, respectively, as compensation under the Plans.
AIM Distributors received commissions of $103,411, $91,528 and $297,352 from
sales of the Class A shares of the Fund during the seven-month period ended July
31, 2000, the six months ended June 30, 2000 and the year ended December 31,
1999, respectively. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM Distributors received
$44,911, $42,361 and $171,470, respectively, in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the seven-month period ended July 31, 2000, the six months ended June
30, 2000 and the year ended December 31, 1999, the Fund paid legal fees of
$2,666, $2,059 and $4,381, respectively, for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Trust's trustees. A member of that firm
is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $3,009, $2,440 and $6,004 and $0, $0, and $772, respectively, under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,009, $2,440 and $6,776, for the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, respectively.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
FS-65
NOTE 5-BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an
agreed-upon price and date. The Fund will use the proceeds of a reverse
repurchase agreement (which are considered to be borrowings under the 1940 Act)
to purchase other permitted securities either maturing, or under an agreement to
resell, at a date simultaneous with or prior to the expiration of the reverse
repurchase agreement. The Fund will enter into a reverse repurchase agreement
only when the interest income to be earned from the investment of proceeds of
the transaction is greater than the interest expense of the transaction. The
agreements are collateralized by the underlying securities and are carried at
the amount at which the securities will subsequently be repurchased as specified
in the agreements.
The maximum amount outstanding during the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
was $66,632,500, $66,632,500 and $68,903,125 while borrowings averaged
$25,000,845, $28,481,013 and $29,142,158, respectively, per day with a weighted
average interest rate of 4.40%, 4.78% and 3.38%, respectively.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the seven-month period ended July 31, 2000 was $273,733,038 and $332,923,342, respectively, and during the six months ended June 30, 2000 was $248,629,355 and $315,039,272, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, is as follows:
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
----------- -----------
Aggregate unrealized appreciation
of investment securities $ 1,440,331 $ 1,403,908
------------------------------------------------------------
Aggregate unrealized
(depreciation) of investment
securities (6,952,837) (7,327,566)
------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investment
securities $(5,512,506) $(5,923,658)
------------------------------------------------------------
Cost of investments for tax purposes at July 31, 2000 is
$446,236,167. Investments have the same cost for tax and
financial statement purposes at June 30, 2000.
|
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED) DECEMBER 31, 1999
---------------------------- ---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ----------- -------------
Sold:
Class A 14,428,306 $ 126,418,351 10,440,474 $ 91,401,026 43,994,368 $ 405,966,986
--------------------------------------------------------------------------------------------------------------------------
Class B 5,530,370 48,527,357 5,035,925 44,179,134 24,981,699 228,902,826
--------------------------------------------------------------------------------------------------------------------------
Class C 2,386,392 20,861,222 1,974,283 17,247,065 4,401,944 40,514,763
--------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 744,846 6,516,394 638,528 5,583,990 1,422,251 12,951,091
--------------------------------------------------------------------------------------------------------------------------
Class B 457,487 4,009,997 397,860 3,485,865 1,015,685 9,277,928
--------------------------------------------------------------------------------------------------------------------------
Class C 90,390 789,795 77,992 681,059 193,191 1,758,352
--------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (17,067,415) (149,421,998) (12,802,588) (111,962,310) (43,911,017) (404,578,756)
--------------------------------------------------------------------------------------------------------------------------
Class B (11,813,222) (103,614,936) (11,060,206) (96,990,819) (24,856,772) (227,028,754)
--------------------------------------------------------------------------------------------------------------------------
Class C (3,013,546) (26,332,911) (2,576,810) (22,501,947) (4,134,353) (37,841,719)
--------------------------------------------------------------------------------------------------------------------------
(8,256,392) $ (72,246,729) (7,874,542) $ (68,876,937) 3,106,996 $ 29,922,717
--------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
----------------------------
SHARES AMOUNT
----------- -------------
Sold:
Class A 29,655,462 $ 283,586,927
----------------------------------------------------------
Class B 27,535,042 264,070,374
----------------------------------------------------------
Class C 6,742,689 63,813,508
----------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 1,069,069 10,191,327
----------------------------------------------------------
Class B 568,105 5,430,298
----------------------------------------------------------
Class C 143,118 1,253,716
----------------------------------------------------------
Reacquired:
Class A (22,783,533) (217,508,626)
----------------------------------------------------------
Class B (12,722,862) (121,830,456)
----------------------------------------------------------
Class C (3,103,831) (29,535,779)
----------------------------------------------------------
27,103,259 $ 259,471,289
==========================================================
|
FS-66
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- -------- -------- -------- -------- --------
Net asset value, beginning of
period $ 8.80 $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70 $ 8.99
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.34 0.29 0.60 0.62 0.63 0.63 0.69
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.03) (0.03) (0.78) 0.13 0.18 (0.42) 0.73
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.31 0.26 (0.18) 0.75 0.81 0.21 1.42
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.34) (0.29) (0.60) (0.63) (0.61) (0.59) (0.67)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Return of capital -- -- -- -- (0.02) (0.04) (0.04)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.34) (0.29) (0.60) (0.63) (0.63) (0.63) (0.71)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.77 $ 8.77 $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70
=================================== ======== ======== ======== ======== ======== ======= ========
Total return(a) 3.55% 2.99% (1.87)% 8.17% 9.07% 2.35% 16.28%
=================================== ======== ======== ======== ======== ======== ======= ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $221,636 $223,091 $238,957 $245,613 $167,427 $174,344 $176,318
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets (including interest
expense) 1.25%(b) 1.29%(b) 1.08% 1.20% 1.11% 1.08% 1.19%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets (excluding interest
expense) 0.98%(b) 0.98%(b) 0.89% 0.96% 1.00% 1.00% 1.08%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 6.61%(b) 6.63%(b) 6.60% 6.43% 6.77% 6.76% 7.36%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of interest expense to
average net assets 0.27%(b) 0.30%(b) 0.19% 0.24% 0.11% 0.08% 0.11%
=================================== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 65% 59% 141% 147% 99% 134% 140%
=================================== ======== ======== ======== ======== ======== ======== =======
|
(a)Does not deduct sales charges and is not annualized for periods less than one
year.
(b)Ratios are annualized and based on average net assets of $218,614,108 and
$217,792,119 for July 31, 2000 and June 30, 2000, respectively.
CLASS B
--------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------------
2000 (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- -------- -------- -------- -------- --------
Net asset value, beginning of
period $ 8.82 $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69 $ 8.99
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.30 0.26 0.53 0.55 0.56 0.55 0.63
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) (0.04) (0.04) (0.77) 0.13 0.17 (0.41) 0.70
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.26 0.22 (0.24) 0.68 0.73 0.14 1.33
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.29) (0.25) (0.53) (0.55) (0.53) (0.51) (0.59)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Return of capital -- -- -- -- (0.02) (0.04) (0.04)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.29) (0.25) (0.53) (0.55) (0.55) (0.55) (0.63)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.79 $ 8.79 $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69
=================================== ======== ======== ======== ======== ======== ======== ========
Total return(a) 3.05% 2.56% (2.56)% 7.40% 8.16% 1.61% 15.22%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $177,032 $178,739 $228,832 $237,919 $ 89,265 $ 79,443 $ 61,300
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets (including interest
expense) 2.01%(b) 2.05%(b) 1.85% 1.96% 1.87% 1.84% 1.97%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets (excluding interest
expense) 1.74%(b) 1.75%(b) 1.66% 1.72% 1.76% 1.76% 1.86%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.85%(b) 5.87%(b) 5.83% 5.68% 6.01% 6.00% 6.58%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of interest expense to
average net assets 0.27%(b) 0.30%(b) 0.19% 0.24% 0.11% 0.08% 0.11%
=================================== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 65% 59% 141% 147% 99% 134% 140%
=================================== ======== ======== ======== ======== ======== ======== ========
|
(a)Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b)Ratios are annualized and based on average net assets of $192,126,552 and
$194,642,705 for July 31, 2000 and June 30, 2000, respectively.
FS-67
NOTE 8-FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
---------------------------------------------------------------------------
AUGUST 4, 1997
SIX MONTHS ENDED YEAR ENDED (DATE SALES
SEVEN MONTHS ENDED JUNE 30, DECEMBER 31, COMMENCED)
JULY 31, 2000 ----------------- TO DECEMBER 31,
2000 (UNAUDITED) 1999 1998 1997
------------------ ---------------- ------- ------- ---------------
Net asset value, beginning of period $ 8.79 $ 8.79 $ 9.56 $ 9.44 $ 9.33
---------------------------------------------------- ------- ------- ------- ------- --------
Income from investment operations:
Net investment income 0.30 0.25 0.53 0.56 0.24
---------------------------------------------------- ------- ------- ------- ------- --------
Net gains (losses) on securities (both realized
and unrealized) (0.03) (0.03) (0.77) 0.11 0.10
---------------------------------------------------- ------- ------- ------- ------- --------
Total from investment operations 0.27 0.22 (0.24) 0.67 0.34
---------------------------------------------------- ------- ------- ------- ------- --------
Less distributions:
Dividends from net investment income (0.29) (0.25) (0.53) (0.55) (0.22)
---------------------------------------------------- ------- ------- ------- ------- --------
Return of capital -- -- -- -- (0.01)
---------------------------------------------------- ------- ------- ------- ------- --------
Total distributions (0.29) (0.25) (0.53) (0.55) (0.23)
---------------------------------------------------- ------- ------- ------- ------- --------
Net asset value, end of period $ 8.77 $ 8.76 $ 8.79 $ 9.56 $ 9.44
==================================================== ======= ======= ======= ======= ========
Total return(a) 3.18% 2.57% (2.57)% 7.31% 3.64%
==================================================== ======= ======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $34,206 $34,305 $39,011 $38,026 $ 1,851
==================================================== ======= ======= ======= ======= ========
Ratio of expenses to average net assets (including
interest expense) 2.01%(b) 2.05%(b) 1.85% 1.96% 1.87%(c)
==================================================== ======= ======= ======= ======= ========
Ratio of expenses to average net assets (excluding
interest expense) 1.74%(b) 1.75%(b) 1.66% 1.72% 1.76%(c)
==================================================== ======= ======= ======= ======= ========
Ratio of net investment income to average net assets 5.85%(b) 5.87%(b) 5.83% 5.68% 6.01%(c)
==================================================== ======= ======= ======= ======= ========
Ratio of interest expense to average net assets 0.27%(b) 0.30%(b) 0.19% 0.24% 0.11%(c)
==================================================== ======= ======= ======= ======= ========
Portfolio turnover rate 65% 59% 141% 147% 99%
==================================================== ======= ======= ======= ======= ========
|
(a)Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b)Ratios are annualized and based on average net assets of $34,843,129 and
$35,012,892 for July 31, 2000 and June 30, 2000, respectively.
(c)Annualized.
FS-68
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of AIM Money Market Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Money Market Fund (a portfolio of AIM Investment Securities Funds), including
the schedule of investments, as of July 31, 2000, and the related statement of
operations for the seven months ended July 31, 2000 and the year ended December
31, 1999, the statement of changes in net assets for the seven months ended July
31, 2000 and the two-years ended December 31, 1999, and the financial highlights
for the seven months ended July 31, 2000 and for each of the years in the
five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Money Market Fund as of July 31, 2000, the results of its operations for the
seven months ended July 31, 2000 and the year ended December 31, 1999, the
changes in net assets for the seven months ended July 31, 2000 and the two-years
ended December 31, 1999, and the financial highlights for the seven months ended
July 31, 2000 and for each of the years in the five-year period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-69
SCHEDULE OF INVESTMENTS
JULY 31, 2000
MATURITY PAR (000) VALUE
COMMERCIAL PAPER-40.34%(a)
ASSET-BACKED SECURITIES-
COMMERCIAL/LOAN/
LEASES-3.21%
Atlantis One Funding Corp.
6.57% 08/18/00 $ 27,000 $ 26,916,233
------------------------------------------------------------------
Centric Capital Corp.
6.68% 12/27/00 13,500 13,129,260
------------------------------------------------------------------
40,045,493
------------------------------------------------------------------
ASSET-BACKED SECURITIES-
CONSUMER
RECEIVABLES-4.31%
Old Line Funding Corp.
6.57% 08/04/00 31,380 31,362,819
------------------------------------------------------------------
Thunder Bay Funding Inc.
6.54% 09/08/00 22,588 22,432,068
------------------------------------------------------------------
53,794,887
------------------------------------------------------------------
ASSET-BACKED
SECURITIES-FULLY
BACKED-5.64%
Forrestal Funding Master
Trust
6.53% 09/08/00 30,602 30,391,067
------------------------------------------------------------------
6.55% 09/26/00 14,000 13,857,356
------------------------------------------------------------------
Triple-A One Funding Master
Trust
6.53% 09/14/00 26,264 26,054,384
------------------------------------------------------------------
70,302,807
------------------------------------------------------------------
ASSET-BACKED SECURITIES-
MULTI-PURPOSE-14.30%
Clipper Receivables Funding
Corp.
6.56% 09/08/00 25,000 24,826,889
------------------------------------------------------------------
Corporate Receivables Corp.
6.53% 09/14/00 50,000 49,600,944
------------------------------------------------------------------
Falcon Asset Securitization
Corp.
6.19% 09/18/00 35,000 34,711,133
------------------------------------------------------------------
Monte Rosa Capital Corp.
6.53% 08/17/00 29,401 29,315,672
------------------------------------------------------------------
Preferred Receivables
Funding Corp.
6.51% 08/28/00 40,000 39,804,700
------------------------------------------------------------------
178,259,338
------------------------------------------------------------------
BANKS-REGIONAL-6.92%
Delaware Funding Corp.
6.53% 09/08/00 27,037 26,850,640
------------------------------------------------------------------
Wells Fargo & Co.
6.61% 09/22/00 60,000 59,427,133
------------------------------------------------------------------
86,277,773
------------------------------------------------------------------
FINANCIAL-DIVERSIFIED-5.96%
Associates First Capital
Corp.
6.58% 09/26/00 30,000 29,692,933
------------------------------------------------------------------
6.61% 09/28/00 25,000 24,733,764
------------------------------------------------------------------
|
MATURITY PAR (000) VALUE
FINANCIAL-DIVERSIFIED-(CONTINUED)
General Electric Capital
Corp.
6.06% 08/28/00 $ 20,000 $ 19,909,100
------------------------------------------------------------------
74,335,797
------------------------------------------------------------------
Total Commercial Paper
(Cost $503,016,095) 503,016,095
------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-8.56%
BANKS-DOMESTIC-1.00%
Atlantic American Corp.,
Weekly VRD Series,
(LOC-Wachovia Bank)
6.62%(b) 06/01/09 12,500 12,500,000
------------------------------------------------------------------
BANKS-REGIONAL-3.03%
Capital One Funding Corp.,
Floating Rate Notes,
Weekly VRD Series
6.70%(b) 08/01/12 11,436 11,436,000
------------------------------------------------------------------
Family Express Corp., LLC,
Loan Program Notes,
Weekly VRD Series,
(LOC-First of America
Bank)
6.67%(b) 04/01/28 9,040 9,040,000
------------------------------------------------------------------
KBL Capital Fund Inc., Loan
Program Notes, Weekly VRD
Series, (LOC-National
City Bank)
6.67%(b) 05/01/27 17,350 17,350,000
------------------------------------------------------------------
37,826,000
------------------------------------------------------------------
FINANCIAL-DIVERSIFIED-3.73%
Associates Corp. NA, Medium
Term Notes
5.85% 01/15/01 8,443 8,415,793
------------------------------------------------------------------
AT&T Capital Corp., Medium
Term Notes
7.50% 11/15/00 16,000 16,040,981
------------------------------------------------------------------
Beneficial Corp., Medium
Term Notes
6.33% 12/18/00 9,000 8,985,811
------------------------------------------------------------------
General Electric Capital
Corp., Floating Rate
Medium Term Notes
6.54%(c) 08/21/00 13,000 12,998,513
------------------------------------------------------------------
46,441,098
------------------------------------------------------------------
INVESTMENT BANKING/
BROKERAGE-0.80%
Morgan Stanley Dean Witter
& Co., Floating Rate
Medium Term Notes
6.61%(c) 09/06/00 10,000 10,000,000
------------------------------------------------------------------
Total Short-Term
Obligations (Cost
$106,767,098) 106,767,098
------------------------------------------------------------------
|
FS-70
MATURITY PAR (000) VALUE
TAXABLE MUNICIPAL BONDS-3.75%
FINANCE-MULTIPLE
INDUSTRY-2.21%
Mississippi Business
Finance Corp.
(Mississippi Industrial
Development); Revenue
Bonds, Weekly VRD Series
6.70% (LOC-Bank of
America)(b) 06/01/15 $ 17,500 $ 17,500,000
------------------------------------------------------------------
6.62%(b) 02/01/23 10,000 10,000,000
------------------------------------------------------------------
27,500,000
------------------------------------------------------------------
HOSPITAL MANAGEMENT-1.54%
Colorado Health Facilities
Authority; Revenue Bonds,
Weekly VRD Series,
(LOC-KBC Bank N.V.)
6.60%(b) 03/01/30 9,750 9,750,000
------------------------------------------------------------------
Illinois Health Facilities
Authority (Loyola
University Health
Systems); Revenue Bonds,
Weekly VRD Series
6.60%(b)(d) 07/01/24 9,500 9,500,000
------------------------------------------------------------------
19,250,000
------------------------------------------------------------------
Total Taxable Municipal
Bonds (Cost
$46,750,000) 46,750,000
------------------------------------------------------------------
CERTIFICATES OF
DEPOSIT-2.01%
Commerzbank
6.31% (Cost $25,000,535) 08/22/00 25,000 25,000,535
------------------------------------------------------------------
MASTER NOTE
AGREEMENTS-10.83%(e)
Merrill Lynch Mortgage
Capital, Inc.
6.95%(f) 08/17/00 75,000 75,000,000
------------------------------------------------------------------
|
MATURITY PAR (000) VALUE
MASTER NOTE AGREEMENTS-(CONTINUED)
Morgan Stanley Dean Witter
& Co.
6.79%(g) 09/01/00 $ 60,000 $ 60,000,000
------------------------------------------------------------------
Total Master Note
Agreements (Cost
$135,000,000) 135,000,000
------------------------------------------------------------------
Total Investments
(excluding repurchase
agreements) (Cost
$816,533,728) 816,533,728
------------------------------------------------------------------
REPURCHASE
AGREEMENTS-32.01%(h)
Bank of America Securities
6.64%(i) 08/01/00 225,091 225,090,983
------------------------------------------------------------------
Credit Suisse First Boston
Corp.
6.62%(j) 08/01/00 58,000 58,000,000
------------------------------------------------------------------
UBS Warburg
6.64%(k) 08/01/00 58,000 58,000,000
------------------------------------------------------------------
Westdeutsche Landesbank
Girozentrale
6.64%(l) 08/01/00 58,000 58,000,000
------------------------------------------------------------------
Total Repurchase
Agreements (Cost
$399,090,983) 399,090,983
------------------------------------------------------------------
TOTAL INVESTMENTS-97.50% 1,215,624,711(m)
------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.50% 31,201,651
------------------------------------------------------------------
NET ASSETS-100.00% $1,246,826,362
==================================================================
|
Investment Abbreviations:
LOC - Letter of Credit
VRD - Variable Rate Demand
Notes to Schedule of Investments:
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days notice. Interest rates are redetermined periodically.
Rates shown are rates in effect on 07/31/00.
(c) The coupon rate shown on floating rate note represents the rate at period
end.
(d) Secured by bond insurance provided by MBIA Insurance Co.
(e) The investments in master note agreements are through participation in joint
accounts with other mutual funds, private accounts, and certain
non-registered investment companies managed by the investment advisor or its
affiliates.
(f) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one business day notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
07/31/00.
(g) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon three business days notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
07/31/00.
(h) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 07/31/00 with a maturing value of
$750,138,333. Collateralized by $862,030,072 par value of U.S. Government
obligations, 5.00% to 7.50% due 01/15/04 to 07/01/29 with an aggregate
market value at 07/31/00 of $765,000,000.
(j) Joint repurchase agreement entered into 07/31/00 with a maturing value of
$150,027,583. Collateralized by $158,744,000 par value of U.S. Government
obligations, 0% to 7.25% due 08/01/00 to 05/15/29 with an aggregate market
value at 07/31/00 of $155,738,821.
(k) Joint repurchase agreement entered into 07/31/00 with a maturing value of
$500,092,222. Collateralized by $605,860,547 par value of U.S. Government
and Treasury obligations, 5.50% to 9.00% due 12/15/01 to 12/15/37 with an
aggregate market value at 07/31/00 of $510,001,104.
(l) Joint repurchase agreement entered into 07/31/00 with a maturing value of
$200,036,889. Collateralized by $249,829,594 par value of U.S. Government
obligations, 6.00% to 7.13% due 01/01/04 to 08/01/29 with an aggregate
market value at 07/31/00 of $204,303,574.
(m) Also represents Cost for federal income tax purposes.
See Notes to Financial Statements.
FS-71
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
MATURITY PAR (000) VALUE
COMMERCIAL PAPER-18.61%(a)
ASSET-BACKED SECURITIES-
COMMERCIAL/LOAN/
LEASES-3.11%
Atlantis One Funding Corp.
6.57% 08/18/00 $ 27,000 $ 26,763,480
------------------------------------------------------------------
Centric Capital Corp.
6.68% 12/27/00 13,500 13,051,605
------------------------------------------------------------------
39,815,085
------------------------------------------------------------------
ASSET-BACKED SECURITIES-
CONSUMER
RECEIVABLES-2.43%
Old Line Funding Corp.
6.57% 08/04/00 31,380 31,185,287
------------------------------------------------------------------
ASSET-BACKED SECURITIES-
MULTI-PURPOSE-2.69%
Falcon Asset Securitization
Corp.
6.19% 09/18/00 35,000 34,524,574
------------------------------------------------------------------
BANKS-REGIONAL-4.61%
Wells Fargo & Company
6.61% 09/22/00 60,000 59,085,617
------------------------------------------------------------------
FINANCIAL-DIVERSIFIED-5.77%
Associates First Capital
Corp.
6.58% 09/26/00 30,000 29,522,950
------------------------------------------------------------------
6.61% 09/28/00 25,000 24,591,465
------------------------------------------------------------------
General Electric Capital
Corp.
6.06% 08/28/00 20,000 19,804,733
------------------------------------------------------------------
73,919,148
------------------------------------------------------------------
Total Commercial Paper
(Cost $238,529,711) 238,529,711
------------------------------------------------------------------
SHORT-TERM
OBLIGATIONS-6.99%
BANKS-DOMESTIC-0.97%
Atlantic American Corp.,
Weekly VRD Series,
(LOC-Wachovia Bank)
6.67%(b) 06/01/09 12,500 12,500,000
------------------------------------------------------------------
BANKS-REGIONAL-1.62%
Capital One Funding Corp.,
Floating Rate Notes,
Weekly VRD Series
6.70%(b) 08/01/12 11,674 11,674,000
------------------------------------------------------------------
Family Express Corp., LLC,
Loan Program Notes,
Weekly VRD Series,
(LOC-First of America
Bank)
6.73%(b) 04/01/28 9,040 9,040,000
------------------------------------------------------------------
20,714,000
------------------------------------------------------------------
FINANCIAL-DIVERSIFIED-3.62%
Associates Corp. NA, Medium
Term Notes
5.85% 01/15/01 8,443 8,410,743
------------------------------------------------------------------
|
MATURITY PAR (000) VALUE
FINANCIAL-DIVERSIFIED-(CONTINUED)
AT&T Capital Corp., Medium
Term Notes
7.50% 11/15/00 $ 16,000 $ 16,052,966
------------------------------------------------------------------
Beneficial Corp., Medium
Term Notes
6.33% 12/18/00 9,000 8,982,646
------------------------------------------------------------------
General Electric Capital
Corp., Floating Rate
Medium Term Notes
6.86%(c) 08/21/00 13,000 12,996,207
------------------------------------------------------------------
46,442,562
------------------------------------------------------------------
INVESTMENT BANKING/
BROKERAGE-0.78%
Morgan Stanley Dean Witter
& Co., Floating Rate
Medium Term Notes
6.93%(c) 09/06/00 10,000 10,000,000
------------------------------------------------------------------
Total Short-Term
Obligations (Cost
$89,656,562) 89,656,562
------------------------------------------------------------------
TAXABLE MUNICIPAL
BONDS-3.65%
FINANCE-MULTIPLE
INDUSTRY-2.15%
Mississippi Business
Finance Corp.
(Mississippi Industrial
Development); Revenue
Bonds, Weekly VRD Series
6.74% (LOC-Bank of
America)(b) 06/01/15 17,500 17,500,000
------------------------------------------------------------------
6.63%(b) 02/01/23 10,000 10,000,000
------------------------------------------------------------------
27,500,000
------------------------------------------------------------------
HOSPITAL MANAGEMENT-1.50%
Colorado Health Facilities
Authority; Revenue Bonds,
Weekly VRD Series
(LOC-KBC Bank N.V.)
6.65%(b) 03/01/30 9,750 9,750,000
------------------------------------------------------------------
Illinois Health Facilities
Authority (Loyola
University Health
Systems); Revenue Bonds,
Weekly VRD Series
6.85%(b)(d) 07/01/24 9,500 9,500,000
------------------------------------------------------------------
19,250,000
------------------------------------------------------------------
Total Taxable Municipal
Bonds (Cost
$46,750,000) 46,750,000
------------------------------------------------------------------
CERTIFICATES OF
DEPOSIT-2.73%
Bank Austria
5.65% 07/06/00 10,000 9,999,934
------------------------------------------------------------------
Commerzbank
6.31% 08/22/00 25,000 25,001,324
------------------------------------------------------------------
Total Certificates of
Deposit (Cost
$35,001,258) 35,001,258
------------------------------------------------------------------
|
FS-72
MATURITY PAR (000) VALUE
MASTER NOTE
AGREEMENTS-10.53%(e)
Merrill Lynch Mortgage
Capital, Inc.
7.34%(f) 08/17/00 $ 75,000 $ 75,000,000
------------------------------------------------------------------
Morgan Stanley Dean Witter
& Co.
7.23%(g) 09/01/00 60,000 60,000,000
------------------------------------------------------------------
Total Master Note
Agreements (Cost
$135,000,000) 135,000,000
------------------------------------------------------------------
Total Investments
(excluding repurchase
agreements) (Cost
$544,937,531) 544,937,531
------------------------------------------------------------------
REPURCHASE
AGREEMENTS-53.01%(h)
Bank of America Securities
6.90%(i) 07/03/00 10,000 10,000,000
------------------------------------------------------------------
Barclays Capital Inc.
6.80%(j) 07/03/00 58,000 58,000,000
------------------------------------------------------------------
Chase Securities, Inc.
6.80%(k) 07/03/00 296,600 296,600,000
------------------------------------------------------------------
|
MATURITY PAR (000) VALUE
REPURCHASE AGREEMENTS-(CONTINUED)
Deutsche Bank Securities
Corp.
6.72%(l) 07/03/00 $ 82,923 $ 82,922,978
------------------------------------------------------------------
First Union Capital Markets
6.90%(m) 07/03/00 58,000 58,000,000
------------------------------------------------------------------
Goldman Sachs & Co.
6.88%(n) 07/03/00 58,000 58,000,000
------------------------------------------------------------------
UBS Warburg
6.85%(o) 07/03/00 58,000 58,000,000
------------------------------------------------------------------
Westdeutsche Landesbank
Girozentrale
6.85%(p) 07/03/00 58,000 58,000,000
------------------------------------------------------------------
Total Repurchase
Agreements (Cost
$679,522,978) 679,522,978
------------------------------------------------------------------
TOTAL INVESTMENTS-95.52% 1,224,460,509(q)
------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-4.48% 57,396,025
------------------------------------------------------------------
NET ASSETS-100.00% $1,281,856,534
==================================================================
|
Investment Abbreviations:
LOC - Letter of Credit
VRD - Variable Rate Demand
Notes to Schedule of Investments:
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days notice. Interest rates are redetermined periodically.
Rates shown are rates in effect on 06/30/00.
(c) The coupon rate shown on floating rate note represents the rate at period
end.
(d) Secured by bond insurance provided by MBIA Insurance Co.
(e) The investments in master note agreements are through participation in joint
accounts with other mutual funds, private accounts, and certain
non-registered investment companies managed by the investment advisor or its
affiliates.
(f) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one business day notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
06/30/00.
(g) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon three business days notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
06/30/00.
(h) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$500,287,500. Collateralized by $556,572,016 par value of U.S. Government
obligations, 6.11% to 6.50% due 12/01/14 to 07/01/29 with an aggregate
market value at 06/30/00 of $510,000,000.
(j) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$467,874,523. Collateralized by $479,206,000 par value of U.S. Government
obligations, 0% to 7.25% due 08/02/00 to 05/14/10 with an aggregate market
value at 06/30/00 of $476,961,879.
(k) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$300,170,000. Collateralized by $543,975,698 par value of U.S. Government
and Treasury obligations, 0% to 9.00% due 06/15/09 to 03/01/33 with an
aggregate market value at 06/30/00 of $306,003,760.
(l) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$150,084,000. Collateralized by $154,584,000 par value of U.S. Government
obligations, 0% to 7.25% due 11/02/00 to 05/13/05 with an aggregate market
value at 06/30/00 of $153,004,476.
(m) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$750,431,250. Collateralized by $1,638,512,025 par value of U.S. Government
and Treasury obligations, 5.00% to 12.50% due 10/01/00 to 07/01/30 with an
aggregate market value at 06/30/00 of $765,000,000.
(n) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$1,000,573,333. Collateralized by $1,815,571,441 par value of U.S.
Government and Treasury obligations, 0% to 10.00% due 03/01/05 to 06/01/37
with an aggregate market value at 06/30/00 of $1,020,000,001.
(o) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$250,142,708. Collateralized by $310,901,218 par value of U.S. Government
and Treasury obligations, 6.00% to 8.50% due 03/15/01 to 12/15/37 with an
aggregate market value at 06/30/00 of $255,000,262.
(p) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$200,114,167. Collateralized by $293,357,525 par value of U.S. Government
and Treasury obligations, 5.50% to 9.50% due 01/31/02 to 08/01/29 with an
aggregate market value at 06/30/00 of $204,000,456.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-73
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
-------------- --------------
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 816,533,728 $ 544,937,531
---------------------------------------------------------------------------------------------
Repurchase agreements 399,090,983 679,522,978
---------------------------------------------------------------------------------------------
Receivables for:
Investments sold 238,000 --
---------------------------------------------------------------------------------------------
Fund shares sold 91,517,474 79,884,809
---------------------------------------------------------------------------------------------
Interest 2,573,876 2,907,800
---------------------------------------------------------------------------------------------
Investment for deferred compensation plan 93,043 91,036
---------------------------------------------------------------------------------------------
Other assets 271,472 263,285
---------------------------------------------------------------------------------------------
Total assets 1,310,318,576 1,307,607,439
---------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 61,779,969 23,671,140
---------------------------------------------------------------------------------------------
Dividends 266,174 254,396
---------------------------------------------------------------------------------------------
Deferred compensation plan 93,043 91,036
---------------------------------------------------------------------------------------------
Accrued advisory fees 541,572 565,533
---------------------------------------------------------------------------------------------
Accrued administrative service fees 11,946 11,745
---------------------------------------------------------------------------------------------
Accrued distribution fees 461,927 896,390
---------------------------------------------------------------------------------------------
Accrued trustees' fees 802 2,991
---------------------------------------------------------------------------------------------
Accrued transfer agent fees 241,659 184,654
---------------------------------------------------------------------------------------------
Accrued operating expenses 95,122 73,020
---------------------------------------------------------------------------------------------
Total liabilities 63,492,214 25,750,905
---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,246,826,362 $1,281,856,534
=============================================================================================
NET ASSETS:
AIM Cash Reserve Shares $ 912,041,597 $ 932,932,450
=============================================================================================
Class B $ 289,327,479 $ 302,416,702
=============================================================================================
Class C $ 45,457,286 $ 46,507,382
=============================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
AIM Cash Reserve Shares 912,028,393 932,915,313
=============================================================================================
Class B 289,323,006 302,417,029
=============================================================================================
Class C 45,456,592 46,505,821
=============================================================================================
AIM Cash Reserve Shares:
Net asset value, redemption and offering price per share $ 1.00 $ 1.00
=============================================================================================
Class B:
Net asset value and offering price per share $ 1.00 $ 1.00
=============================================================================================
Class C:
Net asset value and offering price per share $ 1.00 $ 1.00
=============================================================================================
|
See Notes to Financial Statements.
FS-74
STATEMENT OF OPERATIONS
SIX MONTHS
SEVEN MONTHS ENDED YEAR
ENDED JUNE 30, ENDED
JULY 31, 2000 DECEMBER 31,
2000 (UNAUDITED) 1999
------------ ----------- ------------
INVESTMENT INCOME:
Interest $46,634,241 $39,794,906 $72,284,896
-------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 4,041,617 3,500,045 7,448,373
-------------------------------------------------------------------------------------------------------
Administrative services fees 83,475 71,529 118,024
-------------------------------------------------------------------------------------------------------
Custodian fees 84,840 72,658 171,275
-------------------------------------------------------------------------------------------------------
Distribution fees - AIM Cash Reserve Shares 1,332,550 1,145,100 2,443,795
-------------------------------------------------------------------------------------------------------
Distribution fees - Class B 1,905,178 1,669,584 3,680,653
-------------------------------------------------------------------------------------------------------
Distribution fees - Class C 265,889 229,427 440,903
-------------------------------------------------------------------------------------------------------
Trustees' fees 6,820 6,540 15,267
-------------------------------------------------------------------------------------------------------
Transfer agent fees - AIM Cash Reserve Shares 1,105,308 935,627 1,549,204
-------------------------------------------------------------------------------------------------------
Transfer agent fees - Class B 395,108 341,020 583,322
-------------------------------------------------------------------------------------------------------
Transfer agent fees - Class C 55,135 46,874 69,876
-------------------------------------------------------------------------------------------------------
Other 377,807 323,718 1,055,705
-------------------------------------------------------------------------------------------------------
Total expenses 9,653,727 8,342,122 17,576,397
-------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (20,578) (16,924) (20,102)
-------------------------------------------------------------------------------------------------------
Net expenses 9,633,149 8,325,198 17,556,295
-------------------------------------------------------------------------------------------------------
Net investment income 37,001,092 31,469,708 54,728,601
-------------------------------------------------------------------------------------------------------
Net realized gain from investments -- -- 83
-------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $37,001,092 $31,469,708 $54,728,684
=======================================================================================================
|
See Notes to Financial Statements.
FS-75
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
SEVEN MONTHS ENDED YEAR YEAR
ENDED JUNE 30, ENDED ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
-------------- -------------- -------------- --------------
OPERATIONS:
Net investment income $ 37,001,092 $ 31,469,708 $ 54,728,601 $ 46,894,254
------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments -- -- 83 2,781
------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 37,001,092 31,469,708 54,728,684 46,897,035
------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
AIM Cash Reserve Shares (27,493,666) (23,284,591) (40,668,074) (18,980,988)
------------------------------------------------------------------------------------------------------------------------------
Class A* -- -- -- (20,797,936)
------------------------------------------------------------------------------------------------------------------------------
Class B (8,335,400) (7,192,863) (12,546,032) (6,486,731)
------------------------------------------------------------------------------------------------------------------------------
Class C (1,172,026) (992,254) (1,514,495) (628,599)
------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
AIM Cash Reserve Shares (77,443,140) (56,556,220) (189,587,232) 834,944,363
------------------------------------------------------------------------------------------------------------------------------
Class A* -- -- -- (375,997,608)
------------------------------------------------------------------------------------------------------------------------------
Class B (115,577,813) (102,483,790) 94,371,540 194,469,771
------------------------------------------------------------------------------------------------------------------------------
Class C (11,177,934) (10,128,705) 29,244,201 19,103,703
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (204,198,887) (169,168,715) (65,971,408) 672,523,010
------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,451,025,249 1,451,025,249 1,516,996,657 844,473,647
------------------------------------------------------------------------------------------------------------------------------
End of period $1,246,826,362 $1,281,856,534 $1,451,025,249 $1,516,996,657
==============================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,246,789,171 $1,281,819,343 $1,450,988,058 $1,516,959,549
------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investments 37,191 37,191 37,191 37,108
------------------------------------------------------------------------------------------------------------------------------
$1,246,826,362 $1,281,856,534 $1,451,025,249 $1,516,996,657
==============================================================================================================================
|
* The Fund's Class A shares were reclassified as AIM Cash Reserve Shares on 12/21/98.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Money Market Fund (the "Fund") is a series portfolio of AIM Investment
Securities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
separate portfolios, each having an unlimited number of shares of beneficial
interest. Prior to June 1, 2000, the Fund was organized as a series portfolio of
AIM Funds Group. At a meeting held on February 3, 2000, the Board of Trustees of
AIM Funds Group approved an Agreement and Plan of Reorganization (the
"Reorganization") which reorganized the Fund as a series portfolio of the Trust.
Shareholders of the Fund approved the Reorganization at a meeting held on May
31, 2000. Pursuant to the Reorganization, the Fund's fiscal year-end was changed
from December 31 to July 31. This report includes financial information for the
period ended July 31, 2000 (seven months), the six months ended June 30, 2000
and the year ended December 31, 1999. Financial information for the six months
ended June 30, 2000 is unaudited. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is to provide as high
a level of current income as is consistent with the preservation of capital and
liquidity.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of
FS-76
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- As permitted under Rule 2a-7 of the 1940 Act, the
Fund's securities are valued on the basis of amortized cost which
approximates market value. This method values a security at its cost on the
date of purchase and thereafter, assumes a constant amortization to maturity
of any discount or premiums.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and discounts on
investments, is recorded on the accrual basis from settlement date.
C. Distributions -- It is the policy of the Fund to declare and pay dividends
daily from net investment income. Distributions from net realized capital
gains, if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.55% on the first $1
billion of the Fund's average daily net assets, plus 0.50% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the year ended December 31, 1999, AIM was
paid $83,475, $71,529 and $118,024, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $776,212, $671,889 and $1,341,736, respectively, for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the AIM
Cash Reserve shares, Class B shares and Class C shares of the Fund. The Trust
has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's AIM Cash Reserve shares, Class B shares and Class C shares (collectively
the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of AIM Cash Reserve shares and 1.00% of the average daily net assets of Class B
and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the
average daily net assets of the AIM Cash Reserve shares, Class B shares or Class
C shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own the
appropriate class of shares of the Fund. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the seven-month period ended
July 31, 2000, the AIM Cash Reserve shares, Class B shares and Class C shares
paid AIM Distributors $1,332,550, $1,905,178 and $265,889, respectively, as
compensation under the Plans. For the six months ended June 30, 2000, the AIM
Cash Reserve shares, Class B shares and Class C shares paid AIM Distributors
$1,145,100, $1,669,584 and $229,427, respectively, as compensation under the
Plans. For the year ended December 31, 1999, the AIM Cash Reserves, Class B and
Class C shares paid AIM Distributors $2,443,795, $3,680,653, and $440,903,
respectively, as compensation under the Plans.
During the seven-month period ended July 31, 2000, the six months ended June
30, 2000 and the year ended December 31, 1999, AIM Distributors received
$740,774, $679,919 and $1,254,200, respectively, in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the seven-month period ended July 31, 2000, the six months ended June
30, 2000 and the year ended December 31, 1999, the Fund paid legal fees of
$3,444, $2,668 and $5,825, respectively, for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Trust's trustees. A member of that firm
is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $8,809, $7,117 and $15,823, respectively, and reductions in custodian fees of $11,769, $9,807 and $4,279, respectively, under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $20,578, $16,924 and $20,102 for the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, respectively.
FS-77
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
JUNE 30, 2000
JULY 31, 2000 (UNAUDITED)
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
Sold:
Cash Reserve Shares 3,591,529,412 $ 3,591,529,412 3,119,085,058 $ 3,122,260,400
-----------------------------------------------------------------------------------------------------
Class A* -- -- -- --
-----------------------------------------------------------------------------------------------------
Class B 509,744,331 509,744,331 448,990,264 450,158,250
-----------------------------------------------------------------------------------------------------
Class C 156,197,199 156,197,199 130,393,503 130,551,340
-----------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Cash Reserve Shares 24,814,673 24,814,673 24,207,616 21,032,274
-----------------------------------------------------------------------------------------------------
Class A* -- -- -- --
-----------------------------------------------------------------------------------------------------
Class B 7,211,243 7,211,243 7,419,659 6,251,673
-----------------------------------------------------------------------------------------------------
Class C 1,019,008 1,019,008 1,022,298 864,461
-----------------------------------------------------------------------------------------------------
Issued in connection with
acquisitions:**
Cash Reserve Shares -- -- -- --
-----------------------------------------------------------------------------------------------------
Class A* -- -- -- --
-----------------------------------------------------------------------------------------------------
Class B -- -- -- --
-----------------------------------------------------------------------------------------------------
Class C -- -- -- --
-----------------------------------------------------------------------------------------------------
Reacquired:
Cash Reserve Shares (3,693,787,225) (3,693,787,225) (3,199,848,894) (3,199,848,894)
-----------------------------------------------------------------------------------------------------
Class A* -- -- -- --
-----------------------------------------------------------------------------------------------------
Class B (632,533,387) (632,533,387) (558,893,713) (558,893,713)
-----------------------------------------------------------------------------------------------------
Class C (168,394,141) (168,394,141) (141,544,506) (141,544,506)
-----------------------------------------------------------------------------------------------------
(204,198,887) $ (204,198,887) (169,168,715) $ (169,168,715)
=====================================================================================================
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- --------------- ---------------
Sold:
Cash Reserve Shares 8,060,651,699 $ 8,060,651,699 6,566,275,190 $ 6,566,275,190
------------------------------------------------------------------------------------------------------
Class A* -- -- 12,526,260,894 12,526,260,894
------------------------------------------------------------------------------------------------------
Class B 1,129,278,732 1,129,278,732 732,230,888 732,230,888
------------------------------------------------------------------------------------------------------
Class C 387,953,922 387,953,922 350,900,238 350,900,238
------------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Cash Reserve Shares 34,229,027 34,229,027 15,456,154 15,456,154
------------------------------------------------------------------------------------------------------
Class A* -- -- 15,630,817 15,630,817
------------------------------------------------------------------------------------------------------
Class B 10,880,999 10,880,999 5,684,934 5,684,934
------------------------------------------------------------------------------------------------------
Class C 1,259,465 1,259,465 536,206 536,206
------------------------------------------------------------------------------------------------------
Issued in connection with
acquisitions:**
Cash Reserve Shares -- -- 117,682,745 117,682,745
------------------------------------------------------------------------------------------------------
Class A* -- -- 135,276 135,276
------------------------------------------------------------------------------------------------------
Class B -- -- 72,923,588 72,923,588
------------------------------------------------------------------------------------------------------
Class C -- -- 5,548,897 5,548,897
------------------------------------------------------------------------------------------------------
Reacquired:
Cash Reserve Shares (8,284,467,958) (8,284,467,958) (5,864,469,726) (5,864,469,726)
------------------------------------------------------------------------------------------------------
Class A* -- -- (12,918,024,595) (12,918,024,595)
------------------------------------------------------------------------------------------------------
Class B (1,045,788,191) (1,045,788,191) (616,369,639) (616,369,639)
------------------------------------------------------------------------------------------------------
Class C (359,969,186) (359,969,186) (337,881,638) (337,881,638)
------------------------------------------------------------------------------------------------------
(65,971,491) $ (65,971,491) 672,520,229 $ 672,520,229
======================================================================================================
|
* Class A shares were reclassified to AIM Cash Reserve Shares effective December 21, 1998. ** The fund acquired AIM Advisor Cash Management Fund and AIM Dollar Fund on February 27, 1998 and December 21, 1998, respectively. The acquired funds' net assets as of the respective closing dates were $5,680,255 and $190,605,903, respectively. The net assets of the Fund immediately prior to each acquisition were $701,467,228 and $1,383,530,387, respectively.
FS-78
NOTE 7-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CASH RESERVE
-----------------------------------------------------------------------------------------
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------------------
2000(a) (UNAUDITED) 1999 1998 1997 1996 1995
------------ ----------- -------- ---------- -------- -------- --------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------- -------- -------- -------- ---------- -------- -------- --------
Income from investment operations:
Net investment income 0.0300 0.0252 0.0414 0.0453 0.0456 0.0433 0.0493
-------------------------------------- -------- -------- -------- ---------- -------- -------- --------
Less distributions from net investment
income (0.0300) (0.0252) (0.0414) (0.0453) (0.0456) (0.0433) (0.0493)
-------------------------------------- -------- -------- -------- ---------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ======== ======== ======== ========== ======== ======== ========
Total return(b) 3.03% 2.55% 4.22% 4.62% 4.66% 4.41% 5.04%
====================================== ======== ======== ======== ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $912,042 $932,932 $989,478 $1,179,072 $344,117 $315,470 $293,450
====================================== ======== ======== ======== ========== ======== ======== ========
Ratio of expenses to average net
assets 1.07%(c) 1.07%(c) 1.04% 0.99% 1.05% 1.08% 1.04%
====================================== ======== ======== ======== ========== ======== ======== ========
Ratio of net investment income to
average net assets 5.15%(c) 5.08%(c) 4.16% 4.53% 4.55% 4.32% 4.92%
====================================== ======== ======== ======== ========== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $915,893,647 and
$921,113,716 for July 31, 2000 and June 30, 2000, respectively.
CLASS B
--------------------------------------------------------------------------------------
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 --------------------------------------------------------
2000(a) (UNAUDITED) 1999 1998 1997 1996 1995
------------ ----------- -------- -------- -------- -------- --------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0256 0.0215 0.0339 0.0371 0.0378 0.0360 0.0419
----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions from net investment
income (0.0256) (0.0215) (0.0339) (0.0371) (0.0378) (0.0360) (0.0419)
----------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================= ======== ======== ======== ======== ======== ======== ========
Total return(b) 2.59% 2.17% 3.45% 3.78% 3.84% 3.66% 4.27%
========================================= ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $289,327 $302,417 $404,911 $310,534 $116,058 $ 91,148 $ 69,857
========================================= ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.82%(c) 1.82%(c) 1.79% 1.81% 1.80% 1.81% 1.78%
========================================= ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 4.40%(c) 4.33%(c) 3.41% 3.71% 3.80% 3.60% 4.14%
========================================= ======== ======== ======== ======== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $327,368,646 and
$335,751,488 for July 31, 2000 and June 30, 2000, respectively.
FS-79
NOTE 7-FINANCIAL HIGHLIGHTS-(CONTINUED)
CLASS C
-----------------------------------------------------------------------------
SIX MONTHS
SEVEN MONTHS ENDED YEAR ENDED AUGUST 4, 1997
ENDED JUNE 30, DECEMBER 31, (DATE SALES COMMENCED)
JULY 31, 2000 -------------------- TO DECEMBER 31,
2000(a) (UNAUDITED) 1999 1998 1997
------------ ----------- -------- -------- ----------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0256 0.0215 0.0339 0.0371 0.0158
-------------------------------------------------- -------- -------- -------- -------- --------
Less distributions from net investment income (0.0256) (0.0215) (0.0339) (0.0371) (0.0158)
-------------------------------------------------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================================== ======== ======== ======== ======== ========
Total return(b) 2.59% 2.17% 3.44% 3.78% 3.92%
================================================== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 45,457 $ 46,507 $ 56,636 $ 27,391 $ 8,287
================================================== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.82%(c) 1.82%(c) 1.79% 1.81% 1.80%(d)
================================================== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 4.40%(c) 4.33%(c) 3.41% 3.71% 3.80%(d)
================================================== ======== ======== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges where applicable and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $45,687,844 and
$46,137,478 for July 31, 2000 and June 30, 2000, respectively.
(d) Annualized.
FS-80
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of AIM Municipal Bond Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Municipal Bond Fund (a portfolio of AIM Investment Securities Funds), including
the schedule of investments, as of July 31, 2000, and the related statement of
operations for the seven months ended July 31, 2000 and the year ended December
31, 1999, the statement of changes in net assets for the seven months ended July
31, 2000 and the two-years ended December 31, 1999, and the financial highlights
for the seven months ended July 31, 2000 and for each of the years in the
five-year period ended December 31, 1999. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Municipal Bond Fund as of July 31, 2000, the results of its operations for the
seven months ended July 31, 2000 and the year ended December 31, 1999, the
changes in its net assets for the seven months ended July 31, 2000 and the
two-years ended December 31, 1999, and the financial highlights for the seven
months ended July 31, 2000 and for each of the years in the five-year period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG September 1, 2000 Houston, Texas |
FS-81
SCHEDULE OF INVESTMENTS
July 31, 2000
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
ALABAMA-1.30%
Alabama (State of)
Housing Finance
Authority; Single
Family Mortgage Series
D-2 RB
5.50%, 10/01/17(b) -- Aaa $ 970 $ 937,534
----------------------------------------------------------------
Alabama (State of) Public
School & College
Authority; Capital
Improvement Series 1999
C RB
5.75%, 07/01/17 AA Aa3 1,400 1,432,970
----------------------------------------------------------------
Courtland Industrial
Development Board
(Champion International
Corp. Project);
Refunding Environmental
Improvement Series RB
6.40%, 11/01/26(b) -- Baa1 2,315 2,279,997
----------------------------------------------------------------
4,650,501
----------------------------------------------------------------
ALASKA-0.76%
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 2,465 2,525,442
----------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Mortgage
Program Series RB
6.88%, 06/01/33 AAA Aaa 205 209,633
----------------------------------------------------------------
2,735,075
----------------------------------------------------------------
ARIZONA-1.47%
Arizona (State of)
Educational Loan
Marketing Corp.; RB
6.13%, 09/01/02(b) -- Aa2 1,900 1,941,211
----------------------------------------------------------------
Pima (County of) Unified
School District No. 10
(Amphitheater); School
Improvement Series 1992
E GO
6.50%, 07/01/05 A+ A2 3,100 3,343,443
----------------------------------------------------------------
5,284,654
----------------------------------------------------------------
ARKANSAS-0.56%
Little Rock (City of);
Capital Improvement
Series B GO
5.75%, 02/01/06 AA Aa3 2,000 2,011,400
----------------------------------------------------------------
CALIFORNIA-2.02%
Abag Financing Authority
for Non-profit Corps.
(Lytton Gardens Inc.);
Series 1999 COP
6.00%, 02/15/19 AA- -- 2,085 2,113,627
----------------------------------------------------------------
Abag Financing Authority
for Non-Profit Corps.
(Odd Fellows Home of
California); Series
1999 COP
6.00%, 08/15/24 AA- -- 1,000 1,013,180
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
CALIFORNIA-(CONTINUED)
Abag Financing Authority
for Non-Profit Corps.
(Lincoln Glen Manor
Senior Citizens);
Series 2000 COP
6.10%, 02/15/25 AA- -- $1,000 $ 1,027,600
----------------------------------------------------------------
California (State of)
Educational Facilities
Authority (Fresno
Pacific University);
Series 2000 A RB
6.05%, 03/01/11 -- Baa3 1,350 1,417,716
----------------------------------------------------------------
Foothill/Eastern Corridor
Agency (California Toll
Road Project); Senior
Lien Series A RB
6.00%, 01/01/10(d)(e) AAA Aaa 400 445,280
----------------------------------------------------------------
Sacramento (City of)
California City
Financing Authority
(Senior Convention
Center Hotel); Series
1999 A RB
6.25%, 01/01/30(f) -- -- 750 707,738
----------------------------------------------------------------
Sacramento (City of)
California Cogeneration
Authority (Procter &
Gamble Project); Series
1995 RB
7.00%, 07/01/04 BBB -- 500 539,510
----------------------------------------------------------------
7,264,651
----------------------------------------------------------------
COLORADO-1.32%
Adams (County of)
Colorado School
District No. 1;
Unlimited Tax Series
1992 A GO
6.63%, 12/01/02(d)(e) AAA Aaa 500 528,270
----------------------------------------------------------------
Colorado Health
Facilities Authority
(National Jewish
Medical and Research
Project); Hospital
Series RB
5.38%, 01/01/29 BBB -- 1,000 767,110
----------------------------------------------------------------
Colorado (State of) E-470
Public Highway
Authority; Series 2000
A RB
5.75%, 09/01/35(c) AAA Aaa 1,000 995,460
----------------------------------------------------------------
Highlands Ranch Metro
District No. 1;
Unlimited Tax Refunding
& Improvement Series A
GO
7.30%, 09/01/02(d)(e) NRR NRR 500 540,605
----------------------------------------------------------------
Mesa County School
District No. 51; 1989
Series B COP
6.88%, 12/01/05(c) AAA Aaa 1,465 1,522,853
----------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Refunding Series GO
7.95%, 12/01/02(d)(e) NRR NRR 50 54,183
----------------------------------------------------------------
|
FS-82
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
COLORADO-(CONTINUED)
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Unrefunded Balance
Series GO
7.95%, 12/01/03(f) -- -- $ 305 $ 317,420
----------------------------------------------------------------
4,725,901
----------------------------------------------------------------
CONNECTICUT-2.12%
Connecticut (State of)
(Bradley International
Airport); Special
Obligation Parking
Series 2000 A RB
6.60%, 07/01/24(b) A -- 1,000 1,021,440
----------------------------------------------------------------
Connecticut (State of);
General Purpose Public
Improvement Series
1992-A GO
6.50%, 03/15/02(d)(e) NRR NRR 5,500 5,776,100
----------------------------------------------------------------
Connecticut (State of)
Housing Finance
Authority; Sub-series
1996 A-3 RB
5.95%, 05/15/17 AA Aa2 800 818,400
----------------------------------------------------------------
7,615,940
----------------------------------------------------------------
DELAWARE-0.08%
Delaware Economic
Development Authority
(Osteopathic Hospital
Association); Series A
RB
6.75% 01/01/13(d) NRR Aaa 250 282,160
----------------------------------------------------------------
DISTRICT OF
COLUMBIA-0.27%
District of Columbia
(Gonzaga College High
School); Series 1999 RB
5.38%, 07/01/19(c) AAA Aaa 1,000 970,500
----------------------------------------------------------------
FLORIDA-2.00%
Crossings at Fleming
Island (Community
Development District
Special Assessment);
Refunding Series 2000 B
RB
5.80%, 05/01/16(c) AAA Aaa 1,000 1,028,900
----------------------------------------------------------------
Dade (County of)
(Courthouse Center
Project); Special
Obligation Series 1995
RB
5.90%, 04/01/05(d)(e) NRR NRR 500 533,740
----------------------------------------------------------------
Escambia (County of)
(Champion International
Corp. Project); PCR
6.90%, 08/01/22(b) BBB Baa1 1,125 1,144,811
----------------------------------------------------------------
Escambia (County of)
Health Facilities
Authority (Health Care
Facility Loan-Veterans
Hospital Project);
Hospital Series 2000 RB
5.95%, 07/01/20(c) -- Aaa 1,000 1,022,280
----------------------------------------------------------------
Miami (City of) Dade
County Florida Aviation
(Miami International
Airport); Series 2000 B
RB
5.75%, 10/01/29(c) AAA Aaa 2,000 2,020,760
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
FLORIDA-(CONTINUED)
Miami (City of) Parking
Facilities; Series 1992
A RB
6.70%, 10/01/01(d)(e) NRR NRR $1,120 $ 1,168,754
----------------------------------------------------------------
Plantation (City of)
Health Facilities
Authority (Covenant
Retirement Communities
Inc.); Series 1992 RB
7.75%, 12/01/02(d)(e) NRR NRR 250 272,425
----------------------------------------------------------------
7,191,670
----------------------------------------------------------------
GEORGIA-0.48%
Georgia (State of)
Housing and Finance
Authority (Home
Ownership Opportunity
Program); Series C RB
6.50%, 12/01/11 AA+ Aa2 650 676,429
----------------------------------------------------------------
Savannah (City of)
Economic Development
Authority (Hershey
Foods Corp. Project);
Refunding IDR
6.60%, 06/01/12 A+ -- 1,000 1,043,300
----------------------------------------------------------------
1,719,729
----------------------------------------------------------------
IDAHO-0.26%
Idaho Health Facilities
Authority (Elks
Rehabilitation Hospital
Project); Hospital
Series RB
5.30%, 07/15/18 BBB -- 1,150 921,875
----------------------------------------------------------------
ILLINOIS-9.23%
Berwyn (City of) (Macneal
Memorial Hospital
Association Project);
Hospital Series 1991 RB
7.00%, 06/01/01(d)(e) AAA Aaa 3,250 3,382,275
----------------------------------------------------------------
Chicago (City of) Public
Building Committee
(Chicago School
Reform); Refunding
Series 1999 RB
5.25%, 12/01/15(c) AAA Aaa 1,500 1,490,520
----------------------------------------------------------------
Cook (County of);
Unlimited Tax Series
1992 B GO
5.75%, 11/15/02(d)(e) AAA Aaa 2,000 2,091,880
----------------------------------------------------------------
Freeport (City of) (Sewer
System Improvements);
Unlimited Tax Series
2000 GO
6.00%, 12/01/29(c) AAA Aaa 1,000 1,013,850
----------------------------------------------------------------
Illinois (State of);
Sales Tax Series 1991 O
RB
6.50%, 06/15/01(d)(e) AAA NRR 1,500 1,556,205
----------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (CPC
International Project);
Refunding PCR
6.75%, 05/01/16 -- A2 2,500 2,584,550
----------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (Adventist
Health Systems
Project); Hospital
Series 1997 A RB
6.00%, 11/15/11 AAA Aaa 2,500 2,677,700
----------------------------------------------------------------
|
FS-83
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
ILLINOIS-(CONTINUED)
Illinois (State of)
Educational Facilities
Authority (Midwestern
University); Series B
RB
5.50%, 05/15/18 A -- $1,000 $ 958,330
----------------------------------------------------------------
Illinois (State of)
Educational Facilities
Authority (Northwestern
University); Adjustable
Medium Term Series RB
5.25%, 11/01/14(e) AA+ Aa1 1,000 992,980
----------------------------------------------------------------
Illinois (State of)
Educational Facilities
Authority (Shedd
Aquarium Society); RB
5.60%, 07/01/27(c) AAA Aaa 3,500 3,428,355
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Blessing Hospital);
Hospital Series 1999 A
6.00%, 11/15/19(b) AAA Aaa 1,000 1,015,530
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Evangelical Hospital
Corp.); RB
6.25%, Refunding Series
1992 A 04/15/22(d)(e) NRR Aaa 1,000 1,074,390
----------------------------------------------------------------
6.25%, Series 1992 C
04/15/22(d)(e) NRR NRR 1,150 1,231,052
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Franciscan Sisters
Health Care); Series
1992 RB
6.40%, 09/01/04(d) AAA Aaa 2,000 2,133,140
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Memorial Hospital);
Hospital Series 1992 RB
7.25%, 05/01/02(d)(e) NRR NRR 200 212,810
----------------------------------------------------------------
Illinois State University
(Auxiliary Facilities
System);
5.75%, Series 1993 RB
04/01/14(c) AAA Aaa 1,000 1,013,350
----------------------------------------------------------------
5.75%, Series 1991 RB
04/01/22 AA- Aa3 4,750 4,751,900
----------------------------------------------------------------
Peoria and Pekin and
Waukegan (Cities of);
GNMA Collateralized
Mortgage Series 1990 RB
7.88%, 08/01/22(b) AA -- 60 61,945
----------------------------------------------------------------
Tazewell County Community
High School District
No. 303 (Pekin);
Unlimited Tax Series
1996 GO
5.63%, 01/01/14(c) AAA Aaa 1,435 1,461,562
----------------------------------------------------------------
33,132,324
----------------------------------------------------------------
INDIANA-1.22%
Carmel Retirement Rental
Housing (Beverly
Enterprises Project);
Refunding Series RB
8.75%, 12/01/08(f) -- -- 90 95,327
----------------------------------------------------------------
East Allen (City of)
Multi-School Building
Corp.; First Mortgage
Series 2000 RB
5.75%, 01/15/15(c) AAA Aaa 735 754,367
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
INDIANA-(CONTINUED)
Indiana (State of)
(Special Program);
Series 2000 A RB
5.90%, 02/01/14(c) AAA Aaa $1,000 $ 1,042,400
----------------------------------------------------------------
Indiana (State of)
Housing Finance
Authority; Series B-1
RB
6.15%, 07/01/17 -- Aaa 150 153,630
----------------------------------------------------------------
Indianapolis (City of)
(Lake Nora and Fox Club
Project); Series 1999 A
Multi-Family RB
5.90%, 10/01/19(c) -- Aaa 1,795 1,802,109
----------------------------------------------------------------
Indiana Transportation
Finance Authority
(Airport Lease
Facility); Series 1992
A RB
6.25%, 11/01/02(d)(e) NRR Aaa 395 416,717
----------------------------------------------------------------
6.25%, 11/01/16 AA A1 105 108,294
----------------------------------------------------------------
4,372,844
----------------------------------------------------------------
IOWA-0.30%
Iowa Finance Authority
(Trinity Regional
Hospital Project);
Hospital Facilities
Series 1997 RB
6.00%, 07/01/12(c) AAA Aaa 1,000 1,068,490
----------------------------------------------------------------
KANSAS-0.45%
Hutchinson Health Care
Facilities (Wesley
Towers); Refunding &
Improvement Series 1999
A RB
6.25%, 11/15/19(f) -- -- 1,500 1,320,870
----------------------------------------------------------------
Newton (City of) (Newton
Healthcare Corp.);
Hospital Series A RB
7.38%, 11/15/04(d)(e) NRR NRR 250 280,368
----------------------------------------------------------------
1,601,238
----------------------------------------------------------------
KENTUCKY-1.73%
Jefferson (County of)
(Beverly Enterprises
Project); Refunding
Health Facilities
Series RB
5.88%, 05/01/08(f) -- -- 595 559,127
----------------------------------------------------------------
Kenton (County of)
Kentucky Airport Board
(Delta Airlines
Project); Special
Facilities Series 1992
A RB
7.13%, 02/01/21(b) BBB- Baa3 2,500 2,539,575
----------------------------------------------------------------
Mount Sterling (City of);
Lease Funding Series
1993 A RB
6.15%, 03/01/13 -- Aa 3,000 3,124,530
----------------------------------------------------------------
6,223,232
----------------------------------------------------------------
LOUISIANA-3.59%
Louisiana (State of)
Local Government
Environmental
Facilities and
Community Development
Authority (Capital
Projects and Equipment
Acquisition); Series
2000 A RB
6.30%, 07/01/30(c) AAA -- 2,000 2,156,080
----------------------------------------------------------------
|
FS-84
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
LOUISIANA-(CONTINUED)
Louisiana Public
Facilities Authority
(Medical Center at New
Orleans Project); RB
6.13%, 10/15/07(c) AAA -- $2,775 $ 2,843,154
----------------------------------------------------------------
Louisiana Public
Facilities Authority
(Our Lady of Lake
Regional Hospital);
Hospital Refunding
Series C RB
6.00%, 12/01/01(d)(e) AAA Aaa 1,000 1,038,170
----------------------------------------------------------------
Louisiana Public
Facilities Authority
(Tulane University of
Louisiana); RB
6.00%, 10/01/16(c) AAA Aaa 2,500 2,587,725
----------------------------------------------------------------
New Orleans Levee
District; Trust
Receipts Series 1995 A
RB
5.95%, 11/01/07(c) AAA Aaa 1,000 1,058,920
----------------------------------------------------------------
Ouachita Parish Hospital
Service District No. 1
(Glenwood Regional
Medical Center);
Refunding Series 1996
RB
5.70%, 05/15/16(c) AAA Aaa 1,000 1,008,860
----------------------------------------------------------------
St. John Baptist Parish
(Sales Tax District);
Public Improvement
Series 1987 RB
7.60%, 01/01/08(d) NRR NRR 500 581,675
----------------------------------------------------------------
7.60%, 01/01/09(d) NRR NRR 500 590,605
----------------------------------------------------------------
West Feliciana Parish
(Gulf States
Utilities); Series A
PCR
7.50%, 05/01/15 BB+ -- 1,000 1,040,160
----------------------------------------------------------------
12,905,349
----------------------------------------------------------------
MAINE-0.64%
Maine (State of)
Education Loan
Authority; Education
Loan Series A-2 RB
6.95%, 12/01/07(b) -- A2 770 793,577
----------------------------------------------------------------
Maine (State of) Housing
Authority; Series 1999
E-1 RB
5.85%, 11/15/20 AA Aa2 1,500 1,513,740
----------------------------------------------------------------
2,307,317
----------------------------------------------------------------
MASSACHUSETTS-3.50%
Massachusetts (State of)
(Consumer Loans);
Unlimited Tax Series
1991 C GO
7.00%, 08/01/01(d)(e) NRR NRR 2,450 2,559,466
----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Lowell General
Hospital); Series 1991
A RB
8.40%, 06/01/01(d)(e) NRR NRR 3,550 3,732,328
----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Winchester Hospital);
Series D RB
5.80%, 07/01/09(c) AAA -- 1,000 1,045,660
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
MASSACHUSETTS-(CONTINUED)
Massachusetts (State of)
Industrial Finance
Agency (Beverly
Enterprises); Refunding
Series RB
8.00%, 05/01/02(f) -- -- $ 125 $ 126,197
----------------------------------------------------------------
Massachusetts (State of)
Housing Finance Agency;
Single Family Housing
Series 1994 RB
6.60%, 12/01/26(b) A+ Aa3 1,890 1,943,771
----------------------------------------------------------------
Massachusetts (State of)
Municipal Wholesale
Electric Cooperative
Power Supply; System
Series 1992 A RB
6.75%, 07/01/08(c) AAA Aaa 3,000 3,176,670
----------------------------------------------------------------
12,584,092
----------------------------------------------------------------
MICHIGAN-4.12%
Detroit (City of) School
District; Unlimited Tax
Series 1992 GO
6.00%, 05/01/01(d)(e) NRR NRR 1,000 1,031,250
----------------------------------------------------------------
6.15%, 05/01/01(d)(e) NRR NRR 1,300 1,342,029
----------------------------------------------------------------
Flint (City of) Hospital
Building Authority;
Hospital Series B RB
5.38%, 07/01/18(c) A -- 1,000 933,720
----------------------------------------------------------------
Garden City Hospital
Finance Authority
(Garden City Hospital);
Hospital Refunding
Series A RB
5.63%, 09/01/10 -- Ba3 1,000 852,790
----------------------------------------------------------------
Lake Orion Community
School District;
Unlimited Tax Refunding
Series 1994 GO
7.00%, 05/01/05(d)(e) AAA Aaa 2,500 2,771,925
----------------------------------------------------------------
Lakeview Community School
District; Refunding
Unlimited Tax Series
1996 GO
5.75%, 05/01/07(d)(e) AAA Aaa 1,000 1,059,420
----------------------------------------------------------------
Lincoln Park (City of)
School District;
Unlimited Tax Series
1996 GO
6.00%, 05/01/06(d)(e) AAA Aaa 1,210 1,300,085
----------------------------------------------------------------
Michigan (State of)
Housing Development
Authority; Refunding
Rental Housing Series A
RB
6.60%, 04/01/12 AA- -- 945 985,578
----------------------------------------------------------------
Ypsilanti (City of)
School District;
Refunding Unlimited Tax
Series 1996 GO
5.75%, 05/01/07(d)(e) AAA Aaa 4,275 4,529,020
----------------------------------------------------------------
14,805,817
----------------------------------------------------------------
MINNESOTA-0.29%
Minneapolis (City of)
(Parking Ramp Project);
Unlimited Tax Series
2000 A GO
5.90%, 12/01/20 AAA Aaa 1,000 1,025,560
----------------------------------------------------------------
|
FS-85
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
MISSISSIPPI-2.58%
Mississippi (State of)
Development Board
(Panola County
Hospital); Special
Obligation Series RB
5.00%, 07/01/28 A -- $5,000 $ 4,099,600
----------------------------------------------------------------
Mississippi Higher
Education Assistance
Corp.; Student Loan
Sub-Series 1994 C RB
7.50%, 09/01/09(b)(f) -- -- 5,000 5,176,200
----------------------------------------------------------------
9,275,800
----------------------------------------------------------------
MISSOURI-1.15%
Kansas City Industrial
Development Authority
(General Motors Corp.
Project); PCR
6.05%, 04/01/06 A A3 1,435 1,444,973
----------------------------------------------------------------
Kansas City Municipal
Assistance Corp.
(Truman Medical Center
Charitable Foundation);
Leasehold Improvement
Series 1991 A RB
7.00%, 11/01/01(d)(e) NRR NRR 605 623,199
----------------------------------------------------------------
Missouri (State of)
Environmental
Improvement and Energy
Resources Authority;
Series 1995 C PCR
5.85%, 01/01/10 -- Aaa 1,000 1,049,360
----------------------------------------------------------------
St. Louis (City of)
Airport; Series 2000 RB
6.25%, 01/01/02 Baa3 BBB- 1,000 1,008,240
----------------------------------------------------------------
4,125,772
----------------------------------------------------------------
NEVADA-1.62%
Boulder (City of)
(Boulder City Hospital
Inc. Project); Hospital
Refunding Series RB
5.85%, 01/01/22(f) -- -- 500 415,230
----------------------------------------------------------------
Humboldt (County of)
(Sierra Pacific
Project); Refunding
Series 1987 PCR
6.55%, 10/01/13(c) AAA Aaa 3,000 3,140,250
----------------------------------------------------------------
Las Vegas (City of);
Refunding 1992 Limited
Tax GO
6.50%, 04/01/02(d)(e) AAA Aaa 1,000 1,050,990
----------------------------------------------------------------
Reno Redevelopment
Agency; Refunding
Sub-Series A Tax
Allocation Notes
6.00%, 06/01/10 -- Baa3 1,185 1,210,288
----------------------------------------------------------------
5,816,758
----------------------------------------------------------------
NEW HAMPSHIRE-0.42%
Hudson (City of);
Unlimited Tax Series GO
5.25%, 03/15/28 -- Aa3 1,610 1,497,042
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEW JERSEY-2.89%
Hudson (County of)
Correctional Facility;
Refunding Series 1992
COP
6.60%, 12/01/21(c) AAA Aaa $1,250 $ 1,290,675
----------------------------------------------------------------
New Jersey Economic
Development Authority
(Atlantic City Sewer
Co.); Sewer Facility
Series 1991 RB
7.25%, 12/01/11(b)(f) -- -- 1,630 1,684,980
----------------------------------------------------------------
New Jersey Economic
Development Authority
(Continental Airlines
Inc. Project);
Specialty Facilities
Series 1999 RB
6.40%, 09/15/23(b) BB Ba2 4,000 3,765,760
----------------------------------------------------------------
6.25%, 09/15/29(b) BB Ba2 2,250 2,033,527
----------------------------------------------------------------
New Jersey City Economic
Development Authority
(Franciscan Oaks
Project); First
Mortgage Series RB
5.70%, 10/01/17(f) -- -- 500 423,875
----------------------------------------------------------------
New Jersey Health Care
Facility Financing
Authority; Unrefunded
Balance Series 1987 C
RB
8.60%, 07/01/17(c) AAA Aaa 185 186,554
----------------------------------------------------------------
New Jersey (State of)
Turnpike Authority;
Series 2000 A RB
5.50%, 01/01/25(c) AAA Aaa 1,000 988,040
----------------------------------------------------------------
10,373,411
----------------------------------------------------------------
NEW MEXICO-1.62%
Albuquerque (City of) New
Mexico Educational
Facilities Authority
(Albuquerque Academy
Project); Education
Series 1995 RB
5.75%, 10/15/03(d)(e) NRR NRR 915 945,909
----------------------------------------------------------------
Las Cruces South Central
Solid Waste Authority;
Environmental Services
RB
5.65%, 06/01/09 -- A3 575 586,856
----------------------------------------------------------------
Los Alamos (County of);
Utility Series A RB
6.00%, 07/01/15(c) AAA Aaa 2,000 2,069,120
----------------------------------------------------------------
Santa Fe (City of);
Series 1994 A RB
6.25%, 06/01/04(d)(e) AAA Aaa 2,100 2,220,939
----------------------------------------------------------------
5,822,824
----------------------------------------------------------------
NEW YORK-11.61%
Metropolitan
Transportation
Authority; Dedicated
Tax Fund Series 2000 A
RB
5.88%, 04/01/25(c) AAA Aaa 1,500 1,520,265
----------------------------------------------------------------
|
FS-86
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEW YORK-(CONTINUED)
New York (City of); GO
8.25%, Unlimited Tax
Series 1991 F
11/15/01(d)(e) NRR Aaa $2,000 $ 2,123,220
----------------------------------------------------------------
7.65%, Unlimited Tax
Series 1992 F GO
02/01/02(d)(e) NRR Aaa 4,775 5,066,323
----------------------------------------------------------------
7.00%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 350 367,836
----------------------------------------------------------------
7.20%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 390 410,994
----------------------------------------------------------------
02/01/15 A- A3 110 115,138
----------------------------------------------------------------
7.70%, Unlimited Tax
Series D GO
02/01/02(d)(e) NRR Aaa 1,970 2,091,608
----------------------------------------------------------------
02/01/09 A- A3 30 31,699
----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1
08/01/02(d)(e) NRR Aaa 1,990 2,116,305
----------------------------------------------------------------
7.38%, Unlimited Tax
Series B1
08/15/04(d)(e) NRR Aaa 500 556,456
----------------------------------------------------------------
6.25%, Unlimited Tax
Series A
08/01/17 A- A3 3,035 3,166,689
----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1
08/01/17 A- A3 10 10,527
----------------------------------------------------------------
7.00%, Unlimited Tax
Series B
02/01/18(c) AAA Aaa 830 865,549
----------------------------------------------------------------
7.00%, Unlimited Tax
Series B
02/01/02(d)(e) AAA Aaa 170 178,791
----------------------------------------------------------------
New York (City of)
Industrial Development
Agency (The Lighthouse
Inc. Project); Series
1992 RB (LOC-Chase
Manhattan Bank)
6.50%, 07/01/02(d)(e) NRR NRR 1,500 1,585,515
----------------------------------------------------------------
New York (City of)
Municipal Water Finance
Authority; Water &
Sewer Systems
5.75%, Series 1997 B RB
06/15/29 AA Aa3 3,850 3,854,504
----------------------------------------------------------------
5.00%, Series 1987 A RB
06/15/17 AA Aa3 1,350 1,270,674
----------------------------------------------------------------
5.50%, Series 1996 A RB
06/15/24(c) AAA Aaa 1,000 975,280
----------------------------------------------------------------
New York State Dorm
Authority (City
University System);
Series 1990 C RB
6.00%, 07/01/16 A Baa1 365 365,675
----------------------------------------------------------------
New York (State of) Dorm
Authority (State
University Educational
Facilities); Series A
RB
6.50%, 05/15/06 A A3 1,000 1,081,730
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEW YORK-(CONTINUED)
New York (State of)
Environmental
Facilities Corp.; Water
Revenue Series 1991 E
PCR
6.88%, 06/15/01(d)(e) AAA Aaa $2,300 $ 2,395,036
----------------------------------------------------------------
6.88%, 06/15/10 AAA Aaa 1,100 1,139,798
----------------------------------------------------------------
New York (State of) Urban
Development Corp.
(Correctional Capital
Facilities); Series
1991-3 RB
7.38%, 01/01/02(d)(e) NRR Aaa 7,850 8,316,682
----------------------------------------------------------------
North Babylon (City of)
Union Free School
District; Unlimited Tax
Series 2000 A GO
5.50%, 02/15/17(c) -- Aaa 2,070 2,071,594
----------------------------------------------------------------
41,677,888
----------------------------------------------------------------
NORTH CAROLINA-1.58%
North Carolina Eastern
Municipal Power Agency;
Series A RB
6.13%, 01/01/10(c) AAA Aaa 1,500 1,641,870
----------------------------------------------------------------
North Carolina Housing
Finance Agency; Single
Family-Series II RB
6.20%, 03/01/16 AA Aa2 570 588,725
----------------------------------------------------------------
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project);
7.25%, Refunding RB
01/01/07 BBB+ Baa1 2,890 3,166,486
----------------------------------------------------------------
6.50%, Series 1990 RB
01/01/10(d) AAA Aaa 260 286,720
----------------------------------------------------------------
5,683,801
----------------------------------------------------------------
NORTH DAKOTA-0.15%
North Dakota Housing
Finance Agency; Home
Mortgage Series B RB
5.85%, 07/01/28(b) -- Aa3 545 533,958
----------------------------------------------------------------
OHIO-2.65%
Cleveland (City of)
Parking Facilities;
Improvement Series RB
8.00%, 09/15/02(d)(e) NRR NRR 500 542,960
----------------------------------------------------------------
Fairfield (City of)
School District;
Unlimited Tax Series
1995 GO
6.10%, 12/01/15(c) AAA Aaa 1,000 1,036,620
----------------------------------------------------------------
Findlay (City of);
Limited Tax Series 1996
GO
5.88%, 07/01/17 AA- Aa3 1,000 1,028,900
----------------------------------------------------------------
Lake Ohio School
District; Unlimited Tax
Series 2000 GO
5.75%, 12/01/26(c) AAA Aaa 2,500 2,526,925
----------------------------------------------------------------
Mason (City of) Health
Care Facilities (MCV
Health Care
Facilities); Series
1990 RB
7.63%, 02/01/01(d)(e) AAA NRR 2,090 2,173,224
----------------------------------------------------------------
|
FS-87
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
OHIO-(CONTINUED)
Montgomery (County of)
Ohio Hospital Authority
(Grandview Hospital &
Medical Center);
Refunding Hospital
Series RB
5.50%, 12/01/09(d)(e) NRR NRR $1,000 $ 1,041,380
----------------------------------------------------------------
Ohio Department of
Transportation
(Panhandle Rail Line
Project); Series 1992
COP
6.50%, 04/15/12(c) AAA Aaa 1,100 1,147,795
----------------------------------------------------------------
9,497,804
----------------------------------------------------------------
OKLAHOMA-2.77%
McAlester (City of)
Public Works Authority;
Refunding and
Improvement Series 1995
RB
5.50%, 12/01/09(d)(e) AAA Aaa 975 1,029,015
----------------------------------------------------------------
Mustang Improvement
Utility Authority;
Series 1999 RB
5.70%, 10/01/19(c) -- Aaa 1,500 1,503,555
----------------------------------------------------------------
Oklahoma Development
Finance Authority (St.
John Health System);
Refunding Series 1999
RB
5.75%, 02/15/18 AA Aa3 675 674,244
----------------------------------------------------------------
5.75%, 02/15/25 AA Aa3 1,750 1,752,503
----------------------------------------------------------------
Sapula (City of)
Municipal Authority;
Capital Improvement
Series RB
5.00%, 07/01/21(c) AAA Aaa 1,000 920,790
----------------------------------------------------------------
Tulsa (City of)
Industrial Authority
(St. Johns Medical
Center Project);
Hospital Series 1994 RB
6.25%, 02/15/06(d)(e) NRR NRR 2,000 2,150,480
----------------------------------------------------------------
Tulsa (City of)
Industrial Authority
(Tulsa Regional Medical
Center); Hospital
Series RB
7.20%, 06/01/03(d)(e) AAA NRR 500 543,550
----------------------------------------------------------------
Tulsa Public Facilities
Authority-Capital
Improvements-Water
System; Series 1988 B
RB
6.00%, 03/01/08 A+ -- 1,305 1,361,702
----------------------------------------------------------------
9,935,839
----------------------------------------------------------------
OREGON-0.93%
Cow Creek Band Umpqua
Tribe of Indians;
Series B RB
5.10%, 07/01/12(c) AAA Aaa 1,000 999,070
----------------------------------------------------------------
Portland (City of) Sewer
System; Series 1994 A
RB
6.20%, 06/01/04(d)(e) AAA NRR 1,200 1,277,112
----------------------------------------------------------------
6.25%, 06/01/04(d)(e) AAA NRR 1,000 1,065,990
----------------------------------------------------------------
3,342,172
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
PENNSYLVANIA-1.63%
Allegheny (County of)
Port Authority; Special
Revenue Transportation
Series 1999 RB
6.13% 03/01/29(c) AAA Aaa $1,000 $ 1,030,240
----------------------------------------------------------------
Montgomery (County of)
Industrial Development
Authority (Meadowood
Corp. Project);
Refunding First
Mortgage Series A RB
10.25%, 12/01/00(d)(e) NRR NRR 100 103,820
----------------------------------------------------------------
Montgomery (County of)
Industrial Development
Authority (Pennsburg
Nursing &
Rehabilitation Center);
Series 1993 RB
7.63%, 03/31/04(d)(e) NRR Aaa 100 112,101
----------------------------------------------------------------
Pennsylvania (State of);
Unlimited Tax Third
Series GO
6.75%, 11/15/13(c) AAA Aaa 1,250 1,355,512
----------------------------------------------------------------
Pennsylvania Economic
Development Finance
Authority (Colver
Project); Resource
Recovery Series 1994 D
RB
7.05%, 12/01/10(b) BBB- -- 2,900 2,976,125
----------------------------------------------------------------
Scranton-Lackawanna
Health & Welfare
Authority (Moses Taylor
Hospital Project);
Series 1991 B RB
8.50%, 07/01/01(d)(e) AAA NRR 250 263,893
----------------------------------------------------------------
5,841,691
----------------------------------------------------------------
PUERTO RICO-0.39%
Puerto Rico (Commonwealth
of) Electric Power
Authority; Series 1991
P RB
7.00%, 07/01/01(d)(e) AAA Aaa 1,325 1,382,902
----------------------------------------------------------------
RHODE ISLAND-0.66%
Rhode Island Depositors
Economic Protection
Corp.; Special
Obligation Series 1992
A RB
6.95%, 08/01/02(d)(e) AAA Aaa 1,250 1,331,912
----------------------------------------------------------------
Rhode Island Housing and
Mortgage Finance Corp.;
Homeownership
Opportunity Series 15 B
RB
6.00%, 10/01/04 AA+ Aa2 1,000 1,041,640
----------------------------------------------------------------
2,373,552
----------------------------------------------------------------
SOUTH CAROLINA-0.58%
Piedmont Municipal Power
Agency; Refunding
Electric Series A RB
5.75%, 01/01/24 BBB- Baa3 1,150 1,054,654
----------------------------------------------------------------
|
FS-88
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
SOUTH CAROLINA-(CONTINUED)
South Carolina (State of)
Jobs Economic
Development Authority
(Palmetto Health
Alliance); Hospital
Facilities Improvement
Series 2000 A RB
7.13%, 12/15/15 BBB Baa1 $1,000 $ 1,021,740
----------------------------------------------------------------
2,076,394
----------------------------------------------------------------
SOUTH DAKOTA-0.03%
South Dakota Health and
Educational Facility
Authority (Huron
Regional Medical
Center); Series 1994 RB
7.25%, 04/01/20 BBB -- 100 101,698
----------------------------------------------------------------
TENNESSEE-1.77%
Franklin Industrial
Development Board
(Landings Apartment
Project); Multifamily
Housing Series A RB
5.75%, 04/01/10(c) AAA Aaa 975 992,765
----------------------------------------------------------------
Montgomery (County of)
Health, Educational and
Housing Facilities
Board (Clarksville
Project); Refunding and
Improvement Hospital
Series RB
5.38%, 01/01/28(c) A -- 1,800 1,627,164
----------------------------------------------------------------
Robertson and Sumner
(Counties of) White
House Utilities
District; Water and
Sewer Series 2000 RB
6.00%, 01/01/26 -- Aaa 1,000 1,023,750
----------------------------------------------------------------
Shelby (County of);
Unlimited Tax School
Series B GO
6.00%, 03/01/02(d)(e) NRR NRR 1,000 1,031,880
----------------------------------------------------------------
Shelby County Health,
Educational & Housing
Facilities Board (Kirby
Pines); Health Care
Facilities Series A RB
6.25%, 11/15/16(f) -- -- 1,000 886,000
----------------------------------------------------------------
Tennessee Housing
Development Agency;
Homeownership
Progressive Series Q RB
6.80%, 07/01/17 AA Aa2 770 798,451
----------------------------------------------------------------
6,360,010
----------------------------------------------------------------
TEXAS-20.07%
Allen Independent School
District; Unlimited Tax
Refunding Series 2000
GO
5.95%, 02/15/25(c) AAA Aaa 1,600 1,624,368
----------------------------------------------------------------
Arlington Independent
School District;
Unlimited Tax Series GO
5.75%, 02/15/05(d)(e) NRR Aaa 705 736,647
----------------------------------------------------------------
5.75%, 02/15/21(d) -- Aaa 295 295,808
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Austin (City of); Utility
System Combined Fee
Refunding Series 1991
RB
6.50%, 05/15/01(d)(e) AAA Aaa $1,380 $ 1,429,390
----------------------------------------------------------------
Austin Community College
District; Combined Fee
Revenue Building and
Refunding Series 1995
RB
6.10%, 02/01/05(d)(e) AAA Aaa 1,115 1,180,361
----------------------------------------------------------------
Austin Hotel Occupancy
Tax; Refunding Sub Lien
1999 Series RB
5.80%, 11/15/29(c) AAA Aaa 1,000 1,003,460
----------------------------------------------------------------
Bellville Independent
School District;
Unlimited Tax Series
1995 GO
6.13%, 02/01/06(d)(e) NRR Aaa 535 571,808
----------------------------------------------------------------
6.13%, 02/01/20 NRR Aaa 295 302,938
----------------------------------------------------------------
Bexar (County of) Housing
Finance Corp. (Dymaxion
& Marrach Park
Apartments);
Multifamily Housing
Series 2000 A RB
6.10%, 08/01/30(c) -- Aaa 1,000 1,000,000
----------------------------------------------------------------
Brazos (County of) Health
Facilities Development
Corp. (Franciscan
Services Corp.); Series
A RB
5.38%, 01/01/22(c) AAA Aaa 2,000 1,901,120
----------------------------------------------------------------
Brazos Higher Education
Loan Authority Inc.;
Refunding Series 1992
C-1 RB
6.30%, Series 1992 C-1
11/01/01(b) -- Aa 325 330,714
----------------------------------------------------------------
6.45%, Series 1992 C-1
11/01/02(b) -- Aa 1,135 1,164,816
----------------------------------------------------------------
Carrollton (City of);
Limited Tax Series 1996
GO
5.75%, 08/15/06(d)(e) NRR NRR 1,000 1,052,440
----------------------------------------------------------------
Comal (County of)
Industrial Development
Authority (The Coleman
Co., Inc. Project);
Industrial Development
Series 1980 RB
9.25%, 08/01/00(d)(e) NRR NRR 280 280,000
----------------------------------------------------------------
Comal (County of)
Independent School
District; Unlimited Tax
Refunding Series 1999
GO
5.75%, 08/01/28(c) -- Aaa 1,000 998,610
----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Refunding and
Improvement Series RB
5.35%, 04/01/14 AA Aa2 2,055 2,054,836
----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Series A RB
6.00%, 10/01/01(d)(e) NRR NRR 2,030 2,094,473
----------------------------------------------------------------
De Soto (City of)
Independent School
District; Refunding
Unlimited Tax Series GO
5.13%, 08/15/17(c) AAA -- 1,000 951,430
----------------------------------------------------------------
|
FS-89
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Georgetown (City of);
Utility System Series
1995 A RB
6.20%, 08/15/05(d)(e) AAA Aaa $1,500 $ 1,600,470
----------------------------------------------------------------
Grapevine (City of);
Limited Tax Series 2000
COP
5.88%, 08/15/26(c) AAA Aaa 1,610 1,632,492
----------------------------------------------------------------
Harris County; Toll Road
Unlimited Tax GO and
Sub. Lien Refunding
Series 1991
6.75%, 08/01/14 AA Aa1 3,850 4,013,510
----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Saint Luke's
Episcopal Hospital
Project); Series 1991
RB
6.70%, 02/15/03(d)(e) AAA NRR 1,000 1,050,880
----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Texas Childrens
Hospital Project);
Hospital Series 1999 A
RB
5.25%, 10/01/29 AA Aa2 2,000 1,765,040
----------------------------------------------------------------
Harris County Mental
Health and Mental
Retardation Authority;
Refunding Series 1992
RB
6.25%, 09/15/10(c) AAA Aaa 4,500 4,618,620
----------------------------------------------------------------
Houston (City of);
Limited Tax Series 1992
C GO
6.25%, 03/01/02(d)(e) NRR NRR 1,470 1,509,822
----------------------------------------------------------------
Houston (City of); Water
and Sewer System Series
1997 C RB
5.38%, 12/01/27(c) AAA Aaa 2,495 2,363,339
----------------------------------------------------------------
Hurst, Euless, Bedford,
Texas Independent
School District;
6.50%, Refunding
Unlimited Tax Series
1994 GO
08/15/04(d)(e) AAA Aaa 640 684,531
----------------------------------------------------------------
6.50%, Unrefunded
Unlimited Tax Series
1994 GO 08/15/24(c) AAA Aaa 360 371,938
----------------------------------------------------------------
Katy (City of)
Independent School
District; Limited Tax
Series 1999 GO
6.13%, 02/15/32 AAA Aaa 1,500 1,545,630
----------------------------------------------------------------
Keller (City of)
Independent School
District; Series 1994
COP
6.00%, 08/15/05(c) AAA Aaa 1,000 1,058,110
----------------------------------------------------------------
Little Elm (City of)
Independent School
District; Unlimited Tax
Refunding Series
6.00%, Series 1999 GO
08/15/35 AAA -- 2,500 2,557,625
----------------------------------------------------------------
6.13%, Series 2000 GO
08/15/35 AAA -- 1,000 1,031,340
----------------------------------------------------------------
Lockhart (City of) Tax
and Utility Systems;
Unlimited Tax Series
1996 GO
5.85%, 08/01/11(c) AAA Aaa 605 631,989
----------------------------------------------------------------
5.90%, Refunding
08/01/06(d)(e) AAA Aaa 1,100 1,168,849
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Matagorda (County of)
District No. 1 (Reliant
Energy Project);
Refunding 1999 RB
5.95%, 05/01/30(b) BBB Baa1 $2,250 $ 2,028,915
----------------------------------------------------------------
North Central Texas
Health Facilities
Development Corp. (CC
Young Memorial
Project); Hospital
Series RB
5.38%, 02/15/25(c) A -- 1,000 931,140
----------------------------------------------------------------
Northside Independent
School District;
Unlimited Tax Series
1999 A GO
5.50%, 08/15/24 AAA Aaa 1,000 973,980
----------------------------------------------------------------
North Texas Higher
Education Authority
Inc.; Student Loan RB
6.10%, Series 1993 C
04/01/08(b) -- Aa 1,000 1,021,400
----------------------------------------------------------------
6.30%, Series 1993 D
04/01/09(b) -- A 500 509,420
----------------------------------------------------------------
Plano (City of); Limited
Tax Series 2000 GO
5.88%, 09/01/19 AAA Aaa 850 868,428
----------------------------------------------------------------
Plano (City of)
Independent School
District; Unlimited Tax
Series 1991 B GO
5.63%, 02/15/01(d)(e) AAA Aaa 2,500 2,516,850
----------------------------------------------------------------
Richardson (City of);
Hotel Occupancy Limited
Tax Series 2000 A COP
5.75%, 12/15/21(c) AAA Aaa 2,000 2,008,680
----------------------------------------------------------------
San Antonio (City of)
Independent School
District; Unlimited Tax
Series 1999 GO
5.50%, 08/15/24 AAA Aaa 3,500 3,408,930
----------------------------------------------------------------
Southwest Higher
Education Authority
Inc. (Southern
Methodist University);
Higher Education Series
D RB
5.00%, 10/01/22 A+ A1 1,750 1,555,155
----------------------------------------------------------------
Spring Branch Independent
School District;
Limited Tax Series 2000
GO
5.75%, 02/01/24(c) AAA Aaa 1,700 1,697,824
----------------------------------------------------------------
Texas (State of) Public
Property Finance Corp.
(Mental Health and
Mental Retardation);
Series 1996 RB
6.20%, 09/01/16 BBB+ -- 965 961,053
----------------------------------------------------------------
Texas (State of);
Veteran's Land
Unlimited Tax Series
1994 GO
6.40%, 12/01/24(b) AA Aa1 2,000 2,052,060
----------------------------------------------------------------
Texas (State of)
Department of Housing
and Community Affairs
(Asmara Project);
Multifamily Housing
Series 1996 A RB
6.30%, 01/01/16 A -- 310 321,644
----------------------------------------------------------------
|
FS-90
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Texas National Research
Laboratory Community
Financing Corp.
(Superconducting Super
Collider); Refunded
Series 1991 RB
7.10%, 12/01/01(d)(e) AAA Aaa $ 600 $ 631,710
----------------------------------------------------------------
Tyler Health Facilities
Development Corp.
(Mother Frances
Hospital); Hospital
Series A RB
5.63%, 07/01/13 -- Baa2 1,000 864,160
----------------------------------------------------------------
University of Texas;
Series 1999 B RB
5.70%, 08/15/20 AAA Aa1 1,000 1,007,690
----------------------------------------------------------------
Victoria (County of)
(Texas Hospital
Citizens Medical
Center); RB
6.20%, 01/01/10(c) AAA Aaa 1,000 1,050,190
----------------------------------------------------------------
Weatherford (City of)
Independent School
District; Unlimited Tax
Series 1994 GO
6.40%, 02/15/05(d)(e) NRR Aaa 900 964,071
----------------------------------------------------------------
6.40%, 02/15/12(c) -- Aaa 100 106,280
----------------------------------------------------------------
72,056,984
----------------------------------------------------------------
UTAH-1.38%
Intermountain Power
Agency (Utah Power
Supply); Series 1986 B
RB
5.00%, 07/01/16 A+ A1 1,550 1,448,165
----------------------------------------------------------------
Salt Lake (County of)
(Westminster College
Project); RB
5.75%, 10/01/27 BBB -- 1,000 936,180
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency;
Federally Insured Term
Sub. Single Family
Mortgage RB
6.30%, Sub-Series 1994
E-1, 07/01/06 AA- Aa3 240 248,585
----------------------------------------------------------------
7.15%, Sub-Series 1994
G-1, 07/01/06 AA- Aa3 135 142,376
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage RB
6.05%, Series 1994 C
07/01/06 AA- Aa3 350 360,115
----------------------------------------------------------------
6.45%, Series G2
07/01/27(b) AAA Aaa 780 796,957
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage
Sub-Series 2000 B-1 RB
6.00%, 07/01/10(b) AA- Aa3 1,000 1,008,860
----------------------------------------------------------------
4,941,238
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
VERMONT-0.28%
Vermont (State of)
Educational and Health
Buildings Financing
Agency (Fletcher Allen
Health); Hospital
Series 2000 A RB
6.00%, 12/01/23(c) AAA Aaa $1,000 $ 1,020,510
----------------------------------------------------------------
VIRGIN ISLAND-0.93%
Virgin Islands Public
Finance Authority;
Matching Fund Loan
Notes Series 1992 A RB
7.25%, 10/01/02(d)(e) AAA NRR 1,000 1,079,500
----------------------------------------------------------------
Virgin Islands Territory
(Hugo Insurance Claims
Fund); Special Tax Bond
Series 1991
7.75%, 10/01/01(d)(e) NRR NRR 2,155 2,262,017
----------------------------------------------------------------
3,341,517
----------------------------------------------------------------
VIRGINIA-0.65%
Covington-Alleghany
(County of) Industrial
Development Authority
(Beverly Enterprises);
Refunding Series RB
9.38%, 09/01/01(f) -- -- 30 30,449
----------------------------------------------------------------
Richmond (City of);
Public Improvement
Refunding Unlimited Tax
Series B GO
6.25%, 01/15/18 AA A1 2,000 2,056,520
----------------------------------------------------------------
Virginia (State of)
Housing Development
Authority; Commonwealth
Mortgage Series A RB
7.10%, 01/01/17 AA+ Aa1 250 258,420
----------------------------------------------------------------
2,345,389
----------------------------------------------------------------
WASHINGTON-1.98%
Clark (County of) School
District No. 117;
Unlimited Tax Series
1995 GO
6.00%, 12/01/05(d)(e) AAA Aaa 1,000 1,058,640
----------------------------------------------------------------
King (County of);
Unlimited Tax GO
5.50%, 07/01/07(d) AAA Aaa 500 522,150
----------------------------------------------------------------
King (County of);
Unlimited Tax Refunding
GO
6.50%, 12/01/11 AA+ Aaa 500 500,850
----------------------------------------------------------------
King (County of)
Washington Sewer
Authority; Series 1999
RB
5.50%, 01/01/22(c) AAA Aaa 1,000 977,810
----------------------------------------------------------------
Pend Oreille (County of)
Public Utility District
No. 1; Electric Series
B RB
6.30%, 01/01/17 A- A3 1,400 1,448,398
----------------------------------------------------------------
Washington State Public
Power Supply System
(Nuclear Project No.
1); Refunding Series A
RB
5.75%, 07/01/12(c) AAA Aaa 2,000 2,061,340
----------------------------------------------------------------
|
FS-91
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
WASHINGTON-(CONTINUED)
West Richland (City of);
Water & Sewer Refunding
Series RB
7.00%, 12/01/04(d)(e) AAA Aaa $ 500 $ 546,770
----------------------------------------------------------------
7,115,958
----------------------------------------------------------------
WISCONSIN-1.14%
Wisconsin Health and
Educational Facilities
Authority (Sinai
Samaritan Medical
Center); Series 1996 F
RB
5.75%, 08/15/16(c) AAA Aaa 1,500 1,516,290
----------------------------------------------------------------
Wisconsin Health and
Educational Facility
Authority (Sisters of
Sorrowful Mother);
Series 1997 A RB
5.90%, 08/15/24(c) AAA Aaa 2,500 2,499,925
----------------------------------------------------------------
Wisconsin Housing and
Economic Development
Authority; Home
Ownership Series 1994 E
RB
7.35%, 01/01/17 AA Aa2 75 78,136
----------------------------------------------------------------
4,094,351
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
WYOMING-0.64%
Laramie (County of)
(Memorial Hospital
Project); Hospital
Series RB
6.70%, 05/01/12(c) AAA Aaa $ 250 $ 263,860
----------------------------------------------------------------
Natrona (County of)
Wyoming Medical Center;
RB
6.00%, 09/15/11(c) AAA Aaa 1,000 1,045,960
----------------------------------------------------------------
Sweetwater (County of)
(Idaho Power Company
Project); Refunding
Series 1996 A PCR
6.05%, 07/15/26 A A3 1,000 1,003,710
----------------------------------------------------------------
2,313,530
----------------------------------------------------------------
TOTAL INVESTMENTS (Cost
$348,120,898)-99.81% 358,349,112
----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.19% 683,203
----------------------------------------------------------------
NET ASSETS-100.00% $359,032,315
================================================================
|
Investment Abbreviations:
COP - Certificates of Participation GO - General Obligation Bonds IDR - Industrial Development Revenue Bonds LOC - Letter of Credit NRR - Not Re-Rated PCR - Pollution Control Revenue Bonds RB - Revenue Bonds |
Sub. - Subordinate
VRD - Variable Rate Demand
GNMA - Government National Mortgage Association
Notes to Schedule of Investments:
(a)Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security. Ratings are not covered by Independent Auditors' Report.
(b)Security subject to the alternative minimum tax.
(c)Secured by bond insurance provided by one of the following companies: Ambac
Assurance Corp., Financial Guaranty Insurance Co., Financial Security
Assurance, or MBIA Insurance Co.
(d)Secured by an escrow fund of U.S. Treasury obligations.
(e)Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(f)Unrated security; determined by the investment advisor to be of comparable
quality to the rated securities in which the Fund may invest pursuant to
guidelines of quality adopted by the Board of Trustees and followed by the
investment advisor.
(g)Demand security, payable upon demand by the Fund at specified time intervals
no greater than thirteen months. Interest rate is redetermined periodically.
Rate shown is the rate in effect on 07/31/00.
See Notes to Financial Statements.
FS-92
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
ALABAMA-1.28%
Alabama (State of)
Housing Finance
Authority; Single
Family Mortgage Series
D-2 RB
5.50%, 10/01/17(b) -- Aaa $ 970 $ 917,688
----------------------------------------------------------------
Alabama (State of) Public
School & College
Authority; Capital
Improvement Series 1999
C RB
5.75%, 07/01/17 AA Aa3 1,400 1,422,792
----------------------------------------------------------------
Courtland Industrial
Development Board
(Champion International
Corp. Project);
Refunding Environmental
Improvement Series RB
6.40%, 11/01/26(b) -- Baa1 2,315 2,257,264
----------------------------------------------------------------
4,597,744
----------------------------------------------------------------
ALASKA-0.76%
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 2,465 2,517,135
----------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Mortgage
Program Series RB
6.88%, 06/01/33 AAA Aaa 205 209,699
----------------------------------------------------------------
2,726,834
----------------------------------------------------------------
ARIZONA-1.47%
Arizona (State of)
Educational Loan
Marketing Corp.; RB
6.13%, 09/01/02(b) -- Aa2 1,900 1,939,083
----------------------------------------------------------------
Pima (County of) Unified
School District No. 10
(Amphitheater); School
Improvement Series 1992
E GO
6.50%, 07/01/05 A+ A2 3,100 3,321,278
----------------------------------------------------------------
5,260,361
----------------------------------------------------------------
ARKANSAS-0.56%
Little Rock (City of);
Capital Improvement
Series B GO
5.75%, 02/01/06 AA Aa3 2,000 2,001,240
----------------------------------------------------------------
CALIFORNIA-2.01%
Abag Financing Authority
for Non-profit Corps.
(Lytton Gardens Inc.);
Series 1999 COP
6.00%, 02/15/19 AA- -- 2,085 2,095,425
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
CALIFORNIA-(CONTINUED)
Abag Financing Authority
for Non-Profit Corps.
(Odd Fellows Home of
California); Series
1999 COP
6.00%, 08/15/24 AA- -- $1,000 $ 1,006,890
----------------------------------------------------------------
Abag Financing Authority
for Non-Profit Corps.
(Lincoln Glen Manor
Senior Citizens);
Series 2000 COP
6.10%, 02/15/25 AA- -- 1,000 1,017,370
----------------------------------------------------------------
California (State of)
Educational Facilities
Authority (Fresno
Pacific University);
Series 2000 A RB
6.05%, 03/01/11 -- Baa3 1,350 1,406,929
----------------------------------------------------------------
Foothill/Eastern Corridor
Agency (California Toll
Road Project); Senior
Lien Series A RB
6.00%, 01/01/10(d)(e) AAA Aaa 400 442,656
----------------------------------------------------------------
Sacramento (City of)
California City
Financing Authority
(Senior Convention
Center Hotel); Series
1999 A RB
6.25%, 01/01/30(f) -- -- 750 697,770
----------------------------------------------------------------
Sacramento (City of)
California Cogeneration
Authority (Procter &
Gamble Project); Series
1995 RB
7.00%, 07/01/04 BBB -- 500 537,225
----------------------------------------------------------------
7,204,265
----------------------------------------------------------------
COLORADO-1.31%
Adams (County of)
Colorado School
District No. 1;
Unlimited Tax Series
1992 A GO
6.63%, 12/01/02(d)(e) AAA Aaa 500 526,890
----------------------------------------------------------------
Colorado Health
Facilities Authority
(National Jewish
Medical and Research
Project); Hospital
Series RB
5.38%, 01/01/29 BBB -- 1,000 764,030
----------------------------------------------------------------
Colorado (State of) E-470
Public Highway
Authority; Series 2000
A RB
5.75%, 09/01/35(c) AAA Aaa 1,000 982,140
----------------------------------------------------------------
Highlands Ranch Metro
District No. 1;
Unlimited Tax Refunding
& Improvement Series A
GO
7.30%, 09/01/02(d)(e) NRR NRR 500 539,530
----------------------------------------------------------------
|
FS-93
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
COLORADO-(CONTINUED)
Mesa County School
District No. 51; 1989
Series B COP
6.88%, 12/01/05(c) AAA Aaa $1,465 $ 1,524,098
----------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Refunding Series GO
7.95%, 12/01/02(d)(e) NRR NRR 50 54,075
----------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Unrefunded Balance
Series GO
7.95%, 12/01/03(f) -- -- 305 317,066
----------------------------------------------------------------
4,707,829
----------------------------------------------------------------
CONNECTICUT-2.71%
Bridgeport (City of);
Unlimited Tax Refunding
Series A GO
6.00%, 09/01/06(c) AAA Aaa 1,000 1,059,380
----------------------------------------------------------------
Connecticut (State of)
(Bradley International
Airport); Special
Obligation Parking
Series 2000 A RB
6.60%, 07/01/24(b) A -- 1,000 1,010,710
----------------------------------------------------------------
Connecticut (State of);
General Purpose Public
Improvement Series
1992-A GO
6.50%, 03/15/02(d)(e) NRR NRR 5,500 5,766,860
----------------------------------------------------------------
Connecticut (State of)
(JP Morgan Putters);
VRD Series 110 1999
4.54%, 12/15/08(g) -- VMIG-1 545 545,000
----------------------------------------------------------------
Connecticut (State of)
Housing Finance
Authority; Sub-series
1996 A-3 RB
5.95%, 05/15/17 AA Aa2 800 812,968
----------------------------------------------------------------
Connecticut (State of)
(Transportation
Infrastructure Purpose
S-1); Special Tax
Obligation VRD Series
1990 RB
4.75%, 12/01/10(g) A-1+ VMIG-1 2 2,000
----------------------------------------------------------------
Connecticut (State of)
Health Care Development
Authority (Corporate
Independent Living
Project); VRD Series
1990 (LOC-Chase
Manhatten Bank)
4.65%, 07/01/15(g) -- VMIG-1 494 494,000
----------------------------------------------------------------
9,690,918
----------------------------------------------------------------
DELAWARE-0.08%
Delaware Economic
Development Authority
(Osteopathic Hospital
Association); Series A
RB
6.75% 01/01/13(d) NRR Aaa 250 279,398
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
DISTRICT OF
COLUMBIA-0.27%
District of Columbia
(Gonzaga College High
School); Series 1999 RB
5.38%, 07/01/19(c) AAA Aaa $1,000 $ 959,230
----------------------------------------------------------------
FLORIDA-1.99%
Crossings at Fleming
Island (Community
Development District
Special Assessment);
Refunding Series 2000 B
RB
5.80%, 05/01/16(c) AAA Aaa 1,000 1,020,860
----------------------------------------------------------------
Dade (County of)
(Courthouse Center
Project); Special
Obligation Series 1995
RB
5.90%, 04/01/05(d)(e) NRR NRR 500 531,000
----------------------------------------------------------------
Escambia (County of)
(Champion International
Corp. Project); PCR
6.90%, 08/01/22(b) BBB Baa1 1,125 1,144,946
----------------------------------------------------------------
Escambia (County of)
Health Facilities
Authority (Health Care
Facility Loan-Veterans
Hospital Project);
Hospital Series 2000 RB
5.95%, 07/01/20(c) -- Aaa 1,000 1,006,980
----------------------------------------------------------------
Miami (City of) Dade
County Florida Aviation
(Miami International
Airport); Series 2000 B
RB
5.75%, 10/01/29(c) AAA Aaa 2,000 1,994,180
----------------------------------------------------------------
Miami (City of) Parking
Facilities; Series 1992
A RB
6.70%, 10/01/01(d)(e) NRR NRR 1,120 1,169,291
----------------------------------------------------------------
Plantation (City of)
Health Facilities
Authority (Covenant
Retirement Communities
Inc.); Series 1992 RB
7.75%, 12/01/02(d)(e) NRR NRR 250 272,008
----------------------------------------------------------------
7,139,265
----------------------------------------------------------------
GEORGIA-0.48%
Georgia (State of)
Housing and Finance
Authority (Home
Ownership Opportunity
Program); Series C RB
6.50%, 12/01/11 AA+ Aa2 650 674,043
----------------------------------------------------------------
Savannah (City of)
Economic Development
Authority (Hershey
Foods Corp. Project);
Refunding IDR
6.60%, 06/01/12 A+ -- 1,000 1,042,570
----------------------------------------------------------------
1,716,613
----------------------------------------------------------------
|
FS-94
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
IDAHO-0.26%
Idaho Health Facilities
Authority (Elks
Rehabilitation Hospital
Project); Hospital
Series RB
5.30%, 07/15/18 BBB -- $1,150 $ 918,493
----------------------------------------------------------------
ILLINOIS-9.25%
Berwyn (City of) (Macneal
Memorial Hospital
Association Project);
Hospital Series 1991 RB
7.00%, 08/01/01(d)(e) AAA Aaa 3,250 3,386,890
----------------------------------------------------------------
Chicago (City of) Public
Building Committee
(Chicago School
Reform); Refunding
Series 1999 RB
5.25%, 12/01/15(c) AAA Aaa 1,500 1,476,585
----------------------------------------------------------------
Cook (County of);
Unlimited Tax Series
1992 B GO
5.75%, 11/15/02(d)(e) AAA Aaa 2,000 2,085,280
----------------------------------------------------------------
Freeport (City of) (Sewer
System Improvements);
Unlimited Tax Series
2000 GO
6.00%, 12/01/29(c) AAA Aaa 1,000 1,004,030
----------------------------------------------------------------
Illinois (State of);
Sales Tax Series 1991 O
RB
6.50%, 06/15/01(d)(e) AAA NRR 1,500 1,557,765
----------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (CPC
International Project);
Refunding PCR
6.75%, 05/01/16 -- A2 2,500 2,578,325
----------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (Adventist
Health Systems
Project); Hospital
Series 1997 A RB
6.00%, 11/15/11 AAA Aaa 2,500 2,654,300
----------------------------------------------------------------
Illinois (State of)
Educational Facilities
Authority (Midwestern
University); Series B
RB
5.50%, 05/15/18 A -- 1,000 939,510
----------------------------------------------------------------
Illinois (State of)
Educational Facilities
Authority (Northwestern
University); Adjustable
Medium Term Series RB
5.25%, 11/01/14(e) AA+ Aa1 1,000 983,140
----------------------------------------------------------------
Illinois (State of)
Educational Facilities
Authority (Shedd
Aquarium Society); RB
5.60%, 07/01/27(c) AAA Aaa 3,500 3,318,420
----------------------------------------------------------------
Illinois Health
Facilities Authority;
Revolving Fund Pooled
VRD Series 1985 D RB
(LOC-Bank One Illinois
N.A.)
4.70%, 08/01/15(g) A1 VMIG-1 300 300,000
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
ILLINOIS-(CONTINUED)
Illinois Health
Facilities Authority
(Blessing Hospital);
Hospital Series 1999 A
6.00%, 11/15/19(b) AAA Aaa $1,000 $ 1,007,740
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Evangelical Hospital
Corp.); RB
6.25%, Refunding Series
1992 A 04/15/22(d)(e) NRR Aaa 1,000 1,066,710
----------------------------------------------------------------
6.25%, Series 1992 C
04/15/22(d)(e) NRR NRR 1,150 1,219,299
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Franciscan Sisters
Health Care); Series
1992 RB
6.40%, 09/01/04(d) AAA Aaa 2,000 2,122,120
----------------------------------------------------------------
Illinois Health
Facilities Authority
(Memorial Hospital);
Hospital Series 1992 RB
7.25%, 05/01/02(d)(e) NRR NRR 200 212,524
----------------------------------------------------------------
Illinois State University
(Auxiliary Facilities
System);
5.75%, Series 1993 RB
04/01/14(c) AAA Aaa 1,000 1,009,790
----------------------------------------------------------------
5.75%, Series 1991 RB
04/01/22 AA- Aa3 4,750 4,685,733
----------------------------------------------------------------
Peoria and Pekin and
Waukegan (Cities of);
GNMA Collateralized
Mortgage Series 1990 RB
7.88%, 08/01/22(b) AA -- 70 72,134
----------------------------------------------------------------
Tazewell County Community
High School District
No. 303 (Pekin);
Unlimited Tax Series
1996 GO
5.63%, 01/01/14(c) AAA Aaa 1,435 1,454,803
----------------------------------------------------------------
33,135,098
----------------------------------------------------------------
INDIANA-1.21%
Carmel Retirement Rental
Housing (Beverly
Enterprises Project);
Refunding Series RB
8.75%, 12/01/08(f) -- -- 90 95,288
----------------------------------------------------------------
East Allen (City of)
Multi-School Building
Corp.; First Mortgage
Series 2000 RB
5.75%, 01/15/15(c) AAA Aaa 735 748,472
----------------------------------------------------------------
Indiana (State of)
(Special Program);
Series 2000 A RB
5.90%, 02/01/14(c) AAA Aaa 1,000 1,032,990
----------------------------------------------------------------
Indiana (State of)
Housing Finance
Authority; Series B-1
RB
6.15%, 07/01/17 -- Aaa 150 152,721
----------------------------------------------------------------
|
FS-95
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
INDIANA-(CONTINUED)
Indianapolis (City of)
(Lake Nora and Fox Club
Project); Series 1999 A
Multi-Family RB
5.90%, 10/01/19(c) -- Aaa $1,795 $ 1,780,550
----------------------------------------------------------------
Indiana Transportation
Finance Authority
(Airport Lease
Facility); Series 1992
A RB
6.25%, 11/01/02(d)(e) NRR Aaa 395 415,544
----------------------------------------------------------------
6.25%, 11/01/16 AA A1 105 107,617
----------------------------------------------------------------
4,333,182
----------------------------------------------------------------
IOWA-0.30%
Iowa Finance Authority
(Trinity Regional
Hospital Project);
Hospital Facilities
Series 1997 RB
6.00%, 07/01/12(c) AAA Aaa 1,000 1,056,960
----------------------------------------------------------------
KANSAS-0.44%
Hutchinson Health Care
Facilities (Wesley
Towers); Refunding &
Improvement Series 1999
A RB
6.25%, 11/15/19(f) -- -- 1,500 1,311,525
----------------------------------------------------------------
Newton (City of) (Newton
Healthcare Corp.);
Hospital Series A RB
7.38%, 11/15/04(d)(e) NRR NRR 250 278,987
----------------------------------------------------------------
1,590,512
----------------------------------------------------------------
KENTUCKY-1.73%
Jefferson (County of)
(Beverly Enterprises
Project); Refunding
Health Facilities
Series RB
5.88%, 05/01/08(f) -- -- 595 555,760
----------------------------------------------------------------
Kenton (County of)
Kentucky Airport Board
(Delta Airlines
Project); Special
Facilities Series 1992
A RB
7.13%, 02/01/21(b) BBB- Baa3 2,500 2,533,850
----------------------------------------------------------------
Mount Sterling (City of);
Lease Funding Series
1993 A RB
6.15%, 03/01/13 -- Aa 3,000 3,113,700
----------------------------------------------------------------
6,203,310
----------------------------------------------------------------
LOUISIANA-3.57%
Louisiana (State of)
Local Government
Environmental
Facilities and
Community Development
Authority (Capital
Projects and Equipment
Acquisition); Series
2000 A RB
6.30%, 07/01/30(c) AAA -- 2,000 2,108,940
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
LOUISIANA-(CONTINUED)
Louisiana Public
Facilities Authority
(Medical Center at New
Orleans Project); RB
6.13%, 10/15/07(c) AAA -- $2,775 $ 2,834,579
----------------------------------------------------------------
Louisiana Public
Facilities Authority
(Our Lady of Lake
Regional Hospital);
Hospital Refunding
Series C RB
6.00%, 12/01/01(d)(e) AAA Aaa 1,000 1,037,800
----------------------------------------------------------------
Louisiana Public
Facilities Authority
(Tulane University of
Louisiana); RB
6.00%, 10/01/16(c) AAA Aaa 2,500 2,569,975
----------------------------------------------------------------
New Orleans Levee
District; Trust
Receipts Series 1995 A
RB
5.95%, 11/01/07(c) AAA Aaa 1,000 1,048,190
----------------------------------------------------------------
Ouachita Parish Hospital
Service District No. 1
(Glenwood Regional
Medical Center);
Refunding Series 1996
RB
5.70%, 05/15/16(c) AAA Aaa 1,000 1,000,670
----------------------------------------------------------------
St. John Baptist Parish
(Sales Tax District);
Public Improvement
Series 1987 RB
7.60%, 01/01/08(d) NRR NRR 500 575,970
----------------------------------------------------------------
7.60%, 01/01/09(d) NRR NRR 500 584,855
----------------------------------------------------------------
West Feliciana Parish
(Gulf States
Utilities); Series A
PCR
7.50%, 05/01/15 BB+ -- 1,000 1,034,110
----------------------------------------------------------------
12,795,089
----------------------------------------------------------------
MAINE-0.64%
Maine (State of)
Education Loan
Authority; Education
Loan Series A-2 RB
6.95%, 12/01/07(b) -- A2 770 791,491
----------------------------------------------------------------
Maine (State of) Housing
Authority; Series 1999
E-1 RB
5.85%, 11/15/20 AA Aa2 1,500 1,502,010
----------------------------------------------------------------
2,293,501
----------------------------------------------------------------
MASSACHUSETTS-3.65%
Massachusetts (State of)
(Consumer Loans);
Unlimited Tax Series
1991 C GO
7.00%, 08/01/01(d)(e) NRR NRR 2,450 2,563,019
----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Lowell General
Hospital); Series 1991
A RB
8.40%, 06/01/01(d)(e) NRR NRR 3,550 3,741,381
----------------------------------------------------------------
|
FS-96
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
MASSACHUSETTS-(CONTINUED)
Massachusetts (State of)
Health and Education
Facilities Authority
(Winchester Hospital);
Series D RB
5.80%, 07/01/09(c) AAA -- $1,500 $ 1,555,140
----------------------------------------------------------------
Massachusetts (State of)
Industrial Finance
Agency (Beverly
Enterprises); Refunding
Series RB
8.00%, 05/01/02(f) -- -- 125 126,119
----------------------------------------------------------------
Massachusetts (State of)
Housing Finance Agency;
Single Family Housing
Series 1994 RB
6.60%, 12/01/26(b) A+ Aa3 1,890 1,933,300
----------------------------------------------------------------
Massachusetts (State of)
Municipal Wholesale
Electric Cooperative
Power Supply; System
Series 1992 A RB
6.75%, 07/01/08(c) AAA Aaa 3,000 3,170,610
----------------------------------------------------------------
13,089,569
----------------------------------------------------------------
MICHIGAN-4.10%
Detroit (City of) School
District; Unlimited Tax
Series 1992 GO
6.00%, 05/01/01(d)(e) NRR NRR 1,000 1,031,720
----------------------------------------------------------------
6.15%, 05/01/01(d)(e) NRR NRR 1,300 1,342,783
----------------------------------------------------------------
Flint (City of) Hospital
Building Authority;
Hospital Series B RB
5.38%, 07/01/18(c) A -- 1,000 916,970
----------------------------------------------------------------
Garden City Hospital
Finance Authority
(Garden City Hospital);
Hospital Refunding
Series A RB
5.63%, 09/01/10 -- Ba3 1,000 852,230
----------------------------------------------------------------
Lake Orion Community
School District;
Unlimited Tax Refunding
Series 1994 GO
7.00%, 05/01/05(d)(e) AAA Aaa 2,500 2,753,800
----------------------------------------------------------------
Lakeview Community School
District; Refunding
Unlimited Tax Series
1996 GO
5.75%, 05/01/07(d)(e) AAA Aaa 1,000 1,048,100
----------------------------------------------------------------
Lincoln Park (City of)
School District;
Unlimited Tax Series
1996 GO
6.00%, 05/01/06(d)(e) AAA Aaa 1,210 1,288,251
----------------------------------------------------------------
Michigan (State of)
Housing Development
Authority; Refunding
Rental Housing Series A
RB
6.60%, 04/01/12 AA- -- 945 983,839
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
MICHIGAN-(CONTINUED)
Ypsilanti (City of)
School District;
Refunding Unlimited Tax
Series 1996 GO
5.75%, 05/01/07(d)(e) AAA Aaa $4,275 $ 4,480,627
----------------------------------------------------------------
14,698,320
----------------------------------------------------------------
MINNESOTA-0.28%
Minneapolis (City of)
(Parking Ramp Project);
Unlimited Tax Series
2000 A GO
5.90%, 12/01/20 AAA Aaa 1,000 1,017,040
----------------------------------------------------------------
MISSISSIPPI-2.57%
Mississippi (State of)
Development Board
(Panola County
Hospital); Special
Obligation Series RB
5.00%, 07/01/28 A -- 5,000 4,046,150
----------------------------------------------------------------
Mississippi Higher
Education Assistance
Corp.; Student Loan
Sub-Series 1994 C RB
7.50%, 09/01/09(b)(f) -- -- 5,000 5,162,350
----------------------------------------------------------------
9,208,500
----------------------------------------------------------------
MISSOURI-0.87%
Kansas City Industrial
Development Authority
(General Motors Corp.
Project); PCR
6.05%, 04/01/06 A A3 1,435 1,444,399
----------------------------------------------------------------
Kansas City Municipal
Assistance Corp.
(Truman Medical Center
Charitable Foundation);
Leasehold Improvement
Series 1991 A RB
7.00%, 11/01/01(d)(e) NRR NRR 605 623,483
----------------------------------------------------------------
Missouri (State of)
Environmental
Improvement and Energy
Resources Authority;
Series 1995 C PCR
5.85%, 01/01/10 -- Aaa 1,000 1,043,010
----------------------------------------------------------------
3,110,892
----------------------------------------------------------------
NEVADA-1.62%
Boulder (City of)
(Boulder City Hospital
Inc. Project); Hospital
Refunding Series RB
5.85%, 01/01/22(f) -- -- 500 412,125
----------------------------------------------------------------
Humboldt (County of)
(Sierra Pacific
Project); Refunding
Series 1987 PCR
6.55%, 10/01/13(c) AAA Aaa 3,000 3,137,700
----------------------------------------------------------------
Las Vegas (City of);
Refunding 1992 Limited
Tax GO
6.50%, 04/01/02(d)(e) AAA Aaa 1,000 1,048,370
----------------------------------------------------------------
|
FS-97
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEVADA-(CONTINUED)
Reno Redevelopment
Agency; Refunding
Sub-Series A Tax
Allocation Notes
6.00%, 06/01/10 -- Baa3 $1,185 $ 1,201,258
----------------------------------------------------------------
5,799,453
----------------------------------------------------------------
NEW HAMPSHIRE-0.41%
Hudson (City of);
Unlimited Tax Series GO
5.25%, 03/15/28 -- Aa3 1,610 1,480,234
----------------------------------------------------------------
NEW JERSEY-3.01%
Hudson (County of)
Correctional Facility;
Refunding Series 1992
COP
6.60%, 12/01/21(c) AAA Aaa 1,250 1,287,462
----------------------------------------------------------------
New Jersey Economic
Development Authority
(Atlantic City Sewer
Co.); Sewer Facility
Series 1991 RB
7.25%, 12/01/11(b)(f) -- -- 1,630 1,683,969
----------------------------------------------------------------
New Jersey Economic
Development Authority
(Continental Airlines
Inc. Project);
Specialty Facilities
Series 1999 RB
6.40%, 09/15/23(b) BB Ba2 5,250 4,856,565
----------------------------------------------------------------
6.25%, 09/15/29(b) BB Ba2 1,000 891,300
----------------------------------------------------------------
New Jersey City Economic
Development Authority
(Franciscan Oaks
Project); First
Mortgage Series RB
5.70%, 10/01/17(f) -- -- 500 420,860
----------------------------------------------------------------
New Jersey Health Care
Facility Financing
Authority; Unrefunded
Balance Series 1987 C
RB
8.60%, 07/01/17(c) AAA Aaa 185 186,480
----------------------------------------------------------------
New Jersey (State of)
Turnpike Authority;
Series 2000 A RB
5.50%, 01/01/25(c) AAA Aaa 1,000 975,050
----------------------------------------------------------------
5.50%, 01/01/30(c) AAA Aaa 500 485,795
----------------------------------------------------------------
10,787,481
----------------------------------------------------------------
NEW MEXICO-1.62%
Albuquerque (City of) New
Mexico Educational
Facilities Authority
(Albuquerque Academy
Project); Education
Series 1995 RB
5.75%, 10/15/03(d)(e) NRR NRR 915 941,535
----------------------------------------------------------------
Las Cruces South Central
Solid Waste Authority;
Environmental Services
RB
5.65%, 06/01/09 -- A3 575 582,814
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEW MEXICO-(CONTINUED)
Los Alamos (County of);
Utility Series A RB
6.00%, 07/01/15(c) AAA Aaa $2,000 $ 2,058,600
----------------------------------------------------------------
Santa Fe (City of);
Series 1994 A RB
6.25%, 06/01/04(d)(e) AAA Aaa 2,100 2,210,145
----------------------------------------------------------------
5,793,094
----------------------------------------------------------------
NEW YORK-11.03%
Metropolitan
Transportation
Authority; Dedicated
Tax Fund Series 2000 A
RB
5.88%, 04/01/25(c) AAA Aaa 1,500 1,510,335
----------------------------------------------------------------
New York (City of); GO
8.25%, Unlimited Tax
Series 1991 F
11/15/01(d)(e) NRR Aaa 2,000 2,126,360
----------------------------------------------------------------
7.65%, Unlimited Tax
Series 1992 F GO
02/01/02(d)(e) NRR Aaa 4,775 5,064,795
----------------------------------------------------------------
7.00%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 350 367,559
----------------------------------------------------------------
7.20%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 390 410,736
----------------------------------------------------------------
02/01/15 A- A3 110 115,130
----------------------------------------------------------------
7.70%, Unlimited Tax
Series D GO
02/01/02(d)(e) NRR Aaa 1,970 2,091,037
----------------------------------------------------------------
02/01/09 A- A3 30 31,684
----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1 08/01/02(d)(e) NRR Aaa 1,990 2,113,181
----------------------------------------------------------------
7.38%, Unlimited Tax
Series B1
08/15/04(d)(e) NRR Aaa 500 554,330
----------------------------------------------------------------
6.25%, Unlimited Tax
Series A 08/01/17 A- A3 3,035 3,147,568
----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1 08/01/17 A- A3 10 10,519
----------------------------------------------------------------
7.00%, Unlimited Tax
Series B 02/01/18(c) AAA Aaa 830 865,341
----------------------------------------------------------------
7.00%, Unlimited Tax
Series B
02/01/02(d)(e) AAA Aaa 170 178,662
----------------------------------------------------------------
New York (City of)
Industrial Development
Agency (The Lighthouse
Inc. Project); Series
1992 RB (LOC-Chase
Manhattan Bank)
6.50%, 07/01/02(d)(e) NRR NRR 1,500 1,582,965
----------------------------------------------------------------
|
FS-98
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
NEW YORK-(CONTINUED)
New York (City of)
Municipal Water Finance
Authority; Water &
Sewer Systems
5.75%, Series 1997 B RB
06/15/29 AA Aa3 $3,850 $ 3,822,973
----------------------------------------------------------------
5.00%, Series 1987 A RB
06/15/17 AA Aa3 1,350 1,259,253
----------------------------------------------------------------
5.50%, Series 1996 A RB
06/15/24(c) AAA Aaa 1,000 962,640
----------------------------------------------------------------
New York State Dorm
Authority (City
University System);
Series 1990 C RB
6.00%, 07/01/16 A Baa1 365 365,650
----------------------------------------------------------------
New York (State of) Dorm
Authority (State
University Educational
Facilities); Series A
RB
6.50%, 05/15/06 A A3 1,000 1,071,620
----------------------------------------------------------------
New York (State of)
Environmental
Facilities Corp.; Water
Revenue Series 1991 E
PCR
6.88%, 06/15/01(d)(e) AAA Aaa 2,300 2,398,624
----------------------------------------------------------------
6.88%, 06/15/10 AAA Aaa 1,100 1,139,908
----------------------------------------------------------------
New York (State of) Urban
Development Corp.
(Correctional Capital
Facilities); Series
1991-3 RB
7.38%, 01/01/02(d)(e) NRR Aaa 7,850 8,314,328
----------------------------------------------------------------
39,505,198
----------------------------------------------------------------
NORTH CAROLINA-1.57%
North Carolina Eastern
Municipal Power Agency;
Series A RB
6.13%, 01/01/10(c) AAA Aaa 1,500 1,626,225
----------------------------------------------------------------
North Carolina Housing
Finance Agency; Single
Family- Series II RB
6.20%, 03/01/16 AA Aa2 570 583,879
----------------------------------------------------------------
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project);
7.25%, Refunding RB
01/01/07 BBB+ Baa1 2,890 3,141,430
----------------------------------------------------------------
6.50%, Series 1990 RB
01/01/10(d) AAA Aaa 260 283,834
----------------------------------------------------------------
5,635,368
----------------------------------------------------------------
NORTH DAKOTA-0.15%
North Dakota Housing
Finance Agency; Home
Mortgage Series B RB
5.85%, 07/01/28(b) -- Aa3 545 525,396
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
OHIO-2.64%
Cleveland (City of)
Parking Facilities;
Improvement Series RB
8.00%, 09/15/02(d)(e) NRR NRR $ 500 $ 542,085
----------------------------------------------------------------
Fairfield (City of)
School District;
Unlimited Tax Series
1995 GO
6.10%, 12/01/15(c) AAA Aaa 1,000 1,031,890
----------------------------------------------------------------
Findlay (City of);
Limited Tax Series 1996
GO
5.88%, 07/01/17 AA- Aa3 1,000 1,023,320
----------------------------------------------------------------
Lake Ohio School
District; Unlimited Tax
Series 2000 GO
5.75%, 12/01/26(c) AAA Aaa 2,500 2,501,775
----------------------------------------------------------------
Mason (City of) Health
Care Facilities (MCV
Health Care
Facilities); Series
1990 RB
7.63%, 02/01/01(d)(e) AAA NRR 2,090 2,174,499
----------------------------------------------------------------
Montgomery (County of)
Ohio Hospital Authority
(Grandview Hospital &
Medical Center);
Refunding Hospital
Series RB
5.50%, 12/01/09(d)(e) NRR NRR 1,000 1,028,780
----------------------------------------------------------------
Ohio Department of
Transportation
(Panhandle Rail Line
Project); Series 1992
COP
6.50%, 04/15/12(c) AAA Aaa 1,100 1,146,398
----------------------------------------------------------------
9,448,747
----------------------------------------------------------------
OKLAHOMA-2.74%
McAlester (City of)
Public Works Authority;
Refunding and
Improvement Series 1995
RB
5.50%, 12/01/09(d)(e) AAA Aaa 975 1,016,545
----------------------------------------------------------------
Mustang Improvement
Utility Authority;
Series 1999 RB
5.70%, 10/01/19(c) -- Aaa 1,500 1,482,600
----------------------------------------------------------------
Oklahoma Development
Finance Authority (St.
John Health System);
Refunding Series 1999
RB
5.75%, 02/15/18 AA Aa3 675 663,957
----------------------------------------------------------------
5.75%, 02/15/25 AA Aa3 1,750 1,722,718
----------------------------------------------------------------
Sapula (City of)
Municipal Authority;
Capital Improvement
Series RB
5.00%, 07/01/21(c) AAA Aaa 1,000 898,180
----------------------------------------------------------------
Tulsa (City of)
Industrial Authority
(St. Johns Medical
Center Project);
Hospital Series 1994 RB
6.25%, 02/15/06(d)(e) NRR NRR 2,000 2,134,920
----------------------------------------------------------------
|
FS-99
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
OKLAHOMA-(CONTINUED)
Tulsa (City of)
Industrial Authority
(Tulsa Regional Medical
Center); Hospital
Series RB
7.20%, 06/01/03(d)(e) AAA NRR $ 500 $ 541,830
----------------------------------------------------------------
Tulsa Public Facilities
Authority-Capital
Improvements-Water
System; Series 1988 B
RB
6.00%, 03/01/08 A+ -- 1,305 1,352,450
----------------------------------------------------------------
9,813,200
----------------------------------------------------------------
OREGON-1.22%
Cow Creek Band Umpqua
Tribe of Indians;
Series B RB
5.10%, 07/01/12(c) AAA Aaa 1,000 987,650
----------------------------------------------------------------
Marion (County of) (Ogden
Martin Systems);
Refunding Solid Waste &
Electric Series RB
5.50%, 10/01/06(c) AAA Aaa 1,000 1,034,540
----------------------------------------------------------------
Portland (City of) Sewer
System; Series 1994 A
RB
6.20%, 06/01/04(d)(e) AAA NRR 1,200 1,270,812
----------------------------------------------------------------
6.25%, 06/01/04(d)(e) AAA NRR 1,000 1,060,770
----------------------------------------------------------------
4,353,772
----------------------------------------------------------------
PENNSYLVANIA-1.62%
Allegheny (County of)
Port Authority; Special
Revenue Transportation
Series 1999 RB
6.13% 03/01/29(c) AAA Aaa 1,000 1,020,710
----------------------------------------------------------------
Montgomery (County of)
Industrial Development
Authority (Meadowood
Corp. Project);
Refunding First
Mortgage Series A RB
10.25%, 12/01/00(d)(e) NRR NRR 100 104,201
----------------------------------------------------------------
Montgomery (County of)
Industrial Development
Authority (Pennsburg
Nursing &
Rehabilitation Center);
Series 1993 RB
7.63%, 03/31/04(d)(e) NRR Aaa 100 111,651
----------------------------------------------------------------
Pennsylvania (State of);
Unlimited Tax Third
Series GO
6.75%, 11/15/13(c) AAA Aaa 1,250 1,351,775
----------------------------------------------------------------
Pennsylvania Economic
Development Finance
Authority (Colver
Project); Resource
Recovery Series 1994 D
RB
7.05%, 12/01/10(b) BBB- -- 2,900 2,965,250
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
PENNSYLVANIA-(CONTINUED)
Scranton-Lackawanna
Health & Welfare
Authority (Moses Taylor
Hospital Project);
Series 1991 B RB
8.50%, 07/01/01(d)(e) AAA NRR $ 250 $ 264,498
----------------------------------------------------------------
5,818,085
----------------------------------------------------------------
PUERTO RICO-0.39%
Puerto Rico (Commonwealth
of) Electric Power
Authority; Series 1991
P RB
7.00%, 07/01/01(d)(e) AAA Aaa 1,325 1,384,585
----------------------------------------------------------------
RHODE ISLAND-0.66%
Rhode Island Depositors
Economic Protection
Corp.; Special
Obligation Series 1992
A RB
6.95%, 08/01/02(d)(e) AAA Aaa 1,250 1,328,013
----------------------------------------------------------------
Rhode Island Housing and
Mortgage Finance Corp.;
Homeownership
Opportunity Series 15 B
RB
6.00%, 10/01/04 AA+ Aa2 1,000 1,038,050
----------------------------------------------------------------
2,366,063
----------------------------------------------------------------
SOUTH CAROLINA-0.57%
Piedmont Municipal Power
Agency; Refunding
Electric Series A RB
5.75%, 01/01/24 BBB- Baa3 1,150 1,031,596
----------------------------------------------------------------
South Carolina (State of)
Jobs Economic
Development Authority
(Palmetto Health
Alliance); Hospital
Facilities Improvement
Series 2000 A RB
7.13%, 12/15/15 BBB Baa1 1,000 1,016,020
----------------------------------------------------------------
2,047,616
----------------------------------------------------------------
SOUTH DAKOTA-0.03%
South Dakota Health and
Educational Facility
Authority (Huron
Regional Medical
Center); Series 1994 RB
7.25%, 04/01/20 BBB -- 100 101,431
----------------------------------------------------------------
TENNESSEE-1.76%
Franklin Industrial
Development Board
(Landings Apartment
Project); Multifamily
Housing Series A RB
5.75%, 04/01/10(c) AAA Aaa 975 985,150
----------------------------------------------------------------
|
FS-100
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TENNESSEE-(CONTINUED)
Montgomery (County of)
Health, Educational and
Housing Facilities
Board (Clarksville
Project); Refunding and
Improvement Hospital
Series RB
5.38%, 01/01/28(c) A -- $1,800 $ 1,584,954
----------------------------------------------------------------
Robertson and Sumner
(Counties of) White
House Utilities
District; Water and
Sewer Series 2000 RB
6.00%, 01/01/26 -- Aaa 1,000 1,014,420
----------------------------------------------------------------
Shelby (County of);
Unlimited Tax School
Series B GO
6.00%, 03/01/02(d)(e) NRR NRR 1,000 1,029,950
----------------------------------------------------------------
Shelby County Health,
Educational & Housing
Facilities Board (Kirby
Pines); Health Care
Facilities Series A RB
6.25%, 11/15/16(f) -- -- 1,000 880,150
----------------------------------------------------------------
Tennessee Housing
Development Agency;
Homeownership
Progressive Series Q RB
6.80%, 07/01/17 AA Aa2 770 794,840
----------------------------------------------------------------
6,289,464
----------------------------------------------------------------
TEXAS-19.67%
Allen Independent School
District; Unlimited Tax
Refunding Series 2000
GO
5.95%, 02/15/25(c) AAA Aaa 1,600 1,606,848
----------------------------------------------------------------
Arlington Independent
School District;
Unlimited Tax Series GO
5.75%, 02/15/05(d)(e) NRR Aaa 705 732,354
----------------------------------------------------------------
5.75%, 02/15/21(d) -- Aaa 295 292,870
----------------------------------------------------------------
Austin (City of); Utility
System Combined Fee
Refunding Series 1991
RB
6.50%, 05/15/01(d)(e) AAA Aaa 1,380 1,430,881
----------------------------------------------------------------
Austin Community College
District; Combined Fee
Revenue Building and
Refunding Series 1995
RB
6.10%, 02/01/05(d)(e) AAA Aaa 1,115 1,173,794
----------------------------------------------------------------
Austin Hotel Occupancy
Tax (Convention
Center); Series 1999 A
RB
5.50%, 11/15/29(c) AAA Aaa 1,425 1,347,694
----------------------------------------------------------------
Austin Hotel Occupancy
Tax; Refunding Sub Lien
1999 Series RB
5.80%, 11/15/29(c) AAA Aaa 1,000 988,790
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Bellville Independent
School District;
Unlimited Tax Series
1995 GO
6.13%, 02/01/06(d)(e) NRR Aaa $ 535 $ 567,656
----------------------------------------------------------------
6.13%, 02/01/20 NRR Aaa 295 300,755
----------------------------------------------------------------
Brazos (County of) Health
Facilities Development
Corp. (Franciscan
Services Corp.); Series
A RB
5.38%, 01/01/22(c) AAA Aaa 2,000 1,854,700
----------------------------------------------------------------
Brazos Higher Education
Loan Authority Inc.;
Refunding Series 1992
C-1 RB
6.30%, Series 1992 C-1
11/01/01(b) -- Aa 325 330,674
----------------------------------------------------------------
6.45%, Series 1992 C-1
11/01/02(b) -- Aa 1,135 1,163,523
----------------------------------------------------------------
Carrollton (City of);
Limited Tax Series 1996
GO
5.75%, 08/15/06(d)(e) NRR NRR 1,000 1,043,810
----------------------------------------------------------------
Comal (County of)
Industrial Development
Authority (The Coleman
Co., Inc. Project);
Industrial Development
Series 1980 RB
9.25%, 08/01/00(d)(e) NRR NRR 280 281,098
----------------------------------------------------------------
Comal (County of)
Independent School
District; Unlimited Tax
Refunding Series 1999
GO
5.75%, 08/01/28(c) -- Aaa 1,000 983,540
----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Refunding and
Improvement Series RB
5.35%, 04/01/14 AA Aa2 2,055 2,041,005
----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Series A RB
6.00%, 10/01/01(d)(e) NRR NRR 2,030 2,094,128
----------------------------------------------------------------
De Soto (City of)
Independent School
District; Refunding
Unlimited Tax Series GO
5.13%, 08/15/17(c) AAA -- 1,000 941,790
----------------------------------------------------------------
Georgetown (City of);
Utility System Series
1995 A RB
6.20%, 08/15/05(d)(e) AAA Aaa 1,500 1,590,570
----------------------------------------------------------------
Grapevine (City of);
Limited Tax Series 2000
COP
5.88%, 08/15/26(c) AAA Aaa 1,610 1,614,138
----------------------------------------------------------------
Harris County; Toll Road
Unlimited Tax GO and
Sub. Lien Refunding
Series 1991
6.75%, 08/01/14 AA Aa1 3,850 4,017,667
----------------------------------------------------------------
|
FS-101
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Harris County Health
Facilities Development
Corp. (Saint Luke's
Episcopal Hospital
Project); Series 1991
RB
6.70%, 02/15/03(d)(e) AAA NRR $1,000 $ 1,047,750
----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Texas Childrens
Hospital Project);
Hospital Series 1999 A
RB
5.25%, 10/01/29 AA Aa2 2,000 1,728,600
----------------------------------------------------------------
Harris County Mental
Health and Mental
Retardation Authority;
Refunding Series 1992
RB
6.25%, 09/15/10(c) AAA Aaa 4,500 4,610,295
----------------------------------------------------------------
Houston (City of);
Limited Tax Series 1992
C GO
6.25%, 03/01/02(d)(e) NRR NRR 1,470 1,507,367
----------------------------------------------------------------
Houston (City of); Water
and Sewer System Series
1997 C RB
5.38%, 12/01/27(c) AAA Aaa 2,495 2,317,955
----------------------------------------------------------------
Hurst, Euless, Bedford,
Texas Independent
School District;
6.50%, Refunding
Unlimited Tax Series
1994 GO
08/15/04(d)(e) AAA Aaa 640 681,075
----------------------------------------------------------------
6.50%, Unrefunded
Unlimited Tax Series
1994 GO 08/15/24(c) AAA Aaa 360 369,994
----------------------------------------------------------------
Katy (City of)
Independent School
District; Limited Tax
Series 1999 GO
6.13%, 02/15/32 AAA Aaa 1,500 1,527,480
----------------------------------------------------------------
Keller (City of)
Independent School
District; Series 1994
COP
6.00%, 08/15/05(c) AAA Aaa 1,000 1,050,500
----------------------------------------------------------------
Little Elm (City of)
Independent School
District; Unlimited Tax
Refunding Series
6.00%, Series 1999 GO
08/15/35 AAA -- 2,500 2,526,000
----------------------------------------------------------------
6.13%, Series 2000 GO
08/15/35 AAA -- 1,000 1,019,920
----------------------------------------------------------------
Lockhart (City of) Tax
and Utility Systems;
Unlimited Tax Series
1996 GO
5.85%, 08/01/11(c) AAA Aaa 605 627,131
----------------------------------------------------------------
5.90%, Refunding
08/01/06(d)(e) AAA Aaa 1,100 1,159,466
----------------------------------------------------------------
Matagorda (County of)
District No. 1 (Reliant
Energy Project);
Refunding 1999 RB
5.95%, 05/01/30(b) BBB Baa1 2,250 2,006,595
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
North Central Texas
Health Facilities
Development Corp. (CC
Young Memorial
Project); Hospital
Series RB
5.38%, 02/15/25(c) A -- $1,000 $ 907,940
----------------------------------------------------------------
Northside Independent
School District;
Unlimited Tax Series
1999 A GO
5.50%, 08/15/24 AAA Aaa 1,000 959,990
----------------------------------------------------------------
North Texas Higher
Education Authority
Inc.; Student Loan RB
6.10%, Series 1993 C
04/01/08(b) -- Aa 1,000 1,017,950
----------------------------------------------------------------
6.30%, Series 1993 D
04/01/09(b) -- A 500 507,690
----------------------------------------------------------------
Plano (City of); Limited
Tax Series 2000 GO
5.88%, 09/01/19 AAA Aaa 850 862,580
----------------------------------------------------------------
Plano (City of)
Independent School
District; Unlimited Tax
Series 1991 B GO
5.63%, 02/15/01(d)(e) AAA Aaa 2,500 2,518,350
----------------------------------------------------------------
Richardson (City of);
Hotel Occupancy Limited
Tax Series 2000 A COP
5.75%, 12/15/21(c) AAA Aaa 2,000 1,985,560
----------------------------------------------------------------
Southwest Higher
Education Authority
Inc. (Southern
Methodist University);
Higher Education Series
D RB
5.00%, 10/01/22 A+ A1 1,750 1,528,625
----------------------------------------------------------------
Spring Branch Independent
School District;
Limited Tax Series 2000
GO
5.75%, 02/01/24(c) AAA Aaa 1,700 1,674,058
----------------------------------------------------------------
Tarrant County Texas
Water Control and
Improvement District
No. 1; Refunding Series
1993 RB
5.20%, 03/01/10(c) AAA Aaa 2,000 2,000,840
----------------------------------------------------------------
Texas (State of) Public
Property Finance Corp.
(Mental Health and
Mental Retardation);
Series 1996 RB
6.20%, 09/01/16 BBB+ -- 965 954,250
----------------------------------------------------------------
Texas (State of);
Veteran's Land
Unlimited Tax Series
1994 GO
6.40%, 12/01/24(b) AA Aa1 2,000 2,034,260
----------------------------------------------------------------
Texas (State of)
Department of Housing
and Community Affairs
(Asmara Project);
Multifamily Housing
Series 1996 A RB
6.30%, 01/01/16 A -- 310 319,223
----------------------------------------------------------------
|
FS-102
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
TEXAS-(CONTINUED)
Texas National Research
Laboratory Community
Financing Corp.
(Superconducting Super
Collider); Refunded
Series 1991 RB
7.10%, 12/01/01(d)(e) AAA Aaa $ 600 $ 631,962
----------------------------------------------------------------
Tyler Health Facilities
Development Corp.
(Mother Frances
Hospital); Hospital
Series A RB
5.63%, 07/01/13 -- Baa2 1,000 872,020
----------------------------------------------------------------
University of Texas;
Series 1999 B RB
5.70%, 08/15/20 AAA Aa1 1,000 996,380
----------------------------------------------------------------
Victoria (County of)
(Texas Hospital
Citizens Medical
Center); RB
6.20%, 01/01/10(c) AAA Aaa 1,000 1,044,770
----------------------------------------------------------------
Weatherford (City of)
Independent School
District; Unlimited Tax
Series 1994 GO
6.40%, 02/15/05(d)(e) NRR Aaa 900 958,842
----------------------------------------------------------------
6.40%, 02/15/12(c) -- Aaa 100 105,608
----------------------------------------------------------------
70,459,311
----------------------------------------------------------------
UTAH-1.37%
Intermountain Power
Agency (Utah Power
Supply); Series 1986 B
RB
5.00%, 07/01/16 A+ A1 1,550 1,435,610
----------------------------------------------------------------
Salt Lake (County of)
(Westminster College
Project); RB
5.75%, 10/01/27 BBB -- 1,000 941,070
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency;
Federally Insured Term
Sub. Single Family
Mortgage RB
6.30%, Sub-Series 1994
E-1, 07/01/06 AA- Aa3 240 247,337
----------------------------------------------------------------
7.15%, Sub-Series 1994
G-1, 07/01/06 AA- Aa3 135 141,812
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage RB
6.05%, Series 1994 C
07/01/06 AA- Aa3 350 358,271
----------------------------------------------------------------
6.45%, Series G2
07/01/27(b) AAA Aaa 780 791,996
----------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage
Sub-Series 2000 B-1 RB
6.00%, 07/01/10(b) AA- Aa3 1,000 1,003,700
----------------------------------------------------------------
4,919,796
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
VERMONT-0.28%
Vermont (State of)
Educational and Health
Buildings Financing
Agency (Fletcher Allen
Health); Hospital
Series 2000 A RB
6.00%, 12/01/23(c) AAA Aaa $1,000 $ 1,009,800
----------------------------------------------------------------
VIRGIN ISLANDS-0.93%
Virgin Islands Public
Finance Authority;
Matching Fund Loan
Notes Series 1992 A RB
7.25%, 10/01/02(d)(e) AAA NRR 1,000 1,078,560
----------------------------------------------------------------
Virgin Islands Territory
(Hugo Insurance Claims
Fund); Special Tax Bond
Series 1991
7.75%, 10/01/01(d)(e) NRR NRR 2,155 2,266,004
----------------------------------------------------------------
3,344,564
----------------------------------------------------------------
VIRGINIA-0.66%
Covington-Alleghany
(County of) Industrial
Development Authority
(Beverly Enterprises);
Refunding Series RB
9.38%, 09/01/01(f) -- -- 30 30,459
----------------------------------------------------------------
Richmond (City of);
Public Improvement
Refunding Unlimited Tax
Series B GO
6.25%, 01/15/18 AA A1 2,000 2,058,800
----------------------------------------------------------------
Virginia (State of)
Housing Development
Authority; Commonwealth
Mortgage Series A RB
7.10%, 01/01/17 AA+ Aa1 250 257,663
----------------------------------------------------------------
2,346,922
----------------------------------------------------------------
WASHINGTON-1.97%
Clark (County of) School
District No. 117;
Unlimited Tax Series
1995 GO
6.00%, 12/01/05(d)(e) AAA Aaa 1,000 1,049,190
----------------------------------------------------------------
King (County of);
Unlimited Tax GO
5.50%, 07/01/07(d) AAA Aaa 500 515,775
----------------------------------------------------------------
King (County of);
Unlimited Tax Refunding
GO
6.50%, 12/01/11 AA+ Aaa 500 500,575
----------------------------------------------------------------
King (County of)
Washington Sewer
Authority; Series 1999
RB
5.50%, 01/01/22(c) AAA Aaa 1,000 961,040
----------------------------------------------------------------
Pend Oreille (County of)
Public Utility District
No. 1; Electric Series
B RB
6.30%, 01/01/17 A- A3 1,400 1,437,730
----------------------------------------------------------------
|
FS-103
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
WASHINGTON-(CONTINUED)
Washington State Public
Power Supply System
(Nuclear Project No.
1); Refunding Series A
RB
5.75%, 07/01/12(c) AAA Aaa $2,000 $ 2,044,900
----------------------------------------------------------------
West Richland (City of);
Water & Sewer Refunding
Series RB
7.00%, 12/01/04(d)(e) AAA Aaa 500 542,955
----------------------------------------------------------------
7,052,165
----------------------------------------------------------------
WISCONSIN-1.13%
Wisconsin Health and
Educational Facilities
Authority (Sinai
Samaritan Medical
Center); Series 1996 F
RB
5.75%, 08/15/16(c) AAA Aaa 1,500 1,505,685
----------------------------------------------------------------
Wisconsin Health and
Educational Facility
Authority (Sisters of
Sorrowful Mother);
Series 1997 A RB
5.90%, 08/15/24(c) AAA Aaa 2,500 2,458,775
----------------------------------------------------------------
Wisconsin Housing and
Economic Development
Authority; Home
Ownership Series 1994 E
RB
7.35%, 01/01/17 AA Aa2 75 78,130
----------------------------------------------------------------
4,042,590
----------------------------------------------------------------
|
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
WYOMING-0.93%
Campbell (County of)
School District No. 1
(Gillette); Unlimited
Tax Series GO
5.35%, 06/01/04 AAA Aaa $1,000 $ 1,021,100
----------------------------------------------------------------
Laramie (County of)
(Memorial Hospital
Project); Hospital
Series RB
6.70%, 05/01/12(c) AAA Aaa 250 263,410
----------------------------------------------------------------
Natrona (County of)
Wyoming Medical Center;
RB
6.00%, 09/15/11(c) AAA Aaa 1,000 1,039,840
----------------------------------------------------------------
Sweetwater (County of)
(Idaho Power Company
Project); Refunding
Series 1996 A PCR
6.05%, 07/15/26 A A3 1,000 997,380
----------------------------------------------------------------
3,321,730
----------------------------------------------------------------
TOTAL INVESTMENTS (Cost
$349,522,693)-99.77% 357,380,228
----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.23% 836,066
----------------------------------------------------------------
NET ASSETS-100.00% $358,216,294
================================================================
|
Investment Abbreviations:
COP - Certificates of Participation GO - General Obligation Bonds IDR - Industrial Development Revenue Bonds LOC - Letter of Credit NRR - Not Re-Rated PCR - Pollution Control Revenue Bonds RB - Revenue Bonds |
Sub. - Subordinate
VRD - Variable Rate Demand
GNMA - Government National Mortgage Association
Notes to Schedule of Investments:
(a)Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security.
(b)Security subject to the alternative minimum tax.
(c)Secured by bond insurance provided by one of the following companies: Ambac
Assurance Corp., Financial Guaranty Insurance Co., Financial Security
Assurance, or MBIA Insurance Co.
(d)Secured by an escrow fund of U.S. Treasury obligations.
(e)Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(f)Unrated security; determined by the investment advisor to be of comparable
quality to the rated securities in which the Fund may invest pursuant to
guidelines of quality adopted by the Board of Trustees and followed by the
investment advisor.
(g)Demand security, payable upon demand by the Fund at specified time intervals
no greater than thirteen months. Interest rate is redetermined periodically.
Rate shown is the rate in effect on 06/30/00.
See Notes to Financial Statements.
FS-104
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
------------ ------------
ASSETS:
Investments, at market value (cost $348,120,898 and
$349,522,693, respectively) $358,349,112 $357,380,228
-----------------------------------------------------------------------------------------
Receivables for:
Investments sold 1,397,681 2,004,449
-----------------------------------------------------------------------------------------
Fund shares sold 606,957 119,660
-----------------------------------------------------------------------------------------
Interest 6,030,296 6,474,820
-----------------------------------------------------------------------------------------
Investment for deferred compensation plan 65,917 64,411
-----------------------------------------------------------------------------------------
Other assets 6,031 31,269
-----------------------------------------------------------------------------------------
Total assets 366,455,994 366,074,837
-----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,012,046 6,374,572
-----------------------------------------------------------------------------------------
Fund shares reacquired 1,410,228 266,001
-----------------------------------------------------------------------------------------
Amount due custodian 2,921,166 --
-----------------------------------------------------------------------------------------
Dividends 685,601 681,667
-----------------------------------------------------------------------------------------
Deferred compensation plan 65,917 64,411
-----------------------------------------------------------------------------------------
Accrued advisory fees 135,628 133,408
-----------------------------------------------------------------------------------------
Accrued administrative services fees 7,740 7,472
-----------------------------------------------------------------------------------------
Accrued distribution fees 140,939 271,699
-----------------------------------------------------------------------------------------
Accrued trustees' fees 627 6,158
-----------------------------------------------------------------------------------------
Accrued transfer agent fees 14,203 7,107
-----------------------------------------------------------------------------------------
Accrued operating expenses 29,584 46,048
-----------------------------------------------------------------------------------------
Total liabilities 7,423,679 7,858,543
-----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $359,032,315 $358,216,294
=========================================================================================
NET ASSETS:
Class A $283,416,443 $283,568,571
=========================================================================================
Class B $ 67,363,390 $ 66,576,044
=========================================================================================
Class C $ 8,252,482 $ 8,071,679
=========================================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 36,187,747 36,453,574
=========================================================================================
Class B 8,588,708 8,546,095
=========================================================================================
Class C 1,053,882 1,037,788
=========================================================================================
Class A:
Net asset value and redemption price per share $ 7.83 $ 7.78
-----------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of divided by 95.25%) $ 8.22 $ 8.17
=========================================================================================
Class B:
Net asset value and offering price per share $ 7.84 $ 7.79
=========================================================================================
Class C:
Net asset value and offering price per share $ 7.83 $ 7.78
=========================================================================================
|
See Notes to Financial Statements.
FS-105
STATEMENT OF OPERATIONS
SIX MONTHS
SEVEN MONTHS ENDED YEAR
ENDED JUNE 30, ENDED
JULY 31, 2000 DECEMBER 31,
2000 (UNAUDITED) 1999
-------------- ----------- --------------
INVESTMENT INCOME:
Interest $12,909,783 $11,069,501 $ 23,860,069
-----------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 953,308 817,680 1,830,490
-----------------------------------------------------------------------------------------------------------
Administrative services fee 53,056 45,316 91,647
-----------------------------------------------------------------------------------------------------------
Custodian fees 8,867 6,935 19,729
-----------------------------------------------------------------------------------------------------------
Distribution fees - Class A 412,647 352,748 805,244
-----------------------------------------------------------------------------------------------------------
Distribution fees - Class B 392,471 335,861 753,522
-----------------------------------------------------------------------------------------------------------
Distribution fees - Class C 49,226 42,594 101,726
-----------------------------------------------------------------------------------------------------------
Transfer agent fees - Class A 84,511 67,215 160,531
-----------------------------------------------------------------------------------------------------------
Transfer agent fees - Class B 23,789 19,398 46,049
-----------------------------------------------------------------------------------------------------------
Transfer agent fees - Class C 2,984 2,458 5,831
-----------------------------------------------------------------------------------------------------------
Trustees' fees 4,777 4,095 9,669
-----------------------------------------------------------------------------------------------------------
Other 129,335 113,991 232,903
-----------------------------------------------------------------------------------------------------------
Total expenses 2,114,971 1,808,291 4,057,341
-----------------------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (2,421) (1,949) (4,633)
-----------------------------------------------------------------------------------------------------------
Net expenses 2,112,550 1,806,342 4,052,708
-----------------------------------------------------------------------------------------------------------
Net investment income 10,797,233 9,263,159 19,807,361
-----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES
Net realized gain (loss) from investment securities (6,118,133) (6,145,848) (3,713,985)
-----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment
securities 9,924,682 7,554,003 (26,831,659)
-----------------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities 3,806,549 1,408,155 (30,545,644)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $14,603,782 $10,671,314 $(10,738,283)
===========================================================================================================
|
See Notes to Financial Statements.
FS-106
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
SEVEN MONTHS ENDED
ENDED JUNE 30, YEAR ENDED YEAR ENDED
JULY 31, 2000 DECEMBER 31, DECEMBER 31,
2000 (UNAUDITED) 1999 1998
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income $10,797,233 $ 9,263,159 $19,807,361 $ 18,756,162
-----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (6,118,133) (6,145,848) (3,713,985) 595,427
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 9,924,682 7,554,003 (26,831,659) (197,391)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 14,603,782 10,671,314 (10,738,283) 19,154,198
-----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (8,732,079) (7,501,193) (16,158,034) (16,134,077)
-----------------------------------------------------------------------------------------------------------------------
Class B (1,770,019) (1,522,371) (3,218,044) (2,410,612)
-----------------------------------------------------------------------------------------------------------------------
Class C (222,272) (193,241) (435,134) (214,027)
-----------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A -- -- (288,606) (87,502)
-----------------------------------------------------------------------------------------------------------------------
Class B -- -- (67,461) (15,369)
-----------------------------------------------------------------------------------------------------------------------
Class C -- -- (9,104) (1,355)
-----------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (14,365,926) (12,294,815) (8,643,725) 8,923,504
-----------------------------------------------------------------------------------------------------------------------
Class B (5,621,856) (5,955,475) 5,334,838 25,558,113
-----------------------------------------------------------------------------------------------------------------------
Class C (1,486,944) (1,615,554) 857,965 8,741,537
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (17,595,314) (18,411,335) (33,365,588) 43,514,410
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 376,627,629 376,627,629 409,993,217 366,478,807
-----------------------------------------------------------------------------------------------------------------------
End of year $359,032,315 $358,216,294 $376,627,629 $409,993,217
=======================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $359,527,570 $361,136,452 $381,002,296 $383,815,745
-----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (7,534) (34,043) (80,397) (73,902)
-----------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (10,715,935) (10,743,650) (4,597,802) (883,817)
-----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 10,228,214 7,857,535 303,532 27,135,191
-----------------------------------------------------------------------------------------------------------------------
$359,032,315 $358,216,294 $376,627,629 $409,993,217
=======================================================================================================================
|
See Notes to Financial Statements.
FS-107
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Municipal Bond Fund (the "Fund") is a series portfolio of AIM Investment
Securities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of seven
separate portfolios, each having an unlimited number of shares of beneficial
interest. Prior to June 1, 2000 the Fund was organized as a series portfolio of
AIM Funds Group. At a meeting held on February 3, 2000, the Board of Trustees of
AIM Funds Group approved an Agreement and Plan of Reorganization (the
"Reorganization") which reorganized the Fund as a series portfolio of the Trust.
Shareholders of the Fund approved the Reorganization at a meeting held on May
31, 2000. Pursuant to the Reorganization, the Fund's fiscal year-end was changed
from December 31 to July 31. This report includes financial information for the
period ended July 31, 2000 (seven months), the six months ended June 30, 2000
and the year ended December 31, 1999. Financial information for the six months
ended June 30, 2000 is unaudited. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Fund. The Fund's investment objective is to achieve a high
level of current income exempt from federal income taxes, consistent with the
preservation of principal.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Portfolio securities are valued on the basis of prices
provided by an independent pricing service approved by the Board of Trustees,
provided that securities with a demand feature exercisable within one to
seven days will be valued at par. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Portfolio securities for which
prices are not provided by the pricing service are valued at the mean between
the last available bid and asked prices, unless the Board of Trustees, or
persons designated by the Board of Trustees, determines that the mean between
the last available bid and asked prices does not accurately reflect the
current market value of the security. Securities for which market quotations
either are not readily available or are questionable are valued at fair value
as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Notwithstanding the above, short-term obligations with maturities of 60 days
or less are valued at amortized cost.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions -- It is the policy of the Fund to declare dividends from net
investment income daily and pay monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $10,715,935 which may be
carried forward to offset future taxable gains, if any, which expires in
varying increments, if not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.50% on the first
$200 million of the Fund's average daily net assets, plus 0.40% on the next $300
million of the Fund's average daily net assets, plus 0.35% on the next $500
million of the Fund's average daily net assets, plus 0.30% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to
FS-108
the Fund. For the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM was paid $53,056,
$45,316 and $91,647, respectively, for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the seven-month period ended July 31,
2000, the six months ended June 30, 2000 and the year ended December 31, 1999,
AFS was paid $74,735, $64,678 and $138,338, respectively, for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the seven-month period ended
July 31, 2000, the Class A, Class B and Class C shares paid AIM Distributors
$412,647, $392,471, and $49,226, respectively, as compensation under the Plans.
For the six months ended June 30, 2000, the Class A, Class B and Class C shares
paid AIM Distributors $352,748, $335,861 and $42,594, respectively, as
compensation under the Plans. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $805,244, $753,522, and
$101,726, respectively, as compensation under the Plan.
AIM Distributors received commissions of $33,406, $30,129 and $97,187 from
sales of the Class A shares of the Fund during the seven-month period ended July
31, 2000, the six months ended June 30, 2000 and the year ended December 31,
1999, respectively. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. During the seven-month period ended July 31, 2000, the six months ended
June 30, 2000 and the year ended December 31, 1999, AIM Distributors received
$31,486, $30,740 and $123,118, respectively, in contingent deferred sales
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the seven-month period ended July 31, 2000, the six months ended June
30, 2000 and the year ended December 31, 1999, the Fund paid legal fees of
$2,577, $1,986 and $4,178, respectively, for services rendered by Kramer, Levin,
Naftalis & Frankel LLP as counsel to the Trust's trustees. A member of that firm
is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,421, $1,949 and $4,633, respectively, under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $2,421, $1,949 and $4,633, for the seven-month period ended July 31, 2000, the six months ended June 30, 2000 and the year ended December 31, 1999, respectively.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the seven months ended July
31, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period. During
the year ended December 31, 1999, the Fund borrowed minimal amounts under the
line of credit agreement. Interest expense for the Fund for the year ended
December 31, 1999 was $461.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the seven-month period ended July 31, 2000 was $64,555,118 and $82,559,573, respectively, and during the six months ended June 30, 2000 was $55,967,185 and $73,884,663, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, is as follows:
JUNE 30,
JULY 31, 2000
2000 (UNAUDITED)
----------- -----------
Aggregate unrealized appreciation
of investment securities $13,446,655 $11,919,899
------------------------------------------------------------
Aggregate unrealized
(depreciation) of investment
securities (3,218,441) (4,062,364)
------------------------------------------------------------
Net unrealized appreciation of
investment securities $10,228,214 $ 7,857,535
============================================================
Investments have the same cost for tax and financial
statement purposes.
|
FS-109
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the seven-month period ended July 31, 2000,
the six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
JUNE 30,
JULY 31, 2000 DECEMBER 31,
2000 (UNAUDITED) 1999
-------------------------- -------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ------------ ------------
Sold:
Class A 2,678,233 $ 20,753,046 2,271,873 $ 17,572,470 10,431,994 $ 85,813,744
--------------------------------------------------------------------------------------------------------------------
Class B 1,323,354 10,242,284 1,147,928 8,868,397 3,700,766 30,098,258
--------------------------------------------------------------------------------------------------------------------
Class C 1,196,822 9,264,086 969,742 7,487,360 851,082 6,903,087
--------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 600,193 4,643,890 518,640 4,005,344 1,102,784 8,919,262
--------------------------------------------------------------------------------------------------------------------
Class B 149,624 1,159,114 129,640 1,002,438 264,015 2,137,326
--------------------------------------------------------------------------------------------------------------------
Class C 17,331 134,046 15,147 116,951 31,375 254,074
--------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (5,145,569) (39,762,862) (4,391,829) (33,872,629) (12,703,387) (103,376,731)
--------------------------------------------------------------------------------------------------------------------
Class B (2,201,952) (17,023,254) (2,049,155) (15,826,310) (3,338,570) (26,900,746)
--------------------------------------------------------------------------------------------------------------------
Class C (1,407,096) (10,885,076) (1,193,926) (9,219,865) (780,440) (6,299,196)
--------------------------------------------------------------------------------------------------------------------
(2,789,060) $(21,474,726) (2,581,940) $(19,865,844) 440,381 $ 2,450,922
====================================================================================================================
DECEMBER 31,
1998
---------------------------
SHARES AMOUNT
------------ ------------
Sold:
Class A 12,409,366 $103,769,637
----------------------------------------------------------
Class B 5,306,019 44,489,342
----------------------------------------------------------
Class C 1,294,847 10,824,561
----------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 1,031,670 8,611,126
----------------------------------------------------------
Class B 183,219 1,532,455
----------------------------------------------------------
Class C 16,529 138,044
----------------------------------------------------------
Reacquired:
Class A (12,388,704) (103,457,259)
----------------------------------------------------------
Class B (2,444,886) (20,463,684)
----------------------------------------------------------
Class C (265,347) (2,221,068)
----------------------------------------------------------
5,142,713 $ 43,223,154
==========================================================
|
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------------------------------------------
SIX MONTHS ENDED
SEVEN MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------------
2000(A) (UNAUDITED) 1999 1998 1997 1996 1995
------------------ ---------------- -------- -------- -------- -------- --------
Net asset value, beginning of
period $ 7.74 $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31 $ 7.78
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.24 0.20 0.41 0.42 0.42 0.43 0.43
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.09 0.04 (0.61) 0.01 0.16 (0.12) 0.56
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.33 0.24 (0.20) 0.43 0.58 0.31 0.99
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.24) (0.20) (0.41) (0.42) (0.43) (0.43) (0.43)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Return of capital -- -- -- -- -- -- (0.03)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.24) (0.20) (0.41) (0.42) (0.43) (0.43) (0.46)
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period 7.83 $ 7.78 $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31
=================================== ======== ======== ======== ======== ======== ======== ========
Total return(b) 4.32% 3.20% (2.45)% 5.28% 7.27% 3.90% 13.05%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $283,416 $283,569 $294,720 $327,705 $318,469 $278,812 $284,803
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 0.85%(c) 0.85%(c) 0.84% 0.82% 0.90% 0.80% 0.88%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.32%(c) 5.34%(c) 5.01% 5.00% 5.14% 5.29% 5.26%
----------------------------------- -------- -------- -------- -------- -------- -------- --------
Portfolio turnover rate 18% 16% 28% 19% 24% 26% 36%
=================================== ======== ======== ======== ======== ======== ======== ========
|
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average daily net assets of $283,622,551
and $283,749,076 for July 31, 2000 and June 30, 2000, respectively.
FS-110
NOTE 8-FINANCIAL HIGHLIGHTS-(continued)
CLASS B
--------------------------------------------------------------------------------
SEVEN MONTHS SIX MONTHS ENDED
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
JULY 31, 2000 ----------------------------------------------
2000(A) (UNAUDITED) 1999 1998 1997 1996 1995
------------ ---------------- ------- ------- ------- ------- -------
Net asset value, beginning of period $ 7.75 $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.78
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.21 0.18 0.35 0.36 0.36 0.37 0.39
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) 0.08 0.03 (0.62) 0.01 0.17 (0.13) 0.54
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 0.29 0.21 (0.27) 0.37 0.53 0.24 0.93
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.20) (0.17) (0.35) (0.36) (0.36) (0.36) (0.37)
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Return of capital -- -- -- -- -- -- (0.03)
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.20) (0.17) (0.35) (0.36) (0.36) (0.36) (0.40)
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 7.84 $ 7.79 $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31
============================================== ======= ======= ======= ======= ======= ======= =======
Total return(b) 3.84% 2.80% (3.28)% 4.48% 6.59% 2.99% 12.14%
============================================== ======= ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $67,363 $66,576 $72,256 $72,723 $47,185 $33,770 $21,478
============================================== ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.61%(c) 1.61%(c) 1.59% 1.57% 1.66% 1.61% 1.68%(d)
---------------------------------------------- ------- ------- ------- ------- ------- ------- -------
Ratio of net investment income to average net
assets 4.56%(c) 4.58%(c) 4.26% 4.25% 4.38% 4.49% 4.46%
============================================== ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 18% 16% 28% 19% 24% 26% 36%
============================================== ======= ======= ======= ======= ======= ======= =======
|
(a) Calculated using average shares method.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $67,438,640
and $67,541,243 for July 31, 2000 and June 30, 2000, respectively.
(d) After fee waivers and/or expense reimbursements. The ratio of expenses to
average daily net assets prior to fee waivers and/or expense reimbursements
was 1.77% for 1995.
CLASS C
--------------------------------------------------------------------------
SEVEN MONTHS SIX MONTHS ENDED YEAR ENDED AUGUST 4, 1997
ENDED JUNE 30, DECEMBER 31, (DATE SALES COMMENCED)
JULY 31, 2000 --------------- TO DECEMBER 31,
2000(A) (UNAUDITED) 1999 1998 1997
------------ ---------------- ------ ------ ----------------------
Net asset value, beginning of period $ 7.74 $ 7.74 $ 8.35 $ 8.35 $8.30
----------------------------------------------------- ------ ------ ------ ------ -----
Income from investment operations:
Net investment income 0.21 0.18 0.35 0.36 0.15
----------------------------------------------------- ------ ------ ------ ------ -----
Net gains (losses) on securities (both realized and
unrealized) 0.08 0.03 (0.61) -- 0.04
----------------------------------------------------- ------ ------ ------ ------ -----
Total from investment operations 0.29 0.21 (0.26) 0.36 0.19
----------------------------------------------------- ------ ------ ------ ------ -----
Less distributions from net investment income (0.20) (0.17) (0.35) (0.36) (0.14)
----------------------------------------------------- ------ ------ ------ ------ -----
Net asset value, end of period $ 7.83 $ 7.78 $ 7.74 $ 8.35 $8.35
===================================================== ====== ====== ====== ====== =====
Total return(b) 3.85% 2.80% (3.16)% 4.36% 2.36%
===================================================== ====== ====== ====== ====== =====
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,252 $8,072 $9,652 $9,565 $ 825
===================================================== ====== ====== ====== ====== =====
Ratio of expenses to average net assets 1.61%(c) 1.61%(c) 1.59% 1.57% 1.67%(d)
----------------------------------------------------- ------ ------ ------ ------ -----
Ratio of net investment income to average net assets 4.56%(c) 4.58%(c) 4.26% 4.25% 4.37%(d)
===================================================== ====== ====== ====== ====== =====
Portfolio turnover rate 18% 16% 28% 19% 24%
===================================================== ====== ====== ====== ====== =====
|
(a) Calculated using average shares method.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $8,458,483
and $8,565,676 for July 31, 2000 and June 30, 2000, respectively.
(d) Annualized.
FS-111
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Investment Securities Funds:
We have audited the accompanying statement of assets and
liabilities of AIM Limited Maturity Treasury Fund (a
series of AIM Investment Securities Funds) including the
schedule of investments, as of July 31, 2000, and the
related statement of operations for the year then ended,
the statements of changes in net assets for each of the
years in the two-year period then ended, and the
financial highlights for each of the years in the
five-year period then ended. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of
America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned
as of July 31, 2000, by correspondence with the
custodian. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Limited
Maturity Treasury Fund as of July 31, 2000, the results
of its operations for the year then ended, the changes
in its net assets for each of the years in the two-year
period then ended and the financial highlights for each
of the years in the five-year period then ended, in
conformity with accounting principles generally accepted
in the United States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-112
SCHEDULE OF INVESTMENTS
July 31, 2000
PRINCIPAL MARKET
MATURITY AMOUNT VALUE
(000s)
U.S. TREASURY SECURITIES-99.01%
U.S. TREASURY NOTES-99.01%
5.50% 08/31/01 $25,100 $ 24,862,554
-------------------------------------------------------------------------------------------------
5.63% 09/30/01 25,100 24,875,857
-------------------------------------------------------------------------------------------------
5.88% 10/31/01 25,100 24,938,356
-------------------------------------------------------------------------------------------------
5.88% 11/30/01 25,100 24,931,328
-------------------------------------------------------------------------------------------------
6.13% 12/31/01 25,100 25,007,632
-------------------------------------------------------------------------------------------------
6.38% 01/31/02 25,100 25,092,470
-------------------------------------------------------------------------------------------------
6.50% 02/28/02 25,100 25,144,427
-------------------------------------------------------------------------------------------------
6.50% 03/31/02 25,100 25,147,188
-------------------------------------------------------------------------------------------------
6.38% 04/30/02 25,100 25,099,247
-------------------------------------------------------------------------------------------------
6.63% 05/31/02 25,100 25,214,707
-------------------------------------------------------------------------------------------------
6.38% 06/30/02 25,100 25,115,562
-------------------------------------------------------------------------------------------------
6.25% 07/31/02 24,100 24,085,058
-------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $299,787,994) 299,514,386
-------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.01% 299,514,386
-------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.99% 2,999,031
-------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $302,513,417
=================================================================================================
|
See Notes to Financial Statements.
FS-113
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
ASSETS:
Investments, at market value (Cost
$299,787,994) $299,514,386
-----------------------------------------------------------
Cash 1,120,488
-----------------------------------------------------------
Receivables for:
-----------------------------------------------------------
Fund shares sold 272,822
-----------------------------------------------------------
Interest 3,873,029
-----------------------------------------------------------
Investment for deferred compensation plan 40,106
-----------------------------------------------------------
Other assets 2,306
-----------------------------------------------------------
Total assets 304,823,137
-----------------------------------------------------------
LIABILITIES:
Payables for:
-----------------------------------------------------------
Fund shares reacquired 1,752,268
-----------------------------------------------------------
Dividends 358,703
-----------------------------------------------------------
Deferred compensation plan 40,106
-----------------------------------------------------------
Accrued advisory fees 48,904
-----------------------------------------------------------
Accrued administrative services fees 5,859
-----------------------------------------------------------
Accrued distribution fees 54,237
-----------------------------------------------------------
Accrued transfer agent fees 39,501
-----------------------------------------------------------
Accrued operating expenses 10,142
-----------------------------------------------------------
Total liabilities 2,309,720
-----------------------------------------------------------
Net assets applicable to shares outstanding $302,513,417
===========================================================
NET ASSETS:
Class A $300,058,098
===========================================================
Institutional Class $ 2,455,319
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 30,115,896
===========================================================
Institutional Class 246,425
===========================================================
Class A :
Net asset value and redemption price per
share $ 9.96
-----------------------------------------------------------
Offering price per share:
(Net asset value of $9.96 divided by
99.00%) $ 10.06
===========================================================
Institutional Class:
Net asset value, redemption price and
offering price per share $ 9.96
===========================================================
|
STATEMENT OF OPERATIONS
For the year ended July 31, 2000
INVESTMENT INCOME:
Interest $19,783,947
------------------------------------------------------------
EXPENSES:
Advisory fees 705,741
------------------------------------------------------------
Administrative services fee 80,566
------------------------------------------------------------
Custodian fees 11,079
------------------------------------------------------------
Distribution fees -- Class A 517,076
------------------------------------------------------------
Transfer agent fees -- Class A 444,091
------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,749
------------------------------------------------------------
Trustees' fees 9,224
------------------------------------------------------------
Other 104,612
------------------------------------------------------------
Total expenses 1,875,138
------------------------------------------------------------
Less: Expenses paid indirectly (3,920)
------------------------------------------------------------
Net expenses 1,871,218
------------------------------------------------------------
Net investment income 17,912,729
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (4,797,259)
------------------------------------------------------------
Change in net unrealized appreciation of
investment securities 2,049,768
------------------------------------------------------------
Net gain (loss) on investment securities (2,747,491)
------------------------------------------------------------
Net increase in net assets resulting from
operations $15,165,238
===========================================================
|
See Notes to Financial Statements.
FS-114
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 2000 and 1999
2000 1999
------------- ------------
OPERATIONS:
Net investment income $ 17,912,729 $ 19,679,426
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (4,797,259) 1,359,439
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 2,049,768 (3,023,894)
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,165,238 18,014,971
-------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (17,525,848) (18,245,067)
-------------------------------------------------------------------------------------------
Institutional Class (416,635) (1,523,201)
-------------------------------------------------------------------------------------------
Share transactions-net:
Class A (87,282,579) 46,655,684
-------------------------------------------------------------------------------------------
Institutional Class (14,575,249) (33,718,444)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (104,635,073) 11,183,943
-------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 407,148,490 395,964,547
-------------------------------------------------------------------------------------------
End of year $ 302,513,417 $407,148,490
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 311,671,908 $413,559,490
-------------------------------------------------------------------------------------------
Undistributed net investment income 29,754 29,754
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (8,914,637) (4,117,378)
-------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (273,608) (2,323,376)
-------------------------------------------------------------------------------------------
$ 302,513,417 $407,148,490
===========================================================================================
|
See Notes to Financial Statements.
FS-115
NOTES TO FINANCIAL STATEMENTS
July 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Limited Maturity Treasury Fund (the "Fund") is a series portfolio of AIM
Investment Securities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management company consisting of seven separate
series portfolios each having an unlimited number of shares of beneficial
interests. The Fund currently offers two different classes of shares: Class A
shares and the Institutional Class. Matters affecting each portfolio or class
are voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued the mean between the last bid and asked prices. Securities for which
market quotations are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of discounts on investments, is
recorded on the accrual basis from settlement date. It is the policy of the
Fund not to amortize bond premiums for financial reporting purposes.
On July 31, 2000 undistributed net investment income was increased by
$29,754 and additional paid-in capital was decreased by $29,754 as a result
of reclassifications of nondeductible organizational expenses. Net assets of
the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- It is the policy of the Fund to declare dividends from net
investment income daily and pay monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for Federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $4,224,162 as of July 31, 2000 which may be carried forward
to offset future taxable gains, if any, which expires in varying increments,
if not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated between the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.20% on
the first $500 million of the Fund's average daily net assets, plus 0.175% on
the Fund's average daily net assets in excess of $500 million.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2000, AIM was paid
$80,566 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended July 31, 2000, AFS was paid
$151,859 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Trust has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares. The Fund, pursuant to the Plans, pays AIM Distributors
compensation at the annual rate of 0.15% of the Fund's average daily net assets
of Class A shares. The Plan is
FS-116
designed to compensate AIM Distributors for certain promotional and other sales
related costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plan would constitute an asset-
based sales charge. The Plan also imposes a cap on the total sales charges,
including asset-based sales charges that may be paid by the Fund. For the year
ended July 31, 2000, the Fund paid AIM Distributors $517,076 as compensation
under the Plan.
AIM Distributors received commissions of $57,087 from sales of the Class A
shares of the Fund during the year ended July 31, 2000. Such commissions are not
an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS, FMC and AIM Distributors.
During the year ended July 31, 2000, the Fund paid legal fees of $3,294 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended July 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,920 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,920.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a syndicate administered by Citibank, N.A.. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended July 31, 2000, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period.
FS-117
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 2000 was
$431,234,972 and $537,432,998, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of July 31, 2000 was as follows:
Aggregate unrealized appreciation of investment securities $ 395,575 ------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (874,560) ------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investment securities $(478,985) ======================================================================== Cost of investments for tax purposes is $299,993,371. |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 2000 and 1999 were as follows:
2000 1999
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------
Sold:
Class A 20,491,334 $ 204,290,029 66,719,952 $675,218,081
----------------------------------------------------------------------------------------------------------------------
Institutional Class 191,454 1,910,678 489,034 4,947,727
----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,468,058 14,627,764 1,524,802 15,430,990
----------------------------------------------------------------------------------------------------------------------
Institutional Class 891 11,992 1,998 20,239
----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (30,726,141) (306,200,372) (63,662,111) (643,993,387)
----------------------------------------------------------------------------------------------------------------------
Institutional Class (1,653,776) (16,497,919) (3,809,602) (38,686,410)
----------------------------------------------------------------------------------------------------------------------
(10,228,180) $(101,857,828) 1,264,073 $ 12,937,240
======================================================================================================================
|
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.51 0.47 0.53 0.54 0.55
------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.07) (0.04) -- 0.10 (0.06)
------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 0.44 0.43 0.53 0.64 0.49
------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.51) (0.47) (0.53) (0.54) (0.55)
------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 9.96 $ 10.03 $ 10.07 $ 10.07 $ 9.97
============================================================ ======== ======== ======== ======== ========
Total return(a) 4.50% 4.32% 5.42% 6.55% 4.98%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $300,058 $390,018 $345,355 $389,812 $359,048
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.54%(b) 0.54% 0.54% 0.54% 0.54%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.07%(b) 4.61% 5.29% 5.35% 5.45%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 122% 184% 133% 130% 117%
============================================================ ======== ======== ======== ======== ========
|
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $344,717,229.
FS-118
AIM LIMITED MATURITY
TREASURY FUND
AIM Limited Maturity Treasury Fund seeks liquidity with minimum fluctuation of principal value, and, consistent with this objective, the highest total return achievable.
AIM--Registered Trademark--
PROSPECTUS
NOVEMBER 28, 2000
This prospectus contains important information about the Institutional Class of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
----------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Suitability for Investors 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Purchasing Shares A-1 Redeeming Shares A-1 Pricing of Shares A-2 Taxes A-2 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The fund's investment objective is to seek liquidity with minimum fluctuation of principal value, and, consistent with this objective, the highest total return achievable. The fund's investment objective may be changed by the Board of Trustees without shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of the U.S. Treasury, including bills, notes and bonds. The fund will only purchase securities with maturities of three years or less.
The portfolio managers focus on U.S. Treasury obligations they believe have favorable prospects for total return consistent with the fund's investment objective. The portfolio managers usually sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash and shares of affiliated money market funds. As a result, the fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay.
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Interest rate increases can cause the price of a debt security to decrease; the longer the debt security's duration, the more sensitive it is to this risk.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1990 .................................. 9.19%
1991 .................................. 10.62%
1992 .................................. 5.87%
1993 .................................. 4.68%
1994 .................................. 1.08%
1995 .................................. 9.67%
1996 .................................. 5.01%
1997 .................................. 6.22%
1998 .................................. 6.33%
1999 .................................. 2.88%
|
* The Institutional Class shares' year-to-date total return as of September 30, 2000 was 4.69%.
During the periods shown in the bar chart, the highest quarterly return was 3.27% (quarter ended December 31, 1991) and the lowest quarterly return was -0.15% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE ---------------------------------------------------------------------------------------------------- Institutional Class 2.88% 6.00% 6.12% 6.40% 07/13/87 Lehman Bros. 1- to 2-Year U.S. Government Bond Index(1) 3.41% 6.28% 6.40% 6.70%(2) 07/31/88(2) ---------------------------------------------------------------------------------------------------- |
(1) The Lehman Bros. 1- to 2-Year Government Bond Index is an unmanaged index composed of U.S. Agency and Treasury issues with maturities of one to two years.
(2) The average annual total return given is since the date closest to the earliest date the index became available.
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) INSTITUTIONAL CLASS -------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None ------------------------------------------------------ |
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) INSTITUTIONAL CLASS ------------------------------------------------------- Management Fees 0.20% Distribution and/or Service (12b-1) Fees None Other Expenses 0.09 Total Annual Fund Operating Expenses 0.29 ------------------------------------------------------ |
You should also consider the effect of any account fees charged by the financial institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Institutional Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------
Institutional Class $30 $93 $163 $368
-----------------------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended July 31, 2000, the advisor received compensation of 0.20% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio are
- Laurie A. Brignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Scott W. Johnson, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1992 and has been associated with the advisor and/or its affiliates since 1989.
SUITABILITY FOR INVESTORS
The Institutional Class of the fund is intended for use by institutions, particularly banks, acting for themselves or in a fiduciary or similar capacity. The Institutional Class may be particularly appropriate for institutions investing short-term cash reserves for the benefit of customer accounts. Prospective investors should determine if an investment in the fund is consistent with the objectives of its customer account and with applicable state and federal laws and regulations.
The Institutional Class of the fund is designed to be a convenient and economical vehicle for investing in a portfolio of direct U.S. Treasury obligations with remaining maturities of three (3) years or less. An investment in the fund may relieve the institution of many of the investment and administrative burdens encountered when investing directly in securities. These include: selection and diversification of portfolio investments; surveying the market for the best price at which to buy and sell; valuation of portfolio securities; receipt, delivery and safekeeping of securities; and portfolio recordkeeping. It is anticipated that most investors will perform their own subaccounting.
The price per share of the fund's shares will fluctuate inversely with changes in interest rates. However the price changes in the fund's shares due to changes in interest rates should be more moderate than the per share fluctuations of a fund which invests in longer-term obligations. The fund is designed for the investor who seeks a higher yield and greater stability of income than a money market fund offers, but with less capital fluctuation than a long-term bond fund might provide.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
INSTITUTIONAL CLASS
--------------------------------------------------------
YEAR ENDED JULY 31,
--------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- --------
Net asset value, beginning of period $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
------------------------------------------------------------ ------- ------- ------- ------- --------
Income from investment operations:
Net investment income 0.54 0.49 0.56 0.56 0.58
============================================================ ======= ======= ======= ======= ========
Net gains (losses) on securities (both realized and
unrealized) (0.07) (0.04) -- 0.10 (0.06)
============================================================ ======= ======= ======= ======= ========
Total from investment operations 0.47 0.45 0.56 0.66 0.52
============================================================ ======= ======= ======= ======= ========
Less distributions:
Dividends from net investment income (0.54) (0.49) (0.56) (0.56) (0.58)
------------------------------------------------------------ ------- ------- ------- ------- --------
Net asset value, end of period $ 9.96 $ 10.03 $ 10.07 $ 10.07 $ 9.97
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
Total return 4.78% 4.55% 5.66% 6.79% 5.27%
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 2,455 $17,131 $50,609 $48,866 $143,468
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
Ratio of expenses to average net assets 0.29%(a) 0.31% 0.32% 0.31% 0.27%
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
Ratio of net investment income to average net assets 5.31%(a) 4.84% 5.51% 5.56% 5.72%
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
Portfolio turnover rate 122% 184% 133% 130% 117%
____________________________________________________________ _______ _______ _______ _______ ________
============================================================ ======= ======= ======= ======= ========
|
(a) Ratios are based on average net assets of $8,153,267.
PURCHASING SHARES
The minimum initial investment in the Institutional Class is $1,000,000. No minimum amount is required for subsequent investments in the fund, nor are minimum balances required.
Shares of the Institutional Class of the fund are sold on a continuing basis at their net asset value. Although no sales charge is imposed in connection with the purchase of shares, banks or other financial institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of shares of the fund should consult with such institutions to obtain a schedule of such fees. Institutions may be requested to maintain separate master accounts in the fund for shares held by the institution (a) for its own account, for the account of other institutions and for accounts for which the institution acts as a fiduciary; and (b) for accounts for which the institution acts in some other capacity. An institution's master accounts and subaccounts with the fund may be aggregated for the purpose of the minimum investment requirement. Prior to the initial purchase of shares, an account application must be completed and sent to A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497, Houston, Texas 77210-4497. An account application may be obtained from the transfer agent.
In order to be accepted for execution, purchase orders must be submitted in proper form and received during the hours of the customary trading session of the New York Stock Exchange (NYSE) on days the NYSE is open for business and such orders will be confirmed at the net asset value determined as of the close of the customary trading session of the NYSE on that day (trade date). Subsequent purchases of shares of the fund may also be made via AIM LINK--Registered Trademark-- Remote, a personal computer application software product.
Payments for shares purchased must be in the form of federal funds or other funds immediately available to the fund and must be made on the "settlement date," which shall be the next business day of the fund following the trade date. Federal Reserve wires should be sent as early as possible on the settlement date in order to facilitate crediting to the shareholder's account. Any funds received in respect to an order which is not accepted by the fund and any funds received for which an order has not been received will be returned to the sending institution. An order to purchase shares must specify which fund is being purchased, otherwise any funds received will be returned to the sending institution.
REDEEMING SHARES
TIMING OF REDEMPTIONS
You can redeem shares during the hours of the customary trading session of the NYSE on days the NYSE is open for business. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading.
A shareholder may redeem any or all of its shares at the net asset value next determined after receipt of the redemption request in proper form by the fund. Redemption requests with respect to shares for which certificates have not been issued are normally made by calling the transfer agent.
Shareholders may request a redemption by telephone. The transfer agent and the distributor will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the account application if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmation promptly after the transaction. Redemption of shares of the fund may also be made via AIM LINK--Registered Trademark-- Remote.
TIMING AND METHOD OF PAYMENT
If a redemption request is received during the hours of the customary trading session of the NYSE on days the NYSE is open for business, the redemption will be effected at the net asset value determined as of the close of that day (the redemption date).
Payment for redeemed shares is normally made by Federal Reserve wire to the commercial bank account designated in the shareholder's Account Application, but may be remitted by check upon request by a shareholder. The proceeds of a redemption request will be wired on the next business day following the redemption date.
Payment for shares redeemed by mail and payment for telephone redemptions in amounts under $1,000 may, at the option of the fund, be made by check mailed within seven days after receipt of the redemption request in proper form. The fund may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the fund's best interest to do so.
REDEMPTIONS BY THE FUND
If the fund determines that you have provided incorrect information in opening an account or in the course of conducting subsequent transactions, the fund may, at its discretion, redeem the account and distribute the proceeds to you.
The fund is permitted to redeem shares in any account with a net asset value less than $500.
The fund reserves the right at any time to:
- reject or cancel any part of any purchase order;
- modify any terms or conditions of purchase of shares of the fund; or
- withdraw all or any part of the offering made by this prospectus.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values portfolio securities for which market quotations are readily available at market value. The fund values short-term investments maturing within 60 days at amortized cost, which approximates market value.
The fund values all other securities and assets at their fair value. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the fund may value the security at its fair value as determined in good faith by or under the supervision of the Board of Trustees of the fund. The effect of using fair value pricing is that the fund's net asset value will be subject to the judgment of the Board of Trustees or its designee instead of being determined by the market.
The fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. The fund prices purchase and redemption orders at the net asset value calculated after the transfer agent receives an order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are generally taxable to you at different rates depending on the length of time the fund holds its assets. Different rates of tax may apply to ordinary income and long-term capital gain distributions. Every year, information showing the amount of dividends and distributions you received from the fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of fund shares will be subject to federal income tax.
The foreign, state and local tax consequences of investment in fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing.
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 659-1005
BY E-MAIL: general@aimfunds.com
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
|
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
STATEMENT OF
ADDITIONAL INFORMATION
AIM INVESTMENT SECURITIES FUNDS
AIM LIMITED MATURITY TREASURY FUND
INSTITUTIONAL CLASS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(800) 659-1005
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUND, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M FUND SERVICES, INC., P.O. BOX 0843,
HOUSTON, TEXAS 77001-0843
OR BY CALLING (800) 659-1005
STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 28, 2000
RELATING TO THE PROSPECTUS DATED NOVEMBER 28, 2000
TABLE OF CONTENTS
PAGE
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUND................................................................................1
The Fund and Its Shares..................................................................................1
MANAGEMENT........................................................................................................3
Trustees and Officers....................................................................................3
Remuneration of Trustees.................................................................................6
AIM Funds Retirement Plan for Eligible Directors/Trustees................................................8
Deferred Compensation Agreements.........................................................................8
The Investment Advisor...................................................................................9
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................11
Limited Maturity Treasury Fund..........................................................................11
AIM High Yield Fund.....................................................................................12
AIM High Yield Fund II..................................................................................12
AIM Income Fund.........................................................................................13
AIM Municipal Bond Fund.................................................................................14
PURCHASES AND REDEMPTIONS........................................................................................15
Net Asset Value Determination...........................................................................15
The Distribution Agreement..............................................................................15
Suspension of Redemption Rights.........................................................................16
Redemptions by the Fund.................................................................................16
INVESTMENT PROGRAM AND RESTRICTIONS..............................................................................16
Investment Program......................................................................................16
Investment Restrictions.................................................................................18
PERFORMANCE INFORMATION..........................................................................................21
Yield Calculations......................................................................................21
Total Return Calculations...............................................................................21
Historical Portfolio Results............................................................................22
PORTFOLIO TRANSACTIONS...........................................................................................23
General Brokerage Policy................................................................................23
Allocation of Portfolio Transactions....................................................................23
Section 28(e) Standards.................................................................................24
Portfolio Turnover......................................................................................25
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................25
Dividends and Distributions.............................................................................25
Tax Matters.............................................................................................25
Qualification as a Regulated Investment Company.........................................................25
Excise Tax on Regulated Investment Companies............................................................27
Fund Distributions......................................................................................27
Sale or Redemption of Fund Shares.......................................................................28
Foreign Shareholders....................................................................................28
Effect of Future Legislation; Local Tax Considerations..................................................29
MISCELLANEOUS INFORMATION........................................................................................29
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Shareholder Inquiries...................................................................................29
Audit Reports...........................................................................................29
Legal Matters...........................................................................................29
Transfer Agent and Custodian............................................................................29
Other Information.......................................................................................30
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
AIM Investment Securities Funds (the "Trust") is a series mutual fund currently offering seven investment portfolios: the AIM Limited Maturity Treasury Fund (the "Fund") AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Money Market Fund and AIM Municipal Bond Fund. Currently, the Fund has two classes of shares, consisting of the Institutional Class and the Class A shares. This Statement of Additional Information relates solely to the Institutional Class of the Fund.
The rules and regulations of the United States Securities and Exchange
Commission (the "SEC") require all mutual funds to furnish prospective investors
certain information concerning the activities of the fund being considered for
investment. This information is included in a Prospectus for the Institutional
Class (the "Prospectus"), dated November 28, 2000. Copies of the Prospectus and
additional copies of this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Fund's shares, A I M
Fund Services, Inc., P.O. Box 0843, Houston, Texas 77001-0843 or by calling
(800) 659-1005. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Institutional Class. Some of the information required to be in this Statement of Additional Information is also included in the current Prospectus; and, in order to avoid repetition, reference will be made to sections of the Prospectus. Additionally, the Prospectus and this Statement of Additional Information omit certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from the Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund is an open-end, series portfolio of the Trust. The Trust is an open-end, series, management investment company, and may consist of one or more series portfolios as authorized from time to time by the Board of Trustees. The Trust was originally organized as a Maryland corporation on November 4, 1988. On October 15, 1993, the Trust was reorganized as a Delaware business trust and the Fund, which previously had been a portfolio of another open-end investment company, was redomesticated as a portfolio of the Trust. A copy of the Trust's Amended and Restated Agreement and Declaration of Trust, dated November 5, 1998, as amended (the "Declaration of Trust"), is on file with the SEC.
Shares of beneficial interest of the Fund will be redeemable at the net asset value thereof at the option of the shareholder, or at the option of the Fund in certain circumstances.
Shareholders of the Trust do not have cumulative voting rights. Therefore, the holders of more than 50% of the outstanding shares of all series or classes voting together for election of trustees may elect all of the members of the Board of Trustees and in such event, the remaining holders cannot elect any members of the Board of Trustees.
The Declaration of Trust provides for the perpetual existence of the Trust. The Trust or any portfolio or class thereof, however, may be terminated at any time, upon the recommendation of the Board of Trustees, by vote of the holders of a majority of the outstanding shares of the Trust, such portfolio or such class, respectively; provided, however, that the Board of Trustees may terminate, without such shareholder approval, the Trust, any portfolio or any class thereof with respect to which there are fewer than 100 holders of record.
The Declaration of Trust permits the trustees to issue an unlimited number of full and fractional shares, $0.01 par value, of each class of shares of beneficial interest of the Trust. The Board of Trustees may establish additional series or classes of shares from time to time without shareholder approval. Additional information concerning the rights of share ownership is set forth in the prospectus applicable to each such class or series of shares of the Trust.
The assets received by the Trust for the issuance or sale of shares of each class relating to a portfolio and all income, earnings, profits, losses and proceeds therefrom, subject only to the rights of creditors, will be allocated to that portfolio, and constitute the underlying assets of that portfolio. The underlying assets of each portfolio will be segregated and will be charged with the expenses with respect to that portfolio and with a share of the general expenses of the Trust. While certain expenses of the Trust will be allocated to the separate books of account of each portfolio, certain other expenses may be legally chargeable against the assets of the entire Trust.
Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations, however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. However, the Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations and wherein the complaining party was held not to be bound by the disclaimer.
The Declaration of Trust further provides that the trustees and officers of the Trust will not be personally responsible for any act, omission or obligation of the Trust or any trustee or officer. However, nothing in the Declaration of Trust protects a trustee against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office with the Trust. The Declaration of Trust provides for indemnification by the Trust of the trustees and the officers, employees or agents of the Trust if it is determined that such person acted in good faith and reasonably believed: (1) in the case of conduct in his official care or conduct in his official capacity for the Trust, that his conduct was in the Trust's best interests, (2) in all of the cases, that his conduct was at least not opposed to the Trust's best interests and (3) in a criminal proceeding, that he had no reason to believe that his conduct was unlawful. Such person may not be indemnified against any liability to the Trust or to the Trust's shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The Declaration of Trust also authorizes the purchase of liability insurance on behalf of trustees and officers.
All shares of the Trust have equal rights with respect to voting, except that (i) the holders of shares of all classes of a particular portfolio, voting together, will have the exclusive right to vote on matters (such as advisory fees) pertaining solely to that portfolio, and (ii) the holders of shares of a particular class will have the exclusive right to vote on matters pertaining to distribution plans or shareholder service plans, if any such plans are adopted, relating solely to such class. The holders of each class have distinctive rights with respect to dividends. In the event of dissolution or liquidation, holders of each portfolio's shares will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares related, less (b) the liabilities of the Trust attributable to the respective portfolio or allocated between the portfolios based on the respective liquidation values of each such portfolio.
The Trust will not normally hold annual shareholders' meetings. At such time as less than a majority of the trustees have been elected by the shareholders, the trustees then in office will call a shareholders' meeting for the election of trustees. In addition, trustees may be removed from office by a written instrument signed by at least two-thirds of the trustees of the Trust or by a vote of the holders of two-thirds of the outstanding shares present at a meeting of which a quorum is present and which has been duly called for that purpose, which meeting shall be held upon written request of the holders of not less than 10% of the outstanding shares of the Trust's shares.
As used herein, the term "majority of the outstanding shares" of beneficial interest of the Trust or a portfolio means, respectively, the lesser of (i) 67% or more of the shares of beneficial interest of the Trust or the portfolio present at a meeting, if the holders of more than 50% of the outstanding shares of beneficial interest of the Trust or the portfolio are present or represented by proxy, or (ii) more than 50% of the outstanding shares of beneficial interest of the Trust or the portfolio.
The Institutional Class and the Class A shares of the Fund have different shareholders and are allocated certain differing class expenses, such as distribution and/or service fees related to their respective shares. To obtain information about the Class A shares, please call A I M Fund Services, Inc., a registered broker-dealer and wholly owned subsidiary of A I M Advisors, Inc. ("AIM"), at (800) 347-4246. A I M Distributors ("AIM Distributors") is the exclusive distributor of the Trust's shares.
There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional classes or series of the Trust's shares without shareholder approval.
MANAGEMENT
The overall management of the business and affairs of the Fund is vested in the Trust's Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on behalf of the Fund, and persons or companies furnishing services to the Fund, including the Master Investment Advisory Agreement and Master Administrative Services Agreement with AIM, the agreement with AIM Distributors regarding distribution of the Fund's shares, the agreement with The Bank of New York as the custodian and the agreement with A I M Fund Services, Inc. ("AFS") as transfer agent. The day-to-day operations of the Fund is delegated to the officers of the Trust and to AIM, subject always to the investment objective, restrictions and policies of the Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during at least the last five years are set forth below. Unless otherwise indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. All of the trustees of the Trust also serve as directors or trustees of some or all of the other investment companies managed or advised by AIM ("AIM Funds"). Certain of the executive officers of the Trust hold similar offices with some or all of such investment companies.
======================================== ======================= ====================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
======================================== ======================= ====================================================
*ROBERT H. GRAHAM (53) Trustee, Chairman and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and
Fund Management Company; and Director and Chief
Executive Officer, Managed Products, AMVESCAP PLC.
---------------------------------------- ----------------------- ----------------------------------------------------
BRUCE L. CROCKETT (56) Trustee Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board
of Governors of INTELSAT (international
communications company).
---------------------------------------- ----------------------- ----------------------------------------------------
OWEN DALY II (76) Trustee Formerly, Director, Cortland Trust Inc.
Six Blythewood Road (investment company). CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
---------------------------------------- ----------------------- ----------------------------------------------------
EDWARD K. DUNN, JR. (65) Trustee Formerly, Chairman of the Board of Directors,
2 Hopkins Plaza, 8th Floor, Mercantile Mortgage Corp.; Vice Chairman of the
Suite 805 Board of Directors, President and Chief Operating
Baltimore, MD 21201 Officer, Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares.
---------------------------------------- ----------------------- ----------------------------------------------------
JACK M. FIELDS (48) Trustee Chief Executive Officer, Texana Global, Inc.
434 New Jersey Avenue, S.E. (foreign trading company) and Twenty First Century
Washington, DC 20003 Group, Inc. (a governmental affairs company).
Formerly, Member of the U.S. House of
Representatives.
---------------------------------------- ----------------------- ----------------------------------------------------
**CARL FRISCHLING (63) Trustee Partner, Kramer Levin Naftalis & Frankel LLP (law
919 Third Avenue firm).
New York, NY 10022
======================================== ======================= ====================================================
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* A trustee who is an "interested person" of the Trust and AIM as defined in the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940 Act.
======================================== ======================= ====================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
======================================== ======================= ====================================================
PREMA MATHAI-DAVIS (50) Trustee Formerly, Chief Executive Officer, YWCA of the USA.
370 East 76th Street
New York, NY 10021
---------------------------------------- ----------------------- ----------------------------------------------------
LEWIS F. PENNOCK (58) Trustee Partner, Pennock & Coopers (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
---------------------------------------- ----------------------- ----------------------------------------------------
LOUIS S. SKLAR (61) Trustee Executive Vice President, Development and
The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
---------------------------------------- ----------------------- ----------------------------------------------------
GARY T. CRUM (53) Senior Vice President Director and President, A I M Capital Management,
Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
---------------------------------------- ----------------------- ----------------------------------------------------
CAROL F. RELIHAN (46) Senior Vice President Director, Senior Vice President, General Counsel
and Secretary and Secretary, A I M Advisors, Inc; Senior Vice
President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
General Counsel and Vice President, A I M Fund
Services, Inc.; and Vice President,
A I M Capital Management, Inc. and A I M
Distributors, Inc.
---------------------------------------- ----------------------- ----------------------------------------------------
DANA R. SUTTON (41) Vice President and Vice President and Fund Controller, A I M
Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
---------------------------------------- ----------------------- ----------------------------------------------------
MELVILLE B. COX (57) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc.
and Fund Management Company.
---------------------------------------- ----------------------- ----------------------------------------------------
KAREN DUNN KELLEY (40) Vice President Senior Vice President, A I M Capital Management,
Inc. and Vice President, A I M Advisors, Inc.
======================================== ======================= ====================================================
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The standing Committees of the Board of Trustees are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn (Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for the Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Fund's independent accountants and management.
The members of the Investments Committee are Messrs. Crockett, Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's investment-related compliance systems and procedures to ensure their continued adequacy; and (ii) considering and acting, on an interim basis between meetings of the full Board, on investment-related matters requiring Board consideration, including dividends and distributions, brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs. Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis. The Nominating and Compensation Committee is responsible for: (i) considering and nominating individuals to stand for election as independent trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees recommended by a shareholder to serve as trustees, provided (i) that such person is a shareholder of record at the time he or she submits such names and is entitled to vote at the meeting of shareholders at which trustees will be elected, and (ii) that the Nominating and Compensation Committee or the Board, as applicable, shall make the final determination of persons to be nominated.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any Committee attended. Each trustee who is not also an officer of the Trust is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a trustee or director of other funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds"). Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust:
=================================== ===================== ====================== ======================
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL
TRUSTEE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
----------------------------------- --------------------- ---------------------- ----------------------
Charles T. Bauer(4) $ 0 $ 0 $ 0
----------------------------------- --------------------- ---------------------- ----------------------
Bruce L. Crockett 5,461 37,485 103,500
----------------------------------- --------------------- ---------------------- ----------------------
Owen Daly II 5,461 122,898 103,500
----------------------------------- --------------------- ---------------------- ----------------------
Edward K. Dunn, Jr 5,461 55,565 103,500
----------------------------------- --------------------- ---------------------- ----------------------
Jack M. Fields 5,421 15,826 101,500
----------------------------------- --------------------- ---------------------- ----------------------
Carl Frischling(5) 5,461 97,791 103,500
----------------------------------- --------------------- ---------------------- ----------------------
Robert H. Graham 0 0 0
----------------------------------- --------------------- ---------------------- ----------------------
John F. Kroeger(6) 0 40,461 0
----------------------------------- --------------------- ---------------------- ----------------------
Prema Mathai-Davis 5,422 11,870 101,500
----------------------------------- --------------------- ---------------------- ----------------------
Lewis F. Pennock 5,461 45,766 103,500
----------------------------------- --------------------- ---------------------- ----------------------
Ian W. Robinson(6) 0 94,442 25,000
----------------------------------- --------------------- ---------------------- ----------------------
Louis S. Sklar 5,422 90,232 101,500
=================================== ===================== ====================== ======================
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(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended July 31, 2000, including earnings thereon, was $39,147.
(2) During the fiscal year ended July 31, 2000, the total estimated amount of expenses allocated to the Trust in respect of such retirement benefits was $12,655. Data reflects compensation estimated for the calendar year ended December 31, 1999.
(3) Each trustee serves as a director or trustee of a total of 12 registered investment companies advised by AIM as of December 31, 1999. Data reflects total compensation earned during the calendar year ended December 31, 1999.
(4) Mr. Bauer was a trustee and officer until September 30, 2000, when he retired.
(5) During the fiscal year ended July 31, 2000, the Trust paid $22,567 in legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel, LLP for services rendered to the independent trustees of the Trust.
(6) Mr. Kroeger was a trustee until June 11, 1998. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's widow will receive his pension as described below under "AIM Funds Retirement Plan for Eligible Directors/Trustees".
(7) Mr. Robinson was a trustee until March 12, 1999, when he retired.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of the AIM Funds, AIM Management or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, a trustee becomes eligible to retire and receive full benefits under the Plan when he or she has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "Applicable AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his or her date of retirement equal to a maximum of 75% of the annual retainer paid or accrued by the Applicable AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the trustee) and based on the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of all benefits under the Plan, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the Plan are not secured or funded by any Applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable to an eligible trustee upon retirement assuming the retainer amount reflected below and various years of service. The estimated credited years of service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 19, 11, 11, and 2 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
================== =======================================================
Number of Years
of Service With Estimated Annual Benefits Upon Retirement
AIM Funds
================== =======================================================
10 $75,000
------------------ -------------------------------------------------------
9 $67,500
------------------ -------------------------------------------------------
8 $60,000
------------------ -------------------------------------------------------
7 $52,500
------------------ -------------------------------------------------------
6 $45,000
------------------ -------------------------------------------------------
5 $37,500
================== =======================================================
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DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Dunn, Fields, Frischling, and Sklar and Dr. Mathai-Davis (the "Deferring Trustees") have each executed a Deferred Compensation Agreement. Pursuant to the agreements, the Deferring Trustees may elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, in generally equal quarterly installments over a
period of five (5) or ten (10) years (depending on the agreement) beginning on the date the Deferring Trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary in a single lump sum payment as soon as practicable after such deferring trustee's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
THE INVESTMENT ADVISOR
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, serves as the investment advisor to the Fund pursuant to a Master Investment Advisory Agreement with the Trust (the "Advisory Agreement"), and a Master Administrative Services Agreement with AIM. AIM was organized in 1976, and together with its subsidiaries, advises or manages over 120 investment portfolios encompassing a broad range of investment objectives.
AIM is a wholly owned subsidiary of AIM Management, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM Management is a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are an independent investment management group engaged in institutional investment management and retail fund businesses in the United States, Europe and the Pacific Region. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Trustees and Officers." A I M Capital Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, is engaged in the business of providing investment advisory services to investment companies, corporations, institutions and other accounts.
AIM and the Trust have adopted a Code of Ethics which requires investment personnel and certain other employees (a) pre-clear all personal securities transactions subject to the Code of Ethics; (b) file reports regarding such transactions; (c) refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security, (subject to a de minimis exception), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to a de minimis exception); and (d) abide by certain other provisions of the Code of Ethics. The de minimis exception under the Code of Ethics covers situations where there are no material conflict of interest because of the large market capitalization of a security and the relatively small number of shares involved in a personal transaction. The Code of Ethics also prohibits employees from purchasing securities in an initial public offering. Personal trading reports are periodically reviewed by AIM, and the Board of Trustees reviews quarterly and annual reports (which summarize any significant violations of the Code of Ethics). Sanctions for violations of the Code of Ethics may include censure, monetary penalties, suspension or termination of employment.
The Advisory Agreement will continue from year to year only if such continuance is specifically approved at least annually by (i) the Trust's Board of Trustees or the vote of a "majority of the outstanding voting securities" of the Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a majority of the trustees who are not parties to the Advisory Agreement or "interested persons" of any such party (the "Non-Interested Trustees") by votes cast in person at a meeting called for such purpose. The Trust or AIM may terminate the Advisory Agreement on sixty (60) days' written notice without penalty. The Advisory Agreement terminates automatically in the event of its "assignment," as defined in the 1940 Act.
Pursuant to the terms of the Advisory Agreement, AIM manages the investments of the Fund and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Fund. Any investment program undertaken by AIM will at all times be subject to the policies and control of the Trust's Board of Trustees. AIM shall not be liable to the Fund or its shareholders for any act or omission by AIM or for any loss sustained by the Fund or its shareholders
except in the case of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. Pursuant to the Advisory Agreement, AIM receives a fee as compensation for its services with respect to the Fund, calculated daily and paid monthly, at an annual rate equal to 0.20% of the first $500 million of the Fund's aggregate average daily net assets, plus 0.175% of the Fund's aggregate average daily net assets in excess of $500 million.
In addition, if a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Advisory Agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fees, and has agreed to seek Board approval prior to its receipt of all or a portion of such fees.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
In addition to the fees paid to AIM pursuant to the Advisory Agreement and the Master Administrative Services Agreement, the Trust, on behalf of the Fund, also pays or causes to be paid all other expenses attributable to the Fund, including, without limitation: the charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents; brokers' commissions in connection with portfolio securities transactions of the Fund; all taxes, including securities issuance and transfer taxes, and fees payable to federal, state or other governmental agencies; the cost and expenses of engraving or printing share certificates; all costs and expenses in connection with registration and maintenance of registration with the SEC and various states and other jurisdictions (including filing and legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing proxy statements, reports to shareholders, prospectuses and statements of additional information of the Fund and supplements thereto; expenses of shareholders' and trustees' meetings; fees and travel expenses of trustees and trustee members of any advisory board or committee; expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside pricing service; fees and expenses of legal counsel, including counsel to the Non-Interested Trustees of the Trust or AIM, and of independent accountants; membership dues of industry associations; interest payable on borrowings; postage; insurance premiums on property or personnel (including officers and trustees) of the Trust; and extraordinary expenses (including but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto). AIM Distributors bears the expenses of printing and distributing reports to shareholders, prospectuses and statements of additional information (other than those reports to shareholders, prospectuses and statements of additional information distributed to existing shareholders of the Institutional Shares) and any other promotional or sales literature used by AIM Distributors or furnished by AIM Distributors to purchasers or dealers in connection with the public offering of shares of the Institutional Shares.
Expenses of the Trust which are not directly attributable to the operations of any class of shares or Portfolio of the Trust are prorated among all classes of the Trust based upon the relative net assets of each class or Portfolio. Expenses of the Trust which are not directly attributable to a specific class of shares but are directly attributable to a specific Portfolio are prorated among all classes of such Portfolio based upon the relative net assets of each such class. Expenses of the Trust which are directly attributable to a specified class of shares are charged against the income available for distribution as dividends to such shares.
During the fiscal years ended July 31, 2000, 1999 and 1998, AIM received advisory fees of $705,741, $850,738 and $855,900, respectively, pursuant to the Advisory Agreement. During the fiscal years ended July 31, 2000, 1999, and 1998, AIM was reimbursed $80,566, $70,069 and $59,396, respectively, pursuant to the Administrative Services Agreement.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best of the Trust's knowledge, as of November 1, 2000, the trustees and officers of the Trust owned less than 1% of the outstanding shares of all classes of the Trust except for the trustees and officers of AIM Municipal Bond Fund which own 3.76% of the Class A Shares.
To the best of the Trust's knowledge, the names and addresses of the holders of 5% or more of the outstanding shares of the Trust as of November 1, 2000, and the percent of outstanding shares owned by such shareholders are as follows:
LIMITED MATURITY TREASURY FUND
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
----------------------------------- ---------- ----------------
INSTITUTIONAL CLASS:
Esor & Co. 56.42% -0-
Attn: Trust Operations
P.O. Box 19006
Green Bay, WI 54307-9006
Frost National Bank Tx 43.01% -0-
Muir & Co. c/o Frost
P.O. Box 2479
San Antonio, TX 78298-2479
CLASS A SHARES:
Merrill Lynch Pierce Fenner & Smith 11.84% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
|
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
----------------------------------- ---------- ----------------
AIM HIGH YIELD FUND
CLASS A SHARES:
Charles Schwab & Co., Inc. 5.42% -0-
Reinvestment Account
101 Montgomery St.
San Francisco, CA 94104
Merrill Lynch Pierce Fenner & Smith 5.20% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS B SHARES:
Merrill Lynch Pierce Fenner & Smith 12.52% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES:
Banc One Securities Corp 14.69% -0-
FBO The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081
Merrill Lynch Pierce Fenner & Smith 14.34% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM HIGH YIELD FUND II
CLASS A SHARES:
Jonathan C. Schoolar SEP Prop -0- 9.98%
3722 Tartan Lane
Houston, TX 77025
|
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
----------------------------------- ---------- ----------------
Charles Schwab & Co., Inc. 5.29% -0-
Reinvestment Account
101 Montgomery St.
San Francisco, CA 94104
CLASS B SHARES:
Merrill Lynch Pierce Fenner & Smith 9.25% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES:
Merrill Lynch Pierce Fenner & Smith 8.17% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM INCOME FUND
CLASS B SHARES:
Merrill Lynch Pierce Fenner & Smith 7.47% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES:
Merrill Lynch Pierce Fenner & Smith 15.33% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM INTERMEDIATE GOVERNMENT FUND
CLASS A SHARES:
Merrill Lynch Pierce Fenner & Smith 5.18% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
|
Percentage Percentage Owned
Name and Address Owned of of Record and
of Owner Record* Beneficially
----------------------------------- ---------- ----------------
CLASS B SHARES:
Merrill Lynch Pierce Fenner & Smith 15.96% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES:
Merrill Lynch Pierce Fenner & Smith 16.10% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Banc One Securities Corp. 5.05% -0-
FBO The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081
AIM MUNICIPAL BOND FUND
CLASS B SHARES:
Merrill Lynch Pierce Fenner & Smith 10.62% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
CLASS C SHARES:
Merrill Lynch Pierce Fenner & Smith 17.90% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Reagan Family Partners
Robert L. Reagan, General Partner
Dalene C. Reagan, General Partner
125 Crestline Dr.
Kerrville, TX 78028 -0- 6.20%
|
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
A complete description of the manner by which shares of the Institutional Class may be purchased appears in the Prospectus under the caption "Purchasing Shares."
Shares of the Institutional Class are sold at the net asset value of such shares. Shareholders may at any time redeem all or a portion of their shares at net asset value. The investor's price for purchases and redemptions will be the net asset value next determined following the receipt of an order to purchase or a request to redeem shares. The net asset value of the Fund varies depending on the market value of its assets.
In accordance with the current rules and regulations of the SEC, the net asset value per share of the Fund is determined once daily as of the close of the customary trading session of the New York Stock Exchange (the "NYSE") which is generally 4:00 p.m. Eastern Time on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the customary trading session of the NYSE on such day. Net asset value per share of the Fund is determined by subtracting the liabilities (e.g., accrued expenses and dividends payable) of the Fund allocated to the class from the value of securities, cash and other assets (including interest accrued but not collected) of the Fund allocated to the class, and dividing the result by the total number of shares outstanding of such class of the Fund. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Securities will be valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing services may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate, maturity and seasoning differential. Securities for which prices are not provided by the pricing service are valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in accordance with methods which are specifically authorized by the Board of Trustees of the Trust. Short-term obligations having sixty (60) days or less to maturity are valued at amortized cost, which approximates market value. (See also "Purchasing Shares," "Redeeming Shares" and "Pricing of Shares" in the Prospectus.)
The Trust agrees to redeem shares of the Fund solely in cash up to the lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for any one shareholder. In consideration of the best interests of the remaining shareholders, the Trust reserves the right to pay any redemption price exceeding this amount in whole or in part by a distribution in kind of securities held by the Fund in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind. If shares are redeemed in kind, however, the redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received in the distribution.
THE DISTRIBUTION AGREEMENT
The Trust has entered into a Distribution Agreement with AIM Distributors (the "Distribution Agreement"), pursuant to which AIM Distributors has agreed to act as the exclusive distributor of shares of the Institutional Class. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. The Distribution Agreement provides that AIM Distributors has the exclusive right to distribute shares of the Institutional Class either directly or through other broker-dealers. The Distribution Agreement also provides that AIM Distributors will pay promotional expenses, including the incremental costs of printing prospectuses and statements of additional information, annual reports and other periodic reports for distribution to persons who are not shareholders of the Institutional Class and the costs of preparing and distributing any other supplemental sales literature. AIM Distributors has not undertaken to sell any specified number of shares of the Institutional Class. AIM Distributors does not receive any fees from the Fund pursuant to the Distribution Agreement.
AIM Distributors is a registered broker-dealer and is also a wholly owned subsidiary of AIM. Certain trustees and officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreement will continue from year to year only if such continuation is specifically approved at least annually by (i) the Trust's Board of Trustees or the vote of a "majority of the outstanding securities" of the Fund (as defined in the 1940 Act) and (ii) the affirmative vote of a majority of the Non-Interested Trustees by votes cast in person at a meeting called for such purpose. The Fund or AIM Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate in the event of its "assignment," as defined in the 1940 Act.
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon redemption may be postponed when (a) trading on the NYSE is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend or holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency, as determined by the SEC, exists making disposition of portfolio securities or the valuation of the net assets of the Fund not reasonably practicable.
REDEMPTIONS BY THE FUND
If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the fund has the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500.
If the fund determines that you have provided incorrect information in opening an account or in the course of conducting subsequent transactions, the fund may, at its discretion, redeem the account and distribute the proceeds to you.
INVESTMENT PROGRAM AND RESTRICTIONS
Set forth in this section is a description of the Fund's investment policies, strategies and practices. The investment objective of the Fund is a non-fundamental policy and may be changed by the Board of Trustees without shareholder approval. The Fund's investment policies, strategies and practices are also non-fundamental. The Board of Trustees of the Trust reserves the right to change any of these non-fundamental investment policies, strategies or practices without shareholder approval. However, shareholders will be notified before any material change in the investment policies becomes effective. The Fund has adopted certain investment restrictions, some of which are fundamental and cannot be changed without shareholder approval.
Any percentage limitations with respect to assets of a Fund will be applied at the time of purchase. A later change in percentage resulting from changes in asset values will not be considered a violation of the percentage limitations. The percentage limitations applicable to borrowings and reverse repurchase agreements will be applied in accordance with applicable provisions of the 1940 Act and the rules and regulations promulgated thereunder which specifically limit each Fund's borrowing abilities.
INVESTMENT PROGRAM
To achieve its objective, the Fund will invest in an actively managed portfolio of U.S. Treasury notes and other direct obligations of the U.S. Treasury. The Fund may invest in U.S. Treasury obligations, which are direct obligations of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance, including U.S. Treasury bills, U.S. Treasury notes and U.S. Treasury bonds. The Fund will attempt to enhance its total return through capital appreciation when market factors, such as economic and market conditions and the prospects for interest rate changes, indicate that capital appreciation may be available without significant risk to principal. The Fund does not intend
to engage in margin transactions, short sales, or put or call options. The Fund will only purchase securities whose maturities do not exceed three (3) years. Under normal circumstances, the average portfolio maturity of the Fund will range between one-and-one-half (1 1/2) and two (2) years. Since brokerage commissions are not normally paid on investments of the type made by the Fund, the high turnover rate should not adversely affect the net income of the Fund. Any percentage limitations with respect to assets of the Fund will be applied at the time of purchase.
Limited Maturity does not intend to engage in margin transactions.
Loans of Portfolio Securities. Subject to its investment restrictions (see "Investment Restrictions") the Fund may from time to time loan securities from its portfolio to brokers, dealers and financial institutions and receive collateral in cash or U.S. Treasury obligations which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities; provided, however, that such loans are made according to the guidelines of the SEC and the Trust's Board of Trustees. The Fund will be entitled to the interest paid upon investment of the cash collateral in its permitted investments, or to the payment of a premium or fee for the loan. The Fund may at any time call such loans and obtain the securities loaned. However, if the borrower of the securities should default on its obligation to return the securities borrowed, the value of the collateral may be insufficient to permit the Fund to reestablish its position by making a comparable investment due to changes in market conditions. The Fund may pay reasonable fees to persons unaffiliated with the Fund in connection with the arranging of such loans. The Fund will only engage in securities lending transactions with broker-dealers registered with the SEC, or with federally supervised banks or savings and loan associations.
When-Issued or Delayed Delivery Trading. The Fund may purchase U.S. Treasury obligations on a when-issued basis, and it may purchase or sell such securities for delayed delivery. These transactions occur when securities are purchased or sold by the Fund with payment and delivery to take place in the future in order to secure what is considered an advantageous yield and price to the Fund at the time of entering into the transaction. The value of the security on the delivery date may be more or less than its purchase price. The Fund will segregate cash or short-term U.S. Treasury obligations in an aggregate amount equal to the amount of its commitments in connection with such delayed delivery and when-issued purchase transactions. No delayed delivery or when-issued commitments will be made if, as a result, more than 25% of the Fund's net assets would be so committed.
Borrowing. Subject to its investment restrictions (see "Investment Restrictions"), the Fund may borrow money for temporary or emergency purposes such as to meet redemption requests which might otherwise require the untimely disposition of securities. The Fund may not borrow for the purpose of increasing income. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, the Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling Fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Fund believes that, in the event of abnormally heavy redemption requests, its borrowing provisions would help to mitigate any such effects and could make the forced sale of its portfolio securities less likely.
Reverse Repurchase Agreements. A reverse repurchase agreement involves the sale of securities held by the Fund, with an agreement that the Fund will repurchase such securities at an agreed-upon price and date. It is the current operating policy of the Fund to enter into reverse repurchase agreements (which are considered to be borrowings under the Investment Company Act of 1940 (the "1940 Act")) only for temporary or emergency purposes and not as a means to increase income, even though the Fund's investment restrictions permit the Fund to engage in reverse repurchase agreements for income enhancement. The Fund will enter into a reverse repurchase agreement only when the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. During the time a reverse repurchase agreement is outstanding, the Fund will maintain a segregated custodial account containing U.S. Treasury obligations having a value equal to the repurchase price under such reverse repurchase agreement.
Illiquid Securities. The Fund will limit its investment in illiquid securities to no more than 15% of its net assets, including repurchase agreements with remaining maturities in excess of seven days.
Investment in Other Investment Companies. The Fund may invest in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and if applicable, exemptive orders granted by the SEC. The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds (defined below): (i) the Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) the Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) the Fund may not invest more than 10% of its total assets in securities issued by other investment companies other than Affiliated Money Market Funds. With respect to the Fund's purchase of shares of another investment company, including Affiliated Money Market Funds, the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Fund has obtained an exemptive order from the SEC allowing it to invest uninvested cash balances and cash collateral received in connection with securities lending in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that, with respect to uninvested cash balances, investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
Temporary Defensive Investments. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the Fund may temporarily hold all or a portion of its assets in cash and money market instruments. The Fund may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
Repurchase Agreements. The Fund's investment policies permit the Fund to invest in repurchase agreements with banks and broker-dealers pertaining to U.S. Treasury obligations. However, in order to maximize the Fund's dividends which are exempt from state taxation, as a matter of operating policy, the Fund does not currently invest in repurchase agreements. A repurchase agreement involves the purchase by the Fund of an investment contract from a financial institution, such as a bank or broker-dealer, which contract is secured by U.S. Treasury obligations of the type described above whose value is equal to or greater than the value of the repurchase agreement, including the agreed-upon interest. The agreement provides that the seller will repurchase the underlying securities at an agreed-upon time and price. The total amount received on repurchase will exceed the price paid by the Fund, reflecting the agreed-upon rate of interest for the period from the date of the repurchase agreement to the settlement date. This rate of return is not related to the interest rate on the underlying securities. The difference between the total amount received upon the repurchase of the securities and the price paid by the Fund upon their acquisition is accrued daily as interest. Investments in repurchase agreements may involve risks not associated with investments in the underlying securities. If the seller defaulted on its repurchase obligation, the Fund would incur a loss to the extent that the proceeds from a sale of the underlying securities were less than the repurchase price under the agreement. The Fund will limit repurchase agreements to transactions with sellers believed by AIM to present minimal credit risk. Securities subject to repurchase agreements will be held by the Fund's custodian or in the custodian's account with the Federal Reserve Treasury Book-Entry System. Although the securities subject to repurchase agreements might bear maturities in excess of one year, the Fund will not enter into a repurchase agreement with an agreed-upon repurchase date in excess of seven calendar days from the date of acquisition by the Fund, unless the Fund has the right to require the selling institution to repurchase the underlying securities within seven days of the date of acquisition.
The investment program described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of beneficial interest of the Fund.
INVESTMENT RESTRICTIONS
Fundamental Restrictions. The Fund is subject to the following investment restrictions, which may be changed only by a vote of a majority of the Fund's outstanding shares. Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Any investment restriction that involves a
maximum or minimum percentage of securities or assets shall not be considered to be violated unless an excess over or a deficiency under the percentage occurs immediately after, and is caused by, an acquisition or disposition of securities or utilization of assets by the Fund.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act of 1933.
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) tax-exempt obligations issued by governments or political subdivisions of governments, or (iii) for AIM Money Market Fund, bank instruments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests.
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide the Fund with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though the Fund has this flexibility, the Board of Trustees has
adopted non-fundamental restrictions for the Fund relating to certain of these restrictions which the adviser must follow in managing the Fund. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
Non-Fundamental Restrictions. The following non-fundamental investment restrictions apply to the Fund. They may be changed without approval of the Fund's voting securities.
(1) In complying with the fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total assets
(and for AIM Money Market Fund with respect to 100% of its total assets),
purchase securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Fund's total
assets would be invested in the securities of that issuer, except as
permitted by Rule 2a-7 under the 1940 Act, or (ii) the Fund would hold more
than 10% of the outstanding voting securities of that issuer. The Fund may
(i) purchase securities of other investment companies as permitted by
Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities
of other money market funds and lend money to other investment companies
and their series portfolios that have AIM or an affiliate of AIM as an
investment advisor (an "AIM Advised Fund"), subject to the terms and
conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to another AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
For purposes of Limited Maturity's fundamental restriction regarding industry concentration, the United States Government shall not be considered an industry.
The Trust has obtained an opinion of Dechert Price & Rhoads, special counsel to the Trust, that shares of the Fund are eligible for investment by a federal credit union. In order to ensure that shares of the Fund meet the requirements for eligibility for investment by federal credit unions, the Fund has adopted the following policies:
(a) The Fund will enter into repurchase agreements only with:
(a) banks insured by the Federal Deposit Insurance Corporation
("FDIC"); (b) savings and loan associations insured by the FDIC;
or (c) registered broker-dealers. The Fund will only enter into
repurchase transactions pursuant to a master repurchase agreement
in writing with the Fund's counterparty. Under the terms of a
written agreement with its custodian, the Fund receives on a
daily basis written confirmation of each purchase of a security
subject to a repurchase agreement and a receipt from the Fund's
custodian evidencing each transaction. In addition, securities
subject to a repurchase agreement may be recorded in
the Federal Reserve Book-Entry System on behalf of the Fund by its custodian. The Fund purchases securities subject to a repurchase agreement only when the purchase price of the security acquired is equal to or less than its market price at the time of the purchase.
(b) The Fund will only enter into reverse repurchase agreements and purchase additional securities with the proceeds when such proceeds are used to purchase other securities that either mature on a date simultaneous with or prior to the expiration date of the reverse repurchase agreement, or are subject to an agreement to resell such securities within that same time period.
(c) The Fund will only enter into securities lending transactions that comply with the same counterparty, safekeeping, maturity and borrowing restrictions that the Fund observes when participating in repurchase and reverse repurchase transactions.
(d) The Fund will enter into when-issued and delayed delivery transactions only when the time period between trade date and settlement date does not exceed 120 days, and only when settlement is on a cash basis. When the delivery of securities purchased in such manner is to occur within 30 days of the trade date, the Fund will purchase the securities only at their market price as of the trade date.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
Yields for the Institutional Shares used in advertising are computed as follows: (a) divide the interest and dividend income of the Institutional Class for a given 30-day or one-month period, net of expenses, by the average number of shares entitled to receive dividends during the period; (b) divide the figure arrived at in step (a) by the net asset value of the Institutional Class at the end of the period; and (c) annualize the result (assuming compounding of income) in order to arrive at an annual percentage rate. For purposes of yield quotation, income is calculated in accordance with standardized methods applicable to all stock and bond mutual funds. In general, interest income is reduced with respect to bonds trading at a premium over their par value by subtracting a portion of the premium from income on a daily basis, and is increased with respect to bonds trading at a discount by adding a portion of the discount to daily income. Capital gains and losses are excluded from the calculation.
Income calculated for the purposes of calculating the yield of the Institutional Class differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for the Institutional Class may differ from the rate of distributions the Institutional Class paid over the same period or the rate of income reported in the financial statements of the Institutional Class.
The Fund may also quote the distribution rate for the Institutional Class, which expresses the historical amount of income dividends of the Institutional Class to its shareholders as a percentage of the net asset value per share of the Institutional Class. The distribution rate for the Institutional Class for the thirty day period ended July 31, 2000 was 5.91%. This distribution rate was calculated by dividing dividends declared over the thirty days ended July 31, 2000 by the net asset value per share of the Institutional Class at the end of that period and annualizing the result.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the Institutional Class' return, including the effect of reinvesting dividends and capital gain distributions, and any change in the net asset value per share of the Institutional Class over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical investment in the Institutional Shares over a stated period,
and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that the performance of the Institutional Shares is not constant over time, but changes from year to year, and that average annual returns do not represent the actual year-to-year performance of the Institutional Class.
In addition to average annual returns, the Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns, yields, and other performance information may be quoted numerically or in a table, graph, or similar illustration.
HISTORICAL PORTFOLIO RESULTS
The following chart shows the total returns for the Institutional Class for the twelve months and the five and ten year periods ended July 31, 2000.
AVERAGE
ANNUAL CUMULATIVE
RETURN RETURN
------- ----------
Twelve months ended 07/31/00........................... 4.78% 4.78%
Five years ended 07/31/00 ............................. 5.41% 30.13%
Ten years ended 07/31/00 .............................. 5.96% 78.47%
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The 30 day yield of the Institutional Class as of July 31, 2000 was 6.22%.
A hypothetical investment of $1,000 in the Institutional Class made at the beginning of the twelve-month period ended July 31, 2000 would have been worth $1,047.76. During the five-year period ended July 31, 2000, a hypothetical $1,000 investment in the Institutional Class at the beginning of such period would have been worth $1,301.25. A hypothetical investment of $1,000 made at the beginning of the ten-year period ended July 31, 2000, would have been worth $1,784.70 assuming in each case that all distributions were reinvested.
The performance of the Institutional Class may be compared in advertising to the performance of other mutual funds in general or of particular types of mutual funds, especially those with similar objectives. Such performance data may be prepared by Lipper Inc. and other independent services which monitor the performance of mutual funds. The Institutional Class may also advertise mutual fund performance rankings which have been assigned to the Institutional Class by such monitoring services.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of the Fund. Voluntary fee waivers or reductions or commitments to assume expenses may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions or commitments to assume expenses, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions or reimbursement of expenses set forth in the Fee Table in the Prospectus may not be terminated or amended to the Fund's detriment during the period stated in the agreement between AIM and the Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing the Fund's yield and total return.
The performance of the Fund will vary from time to time and past results are not necessarily indicative of future results. The Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market
conditions. A shareholder's investment in the Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in the Fund.
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Fund, selects broker-dealers, effects the Fund's investment portfolio transactions, allocates brokerage fees in such transactions, and where applicable, negotiates commissions and spreads on transactions. Since most purchases and sales of portfolio securities by the Fund are usually principal transactions, the Fund incur little or no brokerage commissions. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best price on the security and a low commission rate. While AIM seeks reasonably competitive commission rates, the Fund may not pay the lowest commission or spread available. See "Section 28(e) Standards" below.
In the event the Fund purchases securities traded in the over-the-counter market, the Fund deals directly with dealers who make markets in the securities involved, except when better prices are available elsewhere. Portfolio transactions placed through dealers who are primary market makers are effected at net prices without commissions, but which include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Fund) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Fund and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular, including sales of the Fund and of the other AIM Funds. In connection with (3) above, the Fund's trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
The Fund may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, the Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in affiliated money funds) provided the Fund follows procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Fund. Occasionally, identical securities will be appropriate for investment by the Fund and by another AIM Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided . . . viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to it, the Fund may pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communication of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information, the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Fund is not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Fund is not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
Limited Maturity paid no brokerage commissions to brokers affiliated with that Fund during the past three fiscal years of the Fund.
PORTFOLIO TURNOVER
Changes in the portfolio holdings of the Fund are made without regard to whether a sale would result in a profit or loss. High portfolio turnover involves correspondingly greater transaction costs which are borne directly by the Fund, and may increase capital gains which are taxable as ordinary income when distributed to shareholders.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
The dividends accrued and paid for each class of the Fund's shares will consist of: (a) interest accrued and discounts earned (including both original issue and market discount) for the Fund, allocated based upon each class' pro rata share of the net assets of the Fund, less (b) Trust expenses accrued for the applicable dividend period attributable to the Fund, such as custodian fees, trustee's fees, and accounting and legal expenses, allocated based upon each class' pro rata share of the net assets of the Fund, less (c) expenses directly attributable to each class which accrued for the applicable dividend period, such as shareholder servicing plan expenses, if any, or transfer agent fees unique to each class.
Dividends are declared to shareholders of record immediately prior to the determination of the net asset value of the Fund. Accordingly, dividends begin accruing on the first business day of the Fund following the day on which a purchase order for shares of the Fund is effective, and accrue through the day on which a redemption order is effective. Thus, if a purchase order is effective on a Friday, dividends will begin accruing on the following Monday (unless such day is not a business day of the Fund).
All dividends declared during a month will be paid by check or wire transfer. (Wire transfers may only be made in amounts of $1,000 or more.) In such case, payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends and distributions automatically reinvested in additional full and fractional shares of the Fund at the net asset value of such shares. Such election, or any revocation thereof, must be made in writing by the institution to AFS at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 and will become effective with dividends paid after its receipt by AFS. If a shareholder redeems all the shares in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Fund and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, the Fund is not subject to federal income tax on the portion of its net investment income (i.e., its taxable interest, dividends and other taxable ordinary income, net of expenses) and realized capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (i.e., net investment income and the excess of net short-term capital gain over net long-term capital loss) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by the Fund made during the taxable year or, under specified circumstances, within 12 months after the close of the taxable year, will be considered distributions of income and gains of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, the Fund must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are ancillary to the Fund's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement").
In general, gain or loss recognized by the Fund on the disposition of an asset will be a capital gain or loss. However, gain recognized on the disposition of a debt obligation purchased by the Fund at a market discount (generally, at a price less than its principal amount) will be treated as ordinary income to the extent of the portion of the market discount which accrued during the period of time the Fund held the debt obligation. In addition, if the Fund purchases a debt obligation that was originally issued at a discount, the Fund is generally required to include in gross income each year the portion of the original issue discount which accrues during such year.
The Fund may enter into notional principal contracts, including interest rate swaps, caps, floors and collars. Under Treasury regulations, in general, the net income or deduction from a notional principal contract for a taxable year is included in or deducted from gross income for that taxable year. The net income or deduction from a notional principal contract for a taxable year equals the total of all of the periodic payments (generally, payments that are payable or receivable at fixed periodic intervals of one year or less during the entire term of the contract) that are recognized from that contract for the taxable year and all of the non-periodic payments (including premiums for caps, floors and collars), even if paid in periodic installments, that are recognized from that contract for the taxable year. A periodic payment is recognized ratably over the period to which it relates. In general, a non-periodic payment must be recognized over the term of the notional principal contract in a manner that reflects the economic substance of the contract. A non-periodic payment that relates to an interest rate swap, cap, floor or collar shall be recognized over the term of the contract by allocating it in accordance with the values of a series of cash-settled forward or option contracts that reflect the specified index and notional principal amount upon which the notional principal contract is based (or, in the case of a swap or of a cap or floor that hedges a debt instrument, under alternative methods contained in the regulations and, in the case of other notional principal contracts, under alternative methods that the IRS may provide in a revenue procedure).
Treasury regulations permit a regulated investment company, in determining its investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) for any taxable year, to elect (unless it has made a taxable year election for excise tax purposes as discussed below) to treat all or part of any net capital loss, any net long-term capital loss or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund must satisfy an asset diversification test in order to qualify as a regulated investment company. Under this test, at the close of each quarter of the Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income gain or loss for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
Section 988 foreign currency gains and losses incurred after October 31 of any
year (or after the end of its taxable year if it has made a taxable year
election) in determining the amount of ordinary taxable income for the current
calendar year (and, instead, include such gains and losses in determining
ordinary taxable income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that the Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment company taxable income and net short-term capital gain for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they are not expected to qualify for the 70% dividends received deduction for corporations.
The Fund may either retain or distribute to shareholders its net capital gain (net long-term capital gain over net short-term capital loss) for each taxable year. The Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain (taxable at a maximum rate of 20% for noncorporate shareholders), regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Conversely, if the Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carryovers) at the 35% corporate tax rate. If the Fund elects to retain net capital gain, it is expected that the Fund also will elect to have shareholders treated as if each received a distribution of its pro rata share of such gain, with the result that each shareholder will be required to report its pro rata share of such gain on its tax return as long-term capital gain, will receive a refundable tax credit for its pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for its shares by an amount equal to the deemed distribution less the tax credit.
Distributions by the Fund that do not constitute ordinary income dividends or capital gain dividends will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below.
Distributions by the Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or any other fund in the AIM Funds). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. In addition, if the net asset value at the time a shareholder purchases shares of the Fund reflects undistributed net investment income or recognized capital gain net income, or unrealized appreciation in the value of the assets of the Fund, distributions of such amounts will be
taxable to the shareholder in the manner described above, although such distributions economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made in certain cases) during the year in accordance with the guidance that has been provided by the Internal Revenue Service.
The Fund is required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Fund that it is not subject to backup withholding or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF FUND SHARES
A shareholder will recognize gain or loss on the sale or redemption of shares of the Fund in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of the Fund will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. Except to the extent otherwise provided in future Treasury regulations, any long-term capital gain recognized by a noncorporate shareholder will be subject to tax at a maximum rate of 20%. However, any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. For this purpose, the special holding period rules of Code Section 246(c)(3) and (4) generally will apply in determining the holding period of shares. Long-term capital gains of non-corporate taxpayers are currently taxed at a maximum rate that in some cases may be 19.6% lower than the maximum rate applicable to ordinary income. Capital losses in any year are deductible only to the extent of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of the
Fund, (ii) disposes of such shares less than 91 days after they are acquired and
(iii) subsequently acquires shares of the same or another fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales load
on the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired. The wash sale
rules may also limit loss recognized.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from the Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, ordinary income dividends and return of capital distributions (other than capital gain dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale or redemption of shares of the Fund, capital gain dividends and amounts retained by the Fund that are designated as undistributed net capital gains.
If the income from the Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, the Fund may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in the Fund, including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is based on the Code and regulations issued thereunder as in effect on November 15, 2000. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. The tax treatment of foreign investors may also differ from the treatment for U.S. investors described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other state and local tax rules affecting investments in the Fund.
MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed to the Fund at P.O. Box 0843, Houston, Texas 77001-0843, or may be made by calling (800) 659-1005.
AUDIT REPORTS
The Trust furnishes holders of the Institutional Class with semi-annual reports containing information about the Trust and its operations, including a schedule of investments held by the Fund and its financial statements. The annual financial statements are audited by the Fund's independent certified public accountants. The Board of Trustees has selected KPMG LLP, 700 Louisiana, Houston, Texas 77002, as the independent auditors to audit the financial statements and review the tax returns of the Fund.
LEGAL MATTERS
Certain legal matters for the Trust have been passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103-7599.
TRANSFER AGENT AND CUSTODIAN
The Fund and AFS, a wholly owned subsidiary of AIM and registered transfer agent, have entered into the Transfer Agency and Service Agreement, pursuant to which AFS provides transfer agency, dividend distribution and disbursement, and shareholder services to the Fund. These services do not include any supervisory function over management or provide any protection against any possible
depreciation of assets. The Bank of New York acts as custodian for the Fund's portfolio securities and cash. The Bank of New York attends to the collection of principal and income, pays and collects all monies for securities bought and sold for the Fund, and performs certain other ministerial duties. The Bank of New York and AFS receive such compensation from the Trust for their services as is agreed to from time to time. The address of The Bank of New York is 90 Washington Street, 11th Floor, New York, New York 10286.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the Trust has filed with the SEC under the 1933 Act and reference is hereby made to the Registration Statement for further information with respect to the Fund and the securities offered pursuant to the Prospectus. The Registration Statement is available for inspection by the public at the SEC in Washington, DC.
FINANCIAL STATEMENTS
FS
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of AIM Investment Securities Funds:
We have audited the accompanying statement of assets and liabilities of AIM
Limited Maturity Treasury Fund (a series of AIM Investment Securities Funds)
including the schedule of investments, as of July 31, 2000, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of AIM
Limited Maturity Treasury Fund as of July 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended and the financial highlights for
each of the years in the five-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP September 1, 2000 Houston, Texas |
FS-1
SCHEDULE OF INVESTMENTS
JULY 31, 2000
PRINCIPAL
AMOUNT MARKET
MATURITY (000) VALUE
U.S. TREASURY SECURITIES-99.01%
U.S. TREASURY NOTES-99.01%
5.50% 08/31/01 $25,100 $ 24,862,554
--------------------------------------------------------------------------------------------
5.63% 09/30/01 25,100 24,875,857
--------------------------------------------------------------------------------------------
5.88% 10/31/01 25,100 24,938,356
--------------------------------------------------------------------------------------------
5.88% 11/30/01 25,100 24,931,328
--------------------------------------------------------------------------------------------
6.13% 12/31/01 25,100 25,007,632
--------------------------------------------------------------------------------------------
6.38% 01/31/02 25,100 25,092,470
--------------------------------------------------------------------------------------------
6.50% 02/28/02 25,100 25,144,427
--------------------------------------------------------------------------------------------
6.50% 03/31/02 25,100 25,147,188
--------------------------------------------------------------------------------------------
6.38% 04/30/02 25,100 25,099,247
--------------------------------------------------------------------------------------------
6.63% 05/31/02 25,100 25,214,707
--------------------------------------------------------------------------------------------
6.38% 06/30/02 25,100 25,115,562
--------------------------------------------------------------------------------------------
6.25% 07/31/02 24,100 24,085,058
--------------------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $299,787,994) 299,514,386
--------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.01% 299,514,386
--------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.99% 2,999,031
--------------------------------------------------------------------------------------------
NET ASSETS-100.00% $302,513,417
============================================================================================
|
See Notes to Financial Statements.
FS-2
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
ASSETS:
Investments, at market value (Cost $299,787,994) $299,514,386
--------------------------------------------------------------------------
Cash 1,120,488
--------------------------------------------------------------------------
Receivables for:
--------------------------------------------------------------------------
Fund shares sold 272,822
--------------------------------------------------------------------------
Interest 3,873,029
--------------------------------------------------------------------------
Investment for deferred compensation plan 40,106
--------------------------------------------------------------------------
Other assets 2,306
--------------------------------------------------------------------------
Total assets 304,823,137
--------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,752,268
--------------------------------------------------------------------------
Dividends 358,703
--------------------------------------------------------------------------
Deferred compensation plan 40,106
--------------------------------------------------------------------------
Accrued advisory fees 48,904
--------------------------------------------------------------------------
Accrued administrative services fees 5,859
--------------------------------------------------------------------------
Accrued distribution fees 54,237
--------------------------------------------------------------------------
Accrued transfer agent fees 39,501
--------------------------------------------------------------------------
Accrued operating expenses 10,142
--------------------------------------------------------------------------
Total liabilities 2,309,720
--------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $302,513,417
==========================================================================
NET ASSETS:
Class A $300,058,098
==========================================================================
Institutional Class $ 2,455,319
==========================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 30,115,896
==========================================================================
Institutional Class 246,425
==========================================================================
Class A :
Net asset value and redemption price per share $ 9.96
--------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.96 divided by 99.00%) $ 10.06
==========================================================================
Institutional Class:
Net asset value, redemption price and offering price per
share $ 9.96
==========================================================================
|
See Notes to Financial Statements.
FS-3
STATEMENT OF OPERATIONS
For the year ended July 31, 2000
INVESTMENT INCOME:
Interest $19,783,947
-------------------------------------------------------------------------
EXPENSES:
Advisory fees 705,741
-------------------------------------------------------------------------
Administrative services fee 80,566
-------------------------------------------------------------------------
Custodian fees 11,079
-------------------------------------------------------------------------
Distribution fees -- Class A 517,076
-------------------------------------------------------------------------
Transfer agent fees -- Class A 444,091
-------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,749
-------------------------------------------------------------------------
Trustees' fees 9,224
-------------------------------------------------------------------------
Other 104,612
-------------------------------------------------------------------------
Total expenses 1,875,138
-------------------------------------------------------------------------
Less: Expenses paid indirectly (3,920)
-------------------------------------------------------------------------
Net expenses 1,871,218
-------------------------------------------------------------------------
Net investment income 17,912,729
-------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (4,797,259)
-------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 2,049,768
-------------------------------------------------------------------------
Net gain (loss) on investment securities (2,747,491)
-------------------------------------------------------------------------
Net increase in net assets resulting from operations $15,165,238
-------------------------------------------------------------------------
|
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income $ 17,912,729 $ 19,679,426
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (4,797,259) 1,359,439
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 2,049,768 (3,023,894)
------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,165,238 18,014,971
------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (17,525,848) (18,245,067)
------------------------------------------------------------------------------------------
Institutional Class (416,635) (1,523,201)
------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (87,282,579) 46,655,684
------------------------------------------------------------------------------------------
Institutional Class (14,575,249) (33,718,444)
------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (104,635,073) 11,183,943
------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 407,148,490 395,964,547
------------------------------------------------------------------------------------------
End of year $302,513,417 $407,148,490
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $311,671,908 $413,559,490
------------------------------------------------------------------------------------------
Undistributed net investment income 29,754 29,754
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (8,914,637) (4,117,378)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (273,608) (2,323,376)
------------------------------------------------------------------------------------------
$302,513,417 $407,148,490
==========================================================================================
|
See Notes to Financial Statements.
FS-4
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Limited Maturity Treasury Fund (the "Fund") is a series portfolio of AIM
Investment Securities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management company consisting of seven separate
series portfolios each having an unlimited number of shares of beneficial
interests. The Fund currently offers two different classes of shares: Class A
shares and the Institutional Class. Matters affecting each portfolio or class
are voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the preparation of its financial
statements.
A. Security Valuations -- Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued the mean between the last bid and asked prices. Securities for which
market quotations are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of discounts on investments, is
recorded on the accrual basis from settlement date. It is the policy of the
Fund not to amortize bond premiums for financial reporting purposes.
On July 31, 2000 undistributed net investment income was increased by
$29,754 and additional paid-in capital was decreased by $29,754 as a result
of reclassifications of nondeductible organizational expenses. Net assets of
the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- It is the policy of the Fund to declare dividends from net
investment income daily and pay monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for Federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $4,224,162 as of July 31, 2000 which may be carried forward
to
FS-5
offset future taxable gains, if any, which expires in varying increments, if
not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated between the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.20% on
the first $500 million of the Fund's average daily net assets, plus 0.175% on
the Fund's average daily net assets in excess of $500 million.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2000, AIM was paid
$80,566 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended July 31, 2000, AFS was paid
$151,859 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Trust has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares. The Fund, pursuant to the Plans, pays AIM Distributors
compensation at the annual rate of 0.15% of the Fund's average daily net assets
of Class A shares. The Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs and provides periodic payments
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plan would constitute an asset-based sales charge. The Plan also imposes a cap
on the total sales charges, including asset-based sales charges that may be paid
by the Fund. For the year ended July 31, 2000, the Fund paid AIM Distributors
$517,076 as compensation under the Plan.
AIM Distributors received commissions of $57,087 from sales of the Class A
shares of the Fund during the year ended July 31, 2000. Such commissions are not
an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS, FMC and AIM Distributors.
During the year ended July 31, 2000, the Fund paid legal fees of $3,294 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended July 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,920 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $3,920.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an "interested person" of AIM. The Trust invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan.
FS-6
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the year ended July 31, 2000,
the Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.09% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 2000 was
$431,234,972 and $537,432,998, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of July 31, 2000 was as follows:
Aggregate unrealized appreciation of investment securities $ 395,575 ------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (874,560) ------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investment securities $(478,985) ======================================================================== Cost of investments for tax purposes is $299,993,371. |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 2000 and 1999 were as follows:
2000 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Sold:
Class A 20,491,334 $ 204,290,029 66,719,952 $ 675,218,081
----------------------------------------------------------------------------------------------
Institutional Class 191,454 1,910,678 489,034 4,947,727
----------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 1,468,058 14,627,764 1,524,802 15,430,990
----------------------------------------------------------------------------------------------
Institutional Class 891 11,992 1,998 20,239
----------------------------------------------------------------------------------------------
Reacquired:
Class A (30,726,141) (306,200,372) (63,662,111) (643,993,387)
----------------------------------------------------------------------------------------------
Institutional Class (1,653,776) (16,497,919) (3,809,602) (38,686,410)
----------------------------------------------------------------------------------------------
(10,228,180) $(101,857,828) 1,264,073 $ 12,937,240
==============================================================================================
|
FS-7
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
INSTITUTIONAL CLASS
---------------------------------------------------
2000 1999 1998 1997 1996
---------- -------- -------- -------- ---------
Net asset value, beginning of period $10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
-------------------------------------------- ------ ------- ------- ------- --------
Income from investment operations:
Net investment income 0.54 0.49 0.56 0.56 0.58
-------------------------------------------- ------ ------- ------- ------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.07) (0.04) -- 0.10 (0.06)
-------------------------------------------- ------ ------- ------- ------- --------
Total from investment operations 0.47 0.45 0.56 0.66 0.52
-------------------------------------------- ------ ------- ------- ------- --------
Less distributions:
Dividends from net investment income (0.54) (0.49) (0.56) (0.56) (0.58)
-------------------------------------------- ------ ------- ------- ------- --------
Net asset value, end of period $ 9.96 $ 10.03 $ 10.07 $ 10.07 $ 9.97
============================================ ====== ======= ======= ======= ========
Total return 4.78% 4.55% 5.66% 6.79% 5.27%
============================================ ====== ======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $2,455 $17,131 $50,609 $48,866 $143,468
============================================ ====== ======= ======= ======= ========
Ratio of expenses to average net assets 0.29%(a) 0.31% 0.32% 0.31% 0.27%
============================================ ====== ======= ======= ======= ========
Ratio of net investment income to average
net assets 5.31%(a) 4.84% 5.51% 5.56% 5.72%
============================================ ====== ======= ======= ======= ========
Portfolio turnover rate 122% 184% 133% 130% 117%
============================================ ====== ======= ======= ======= ========
|
(a) Ratios are based on average net assets of $8,153,267.
FS-8
PART C
OTHER INFORMATION
Item 23. Exhibits
--------
a (1) (a) Agreement and Declaration of Trust of the Registrant was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on August 16, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(b) First Amendment to Agreement and Declaration of Trust of Registrant was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 4 on October 15, 1993,
and was filed electronically as an Exhibit to Post-Effective Amendment No. 6 on
November 17, 1995.
(c) Second Amendment to Agreement and Declaration of Trust of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 7 on November 21, 1996.
(d) Third Amendment to Agreement and Declaration of Trust of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 8 on November 21, 1997.
(e) Fourth Amendment to Agreement and Declaration of Trust of Registrant was filed
as an Exhibit to Post-Effective Amendment No. 9 on July 10, 1998.
(f) Fifth Amendment to Agreement and Declaration of Trust of Registrant was filed
as an Exhibit to Post-Effective Amendment No. 9 on July 10, 1998.
(g) Sixth Amendment to Agreement and Declaration of Trust of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998.
(2) (a) Amended and Restated Agreement and Declaration of Trust of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18, 1998 and
is hereby incorporated by reference.
(b) First Amendment, dated March 8, 2000 to the Amended and Restated Agreement and
Declaration of Trust of Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on March 10, 2000 and is hereby incorporated by
reference.
(c) Amendment No. 2 dated May 10, 2000 to the Amended and Restated Agreement and
Declaration of Trust of Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on May 25, 2000 and is hereby incorporated by reference.
b (1) (a) By-Laws of the Registrant were filed as an Exhibit to Registrant's Post-Effective
Amendment No. 3 on August 16, 1993, and were filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on November 21, 1996.
(b) Amendment to By-Laws of Registrant was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5 on November 30, 1994, and was filed
|
electronically as an Exhibit to Post-Effective Amendment No. 7 on November 21, 1996.
(c) Second Amendment to By-Laws of Registrant was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5 on November 30, 1994, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on November 21, 1996.
(2) Amended and Restated By-laws of Registrant were filed as an Exhibit to Post-Effective
Amendment No. 8 on November 21, 1997.
(3) (a) Amended and Restated Bylaws of Registrant, effective November 5, 1998, were filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18, 1998 and is
hereby incorporated by reference.
(b) First Amendment to the Amended and Restated Bylaws of Registrant, effective June 9,
1999, was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on
October 14, 1999 and is hereby incorporated by reference.
(c) Amendment No. 2 to the Amended and Restated Bylaws of Registrant, effective June 14,
2000, is filed herewith electronically.
c Instruments Defining Rights of Security Holders - None.
d (1) Investment Advisory Agreement between Registrant (on behalf of its AIM Adjustable
Rate Government Fund) and A I M Advisors, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on June 15, 1992.
(2) Master Investment Advisory Agreement, dated as of August 6, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4
on October 15, 1993.
(3) Master Investment Advisory Agreement, dated October 18, 1993, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 5 on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995.
(4) Notice of Termination dated November 18, 1994 to Master Investment Advisory Agreement, dated
October 18, 1993, between Registrant, with respect to the AIM Adjustable Rate Government
Fund, and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995.
(5) (a) Master Investment Advisory Agreement, dated February 28, 1997, between Registrant and
A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment
No. 8 on November 21, 1997.
(b) Amendment No. 1 to the Master Investment Advisory Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc., with respect to AIM High Yield Fund
II, was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on
November 18, 1998.
|
(6) Master Investment Advisory Agreement, dated June 1, 2000, between Registrant and
A I M Advisors, Inc. is filed herewith electronically.
(7) (a) Foreign Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on
October 14, 1999 and is hereby incorporated by reference.
(b) Amendment No. 1, dated September 28, 1998 to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998,
between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on October 14, 1999 and is hereby incorporated by
reference.
(c) Amendment No. 2, dated as of December 14, 1998 to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby
incorporated by reference.
(d) Amendment No. 3, dated as of December 22, 1998 to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby
incorporated by reference.
(e) Amendment No. 4, dated as of January 26, 1999 to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby
incorporated by reference.
(f) Amendment No. 5, dated as of March 1, 1999 to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby
incorporated by reference.
(g) Amendment No. 6, dated as of March 18, 1999 to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby
incorporated by reference.
(h) Amendment No. 7, dated November 15, 1999 to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998,
between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on March 10, 2000 and is hereby incorporated by
reference.
e (1) Distribution Agreement between Registrant (on behalf of its AIM Adjustable Rate
Government Fund) and A I M Distributors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on June 15, 1992.
(2) Master Distribution Agreement, dated August 6, 1993, between Registrant (on behalf of its
AIM Adjustable Rate Government Fund and Limited Maturity Treasury Portfolio - AIM
Limited Maturity Treasury Shares) and A I M Distributors,
|
Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on October
15, 1993.
(3) Distribution Agreement, dated August 6, 1993, between Registrant (on behalf of its Limited
Maturity Treasury Portfolio - Institutional Shares) and Fund Management Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on October 15, 1993.
(4) (a) Master Distribution Agreement, dated October 18, 1993, between Registrant (on behalf of
its Limited Maturity Treasury Portfolio - AIM Limited Maturity Treasury Shares) and
A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 5 on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995.
(b) Amendment No. 1 dated November 18, 1994, to Master Distribution Agreement, dated
October 18, 1993, between Registrant (on behalf of its Limited Maturity Treasury
Portfolio - AIM Limited Maturity Treasury Shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(5) Master Distribution Agreement dated February 28, 1997, between Registrant and A I M
Distributors, Inc. was filed electronically as an Exhibit to Post-Effective
Amendment No. 8 on November 21, 1997.
(6) Amended and Restated Master Distribution Agreement between Registrant (on behalf of
Registrant's Class A and Class C shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998.
(7) Second Amended and Restated Master Distribution Agreement, dated June 1, 2000, between
Registrant (on behalf of Class A Shares, Class C Shares and AIM Cash Reserve Shares) and
A I M Distributors, Inc. is filed herewith electronically.
(8) Form of Third Amended and Restated Master Distribution Agreement, between AIM Investment
Securities Funds (Class A Shares, Class C Shares, AIM Cash Reserve Shares and
Institutional Class Shares) and A I M Distributors, Inc. is filed herewith
electronically.
(9) Master Distribution Agreement between Registrant (on behalf of Registrant's Class B
shares) and AIM Distributors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on November 18, 1998 and is hereby incorporated by
reference.
(10) Distribution Agreement, dated October 18, 1993, between Registrant (on behalf of its Limited
Maturity Treasury Portfolio - Institutional Shares) and Fund Management Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994,
and was filed electronically as an Exhibit to Post-Effective Amendment No. 7 on November
21, 1996.
(11) Master Distribution Agreement, dated February 28, 1997, between Registrant (on behalf of the
Institutional Shares of AIM Limited Maturity Treasury Fund) and Fund Management Company
was filed electronically as an Exhibit to
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Post-Effective Amendment No. 8 on November 21, 1997 and is hereby incorporated by reference.
(12) Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers
was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on November
18, 1998 and is hereby incorporated by reference.
(13) Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks was
filed electronically as an Exhibit to Post-Effective Amendment No. 10 on November
18, 1998 and is hereby incorporated by reference.
(14) Form of Service Agreement for Certain Retirement Plans between Fund Management
Company and Plan Providers was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995, and is hereby incorporated by reference.
f (1) Retirement Plan for Registrant's Non-Affiliated Trustees was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(2) Retirement Plan for Registrant's Non-Affiliated Trustees effective as of March 8, 1994, as
restated September 18, 1995, was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996.
(3) AIM Funds Retirement Plan for Eligible Directors/Trustees restated March 7, 2000,
is filed herewith electronically.
(4) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Trustees
was filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November
30, 1994.
(5) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Trustees as approved
December 5, 1995, was filed electronically as an Exhibit to Post-Effective Amendment No.
7 on November 21, 1996 and is hereby incorporated by reference.
(6) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Trustees as
approved March 12, 1997, was filed as an Exhibit to Post-Effective Amendment No. 9
on July 10, 1998 and is hereby incorporated by reference.
(7) Form of AIM Funds Director Deferred Compensation Agreement, as amended March 7,
2000, is filed herewith electronically.
g (1) Custody Agreement between Registrant and State Street Bank and Trust Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on June 15, 1992.
(2) (a) Second Amended and Restated Custody Agreement between Short-Term Investments Co. (on behalf
of its Limited Maturity Treasury Portfolio) and The Bank of New York was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30, 1994, and was
filed electronically as an Exhibit to Post-Effective Amendment No.7 on November 21, 1996
and is hereby incorporated by reference.
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(b) Amendment to Second Amended and Restated Custody Agreement between Short-Term
Investments Co. (on behalf of its Limited Maturity Treasury Portfolio) and The Bank
of New York was filed as an Exhibit to Registrant's Post-Effective Amendment No. 5
on November 30, 1994, and was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996 and is hereby incorporated by reference.
(3) Assignment and Acceptance of Assignment of Custody Agreement between Registrant (on
behalf of its Limited Maturity Treasury Portfolio) and Short-Term Investments Co.
(on behalf of its Limited Maturity Treasury Portfolio) was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 7 on November 21, 1996
and is hereby incorporated by reference.
(4) Letter Agreement, dated June 1, 2000, between Registrant and The Bank of New York,
is filed herewith electronically.
(5) Letter Agreement, dated August 30, 2000, between Registrant and The Bank of New
York, is filed herewith electronically.
(6) Custodian Contract, dated September 28, 1998, between Registrant (on behalf of its
High Yield Fund II portfolio) and State Street Bank and Trust Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998.
(7) (a) Master Custodian Contract, dated May 1, 2000, between Registrant (on behalf of
High Yield Fund II portfolio) and State Street Bank and Trust Company is filed
herewith electronically.
(b) Amendment to Custodian Contract, dated May 1, 2000, between Registrant (on behalf of
High Yield Fund II portfolio) and State Street Bank and Trust Company is filed herewith
electronically.
(8) (a) Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas
Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund
Services, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on November 21, 1996 and is hereby incorporated by reference.
(9) (b) Amendment No. 1, dated October 2, 1998, to the Subcustodian Agreement with Texas
Commerce Bank, dated September 9, 1994, among Texas Commerce Bank National Association,
State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 13 on March 10, 2000 and is
hereby incorporated by reference.
h (1) Administrative Services Agreement between Registrant and A I M Advisors, Inc. was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on June 15, 1992.
(2) Master Administrative Services Agreement, dated as of August 6, 1993, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on October 15, 1993.
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(3) (a) Master Administrative Services Agreement, dated October 18, 1993, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5 on November 30, 1994, and was filed electronically as
an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(b) Amendment No. 1 dated November 18, 1994 to Master Administrative Services
Agreement, dated October 18, 1993, between Registrant and A I M Advisors, Inc. was
filed electronically as an Exhibit to Post-Effective Amendment No. 6 on November
17, 1995.
(4) (a) Master Administrative Services Agreement, dated February 28, 1997, between
Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997 and is hereby incorporated by
reference.
(b) Amendment No. 1 to the Master Administrative Services Agreement, dated February
28, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 10 on November 18, 1998 and is hereby
incorporated by reference.
(5) (a) Administrative Services Agreement, dated as of October 18, 1993, between A I M
Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on
November 30, 1994.
(b) Amendment No. 1 dated May 11, 1994, to Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(c) Amendment No. 2 dated July 1, 1994, to Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(d) Amendment No. 3 dated September 16, 1994, to Administrative Services Agreement,
dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on November 30, 1994.
(e) Amendment No. 4 dated November 1, 1994, to Administrative Services Agreement,
dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(6) Master Administrative Services Agreement, dated June 1, 2000, between Registrant
and A I M Advisors, Inc. is filed herewith electronically.
(7) (a) Transfer Agency Agreement between Registrant and The Shareholder Services
Group, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2
on November 27, 1992.
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(b) Amendment to Transfer Agency Agreement between Registrant and The Shareholder
Services Group, Inc. was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 2 on November 27, 1992.
(8) (a) Remote Access and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group (formerly The Shareholder
Services Group, Inc.) was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995 and is hereby incorporated by reference.
(b) Amendment No. 1 Remote Access and Related Services Agreement, dated October 4,
1995, between Registrant and First Data Investor Services Group (formerly The
Shareholder Services Group, Inc). was filed electronically as an Exhibit to
Post-Effective Amendment No. 6 on November 17, 1995 and is hereby incorporated by
reference.
(c) Addendum No. 2 to Remote Access and Related Services Agreement, dated October
12, 1995, between Registrant and First Data Investor Services Group (formerly The
Shareholder Services Group, Inc.) was filed electronically as an Exhibit to
Post-Effective Amendment No. 6 on November 17, 1995 and is hereby incorporated by
reference.
(d) Amendment No. 3 to Remote Access and Related Services Agreement, dated February
1, 1997 between Registrant and First Data Investor Services Group was filed
electronically as an Exhibit to Post-Effective Amendment No. 8 on November 21, 1997
and is hereby incorporated by reference.
(e) Exhibit 1, effective as of August 4, 1997, to the Remote Access and Related Services
Agreement, dated December 23, 1994, between Registrant and First Data Investor Services
Group, Inc. was filed as an Exhibit to Post-Effective Amendment No. 9 on July 10, 1998
and is hereby incorporated by reference.
(f) Amendment No. 4 to Remote Access and Related Services Agreement, dated June 30,
1998 between Registrant and First Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998 and is hereby incorporated by reference.
(g) Amendment No. 5 to Remote Access and Related Services Agreement, dated July 1,
1998 between Registrant and First Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998 and is hereby incorporated by reference.
(h) Amendment No. 6 to Remote Access and Related Services Agreement, dated
August 30, 1999 between Registrant and First Data Investor Services Group,
Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13
on March 10, 2000 and is hereby incorporated by reference.
(i) Amendment No. 7 to Remote Access and Related Services Agreement, dated February
29, 2000, between Registrant and PFPC (formerly known as First Data Investor
Services Group, Inc.) is filed herewith electronically.
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(j) Amendment No. 8 to the Remote Access and Related Services Agreement, dated June
26, 2000, between Registrant and PFPC, is filed herewith electronically.
(k) Amendment No. 9 - Restated and Amended Amendment No. 6 to the Remote Access and
Related Services Agreement, dated June 26, 2000, between Registrant and PFPC is
filed herewith electronically.
(l) Amendment No. 10 to the Remote Access and Related Services Agreement, dated
July 28, 2000, between Registrant and PFPC is filed herewith electronically.
(9) Preferred Registration Technology Escrow Agreement, dated September 10, 1997,
between Registrant and First Data Investor Services Group, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 9 on July 10, 1998 and is hereby
incorporated by reference.
(10) Assignment and Acceptance of Assignment of Transfer Agency Agreement among
Registrant (on behalf of its Limited Maturity Treasury Portfolio - Institutional
Shares), Short-Term Investments Co. and State Street Bank and Trust Company was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on November 30,
1994.
(11) Transfer Agency and Service Agreement, dated November 1, 1994, between Registrant (on behalf
of its Limited Maturity Treasury Portfolio - AIM Limited Maturity Treasury Shares) and
A I M Fund Services, Inc. was filed electronically as an Exhibit to Post-Effective
Amendment No. 6 on November 17, 1995.
(12) (a) Transfer Agency and Service Agreement, dated July 1, 1995, between Registrant (on behalf
of its Limited Maturity Treasury Portfolio - Institutional Shares) and A I M
Institutional Fund Services, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 6 on November 17, 1995.
(b) Amendment No. 1 to Transfer Agency and Service Agreement, dated July 1, 1996,
between Registrant and A I M Institutional Fund Services, Inc. was filed electronically
as an Exhibit to Post-Effective Amendment No. 8 on November 21, 1997.
(c) Amendment No. 2 to Transfer Agency and Service Agreement, dated July 1, 1997,
between Registrant and A I M Institutional Fund Services, Inc. was filed electronically
as an Exhibit to Post Effective Amendment No. 8 on November 21, 1997.
(13) (a) Amended and Restated Transfer Agency and Service Agreement, dated December 29,
1997, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 9 on July 10, 1998 and is hereby incorporated by
reference.
(b) Amendment No. 1 to the Amended and Restated Transfer Agency and Service Agreement,
dated January 1, 1999, between Registrant and A I M Fund Services, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No. 11 on October 14, 1999 and
is hereby incorporated by reference.
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(c) Amendment No. 2 to the Amended and Restated Transfer Agency and Service
Agreement, dated July 1, 1999, between Registrant and A I M Fund Services, Inc. was
filed electronically as an Exhibit to Post-Effective Amendment No. 11 on October
14, 1999 and is hereby incorporated by reference.
(d) Amendment No. 3 to the Amended and Restated Transfer Agency and Service
Agreement, dated July 1, 2000, between Registrant and A I M Fund Services, Inc. is
filed herewith electronically.
(13) Memorandum of Agreement, dated November 29, 1999, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on
March 10, 2000.
(14) Memorandum of Agreement, dated June 1, 2000, between Registrant and A I M Advisors,
Inc. is filed herewith electronically.
(15) Agreement and Plan of Reorganization, dated as of December 7, 1999, between
Registrant and AIM Funds Group was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on March 10, 2000 and is hereby incorporated by
reference.
i (1) Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP was filed as an
Exhibit to Post-Effective Amendment No. 12 on March 10, 2000 and is hereby
incorporated by reference.
j (1) Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed herewith electronically.
(2) Consent of Dechert Price & Rhoads is filed herewith electronically.
(3) Consent of KPMG LLP is filed herewith electronically.
(4) (a) Opinion of Dechert Price & Rhoads was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5 on November 30, 1994 and was filed electronically as
an Exhibit to Post-Effective Amendment No. 7 on November 21, 1996.
(b) Opinion of Dechert Price & Rhoads was filed electronically as an Exhibit to
Post-Effective Amendment No. 8 on November 21, 1997 and is hereby incorporated by
reference.
k Financial Statements - None.
l Initial Capitalization Agreement of Registrant's AIM High Yield Fund II was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998 and is hereby incorporated by reference.
m (1) Distribution Plan for Registrant (on behalf of its Limited Maturity Treasury
Portfolio - AIM Limited Maturity Treasury Shares), was filed electronically as an
Exhibit to Post-Effective Amendment No. 6 on November 17, 1995.
(2) Amended and Restated Master Distribution Plan, dated June 30, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment No. 8 on November 21, 1997.
|
(3) Second Amended and Restated Master Distribution Plan for Registrant's Class A
shares was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on
November 18, 1998.
(4) Third Amended and Restated Master Distribution Plan for Registrant's Class A and Class C
shares was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on
November 18, 1998.
(5) Fourth Amended and Restated Master Distribution Plan, dated July 1, 2000, for
Registrant's Class A Shares, Class C Shares and AIM Cash Reserve Shares is filed
herewith electronically.
(6) (a) Master Distribution Plan for Registrant's Class B shares was filed
electronically as an Exhibit to Post-Effective Amendment No. 10 on November 18,
1998 and is hereby incorporated by reference.
(b) Amendment No. 1 to Master Distribution Plan, dated July 1, 2000, for
Registrant's Class B Shares is filed herewith electronically.
(7) Form of Shareholder Service Agreement to be used in connection with Registrant's
Master Distribution Plan was filed electronically as an Exhibit to Post-Effective
Amendment No. 11 on October 14, 1999 and is hereby incorporated by reference.
(8) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's
Master Distribution Plan was filed electronically as an Exhibit to Post-Effective
Amendment No. 11 on October 14, 1999 and is hereby incorporated by reference.
(9) Form of Agency Pricing Agreement (for the Retail Classes) to be used in connection
with Registrant's Master Distribution Plan was filed electronically as an Exhibit
to Post-Effective Amendment No. 11 on October 14, 1999 and is hereby incorporated
by reference.
(10) Form of Service Agreements for Bank Trust Departments and for Brokers for Bank Trust
Departments to be used in connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective Amendment No. 11 on October 14,
1999 and is hereby incorporated by reference.
(11) Form of Variable Group Annuity Contractholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on October 14, 1999 and is hereby incorporated by
reference.
(12) Form of Shareholder Service Agreement for Shares of the AIM Mutual Funds is filed
herewith electronically.
n (1) Multiple Class (Rule 18f-3) Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on November 21, 1996.
(2) Amended and Restated Multiple Class Plan, effective as of July 1, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment No. 8 on November 21, 1997.
|
(3) Second Amended and Restated Multiple Class Plan, effective September 1, 1997, was
filed electronically as an Exhibit to Post-Effective Amendment No. 8 on November
21, 1997.
(4) Third Amended and Restated Multiple Class Plan, effective as of August 5, 1999, was
filed electronically as an Exhibit to Post-Effective Amendment No. 11 on October 14,
1999 and is hereby incorporated by reference.
o Reserved.
p (1) The AIM Management Group Inc. Code of Ethics, adopted May 1, 1981, as last amended
August 17, 1999, relating to A I M Management Group Inc. and A I M Advisors, Inc.,
was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on
October 14, 1999.
(2) The A I M Management Group Inc. Code of Ethics adopted May 1, 1981, as last amended
February 24, 2000, relating to A I M Management Group Inc. and A I M Advisors, Inc.
was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on May
25, 2000 and is hereby incorporated by reference.
(3) Code of Ethics of Registrant, effective as of the 14th day of December, 1990, was
filed electronically as an Exhibit to Post-Effective Amendment No. 11 on October
14, 1999.
(4) AIM Funds Code of Ethics of Registrant, effective as of the 14th day of June, 2000,
is filed herewith electronically.
(5) AIM Funds Code of Ethics of Registrant, effective as of the 23rd day of September,
2000, is filed herewith electronically.
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Item 24. Persons Controlled by or Under Common Control With Registrant
Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant. For any person controlled by another person, disclose the percentage of voting securities owned by the immediately controlling person or other basis of that person's control. For each company, also provide the state or other sovereign power under the laws of which the company is organized.
None.
Item 25. Indemnification
State the general effect of any contract, arrangement or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified against any liability incurred in their official capacity, other than insurance provided by any director, officer, affiliated person or underwriter for their own protection.
Delaware law provides that subject to such standards or restrictions, if any, as are set forth in the governing instrument of a business trust, a business trust shall have the power to indemnify and hold harmless any trustee or beneficial owner or other person from and against any and all claims and demands whatsoever. The Registrant's Agreement and Declaration of Trust provides that every person who is or has been a trustee or officer of the Registrant shall be indemnified by the Registrant to the fullest extent permitted by Delaware law, the Registrant's bylaws and other applicable law. The Registrant's bylaws provide that a trustee, when acting in such capacity, shall not be liable for any act or omission or any conduct whatsoever in his capacity as trustee, provided that nothing contained in the bylaws or the
Delaware Business Trust Act shall protect any trustee against any liability to the Trust or its shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard involved in the conduct of his office.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the United States Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy and will be governed by the final adjudication of such issue.
The Registrant has obtained insurance coverage for its officers and trustees under a joint Mutual Fund and Investment Advisory Professional Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a substantial nature that each investment advisor of the Registrant, and each director, officer or partner of the advisor, is or has been, engaged within the two fiscal years for his or her own account or in the capacity of director, officer, employee, partner or trustee.
The only employment of a substantial nature of the officers and directors of A I M Advisors, Inc. (the "Advisor"), the Registrant's investment advisor, is with the Advisor and its affiliated companies. For additional information regarding the Advisor and its officers and directors, see "Management" in the Prospectus and the Statement of Additional Information for the Class A shares and "Management of the Trust" and "General Information About the Fund" in the Prospectus and the Statement of Additional Information, respectively, for the Institutional Class.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing the Registrant's securities also acts as a principal underwriter, depositor, or investment adviser.
(1) A I M Distributors, Inc., the Registrant's principal underwriter for the Class A, Class B and Class C shares, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Equity Funds (Retail Classes)
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
(2) Fund Management Company, the Registrant's principal underwriter for Institutional Class of AIM Limited Maturity Treasury Fund, also acts as a principal underwriter to the following investment companies:
AIM Equity Funds (Institutional Classes) Short-Term Investments Co.
Short-Term Investments Trust
Tax-Free Investments Co.
(b) Provide the information required by the following table for each director, officer, or partner of each principal underwriter named in the response to Item 20:
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
(1) A I M Distributors, Inc.
Charles T. Bauer Director and Chairman None
Michael J. Cemo Director and President None
Robert H. Graham Director and Senior Vice President Chairman, Trustee and
President
Gary T. Crum Director Senior Vice President
W. Gary Littlepage Director and Senior Vice President None
James L. Salners Executive Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B. J. Thompson First Vice President None
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Ofelia M. Mayo General Counsel, Vice President Assistant Secretary
and Assistant Secretary
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Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President and Treasurer None
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President
and Secretary
Kamala C. Sachidanandan Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, Assistant None
Treasurer and Controller
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Capage Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
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Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel Assistant Secretary
and Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
(2) Fund Management Company
Charles T. Bauer Director and Chairman None
J. Abbott Sprague Director and President None
Robert H. Graham Director and Senior Vice President Chairman, President and
Trustee
Carol F. Relihan Director, Vice President and Senior Vice President
General Counsel and Secretary
Mark D. Santero Senior Vice President None
William J. Wendel Senior Vice President None
Melville B. Cox Vice President and Vice President
Chief Compliance Officer
Dawn M. Hawley Vice President and Treasurer None
Lisa A. Moss Vice President, Assistant General Assistant Secretary
Counsel and Assistant Secretary
James R. Anderson Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer and
Controller
Dana R. Sutton Assistant Vice President Vice President
and Assistant Treasurer and Treasurer
Jeffrey L. Horne Assistant Vice President None
|
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
Robert W. Morris, Jr. Assistant Vice President None
Ann M. Srubar Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel and Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel and Assistant Secretary
Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
|
(c) Provide the information required by the following table for all commissions and other compensation received, directly or indirectly, from the Registrant during the last fiscal year by each principal underwriter who is not an affiliated person of the Registrant or any affiliated person of an affiliated person.
Not applicable.
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical possession
of each account, book, or other document required to be maintained by Section
31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those relating to certain transactions in portfolio securities that are maintained by the Registrant's Custodians, The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, with respect to AIM Limited Maturity Treasury Fund, AIM Money Market Fund and AIM Municipal Bond Fund, and State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, with respect to AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund and AIM Intermediate Government Fund, and Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Item 29. Management Services
Provide a summary of the substantive provisions of any management-related service contract not discussed in Part A and Part B, disclosing the parties to the contract and the total dollars paid and by whom, for the Registrant's last three fiscal years.
None.
Item 30. Undertakings
In initial registration statements filed under the Securities Act, provide an undertaking to file an amendment to the registration statement with certified financial statements showing the initial capital received before accepting subscriptions from more than 25 persons if the Registrant intends to raise its initial capital under Section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 15th day of November, 2000.
REGISTRANT: AIM INVESTMENT SECURITIES FUNDS
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Robert H. Graham, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President November 15, 2000
----------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee November 15, 2000
-----------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee November 15, 2000
-----------------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee November 15, 2000
-----------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee November 15, 2000
-----------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee November 15, 2000
-----------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee November 15, 2000
-----------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee November 15, 2000
-----------------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee November 15, 2000
-----------------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & November 15, 2000
----------------------------------- Treasurer (Principal Financial
(Dana R. Sutton) and Accounting Officer)
|
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
b(3)(c) Amendment No. 2 to the Amended and Restated Bylaws of Registrant, effective June 14, 2000
d(6) Master Investment Advisory Agreement, dated June 1, 2000, between Registrant and A I M
Advisors, Inc.
e(7) Second Amended and Restated Master Distribution Agreement, dated June 1, 2000 between Registrant
(on behalf of Class A Shares, Class C Shares and AIM Cash Reserve Shares) and A I M
Distributors, Inc.
e(8) Form of Third Amended and Restated Master Distribution Agreement, between AIM Investment Securities
Funds (Class A Shares, Class C Shares, AIM Cash Reserve and Institutional Class Shares) and
A I M Distributors, Inc.
f(3) AIM Funds Retirement Plan for Eligible Directors/Trustees restated March 7, 2000
f(7) Form of AIM Funds Director Deferred Compensation Agreement, as amended March 7, 2000
g(4) Letter Agreement, dated June 1, 2000, between Registrant and The Bank of New York
g(5) Letter Agreement, dated August 30, 2000, between Registrant and The Bank of New York
g(7)(a) Master Custodian Contract, dated May 1, 2000, between Registrant (on behalf of High Yield
Fund II portfolio) and State Street Bank and Trust Company
g(7)(b) Amendment to Custodian Contract, dated May 1, 2000, between Registrant (on behalf of High Yield
Fund II portfolio) and State Street Bank and Trust Company
h(6) Master Administrative Services Agreement, dated June 1, 2000, between Registrant and
A I M Advisors, Inc.
h(8)(i) Amendment No. 7 to Remote Access and Related Services Agreement, dated February 29, 2000,
between Registrant and PFPC (formerly known as First Data Investor Services Group, Inc.)
h(8)(j) Amendment No. 8 to the Remote Access and Related Services Agreement, dated June 26, 2000,
between Registrant and PFPC
h(8)(k) Amendment No. 9 - Restated and Amended Amendment No. 6 to the Remote Access and Related
Services Agreement, dated June 26, 2000, between Registrant and PFPC
h(8)(l) Amendment No. 10 to the Remote Access and Related Services Agreement, dated July 28,
2000, between Registrant and PFPC
h(13)(d) Amendment No. 3 to the Amended and Restated Transfer Agency and Service Agreement, dated
July 1, 2000, between Registrant and A I M Fund Services, Inc.
|
h(14) Memorandum of Agreement, dated June 1, 2000, between Registrant and A I M Advisors, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of Dechert Price & Rhoads
j(3) Consent of KPMG LLP
m(5) Fourth Amended and Restated Master Distribution Plan, dated July 1, 2000, for
Registrant's Class A Shares, Class C Shares and AIM Cash Reserve Shares
m(6)(b) Amendment No. 1 to Master Distribution Plan, dated July 1, 2000, for Registrant's Class B
Shares
m(12) Form of Shareholder Service Agreement for Shares of the AIM Mutual Funds
p(4) AIM Funds Code of Ethics of Registrant, effective as of the 14th day of June, 2000
p(5) AIM Funds Code of Ethics of Registrant, effective as of the 23rd day of September, 2000
|
EXHIBIT b(3)(c)
AMENDMENT NO. 2
TO
AMENDED AND RESTATED BYLAWS OF AIM INVESTMENT SECURITIES FUND
(A DELAWARE BUSINESS TRUST)
ADOPTED EFFECTIVE JUNE 14, 2000
This Amendment No. 2 to the Amended and Restated Bylaws of AIM Investment Securities Fund amends the Amended and Restated Bylaws initially adopted effective November 5, 1998, as amended (the "Bylaws").
1. Article IV, Section 8 is hereby restated in its entirety to read as follows:
"Section 8. Quorum. The holders of one-third of the Outstanding Shares entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by applicable law or by the Agreement. Notwithstanding the preceding sentence, with respect to any matter which by applicable law or by the Agreement requires the separate approval of one or more Classes or Portfolios, the holders of one-third of the Outstanding Shares of each such Class or Portfolio (or of such Classes or Portfolios voting together as a single class) entitled to vote on the matter shall constitute a quorum. If, however, such quorum shall not be present or represented at any meeting of the Shareholders, the vote of the holders of a majority of Shares cast shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified."
2. A new Article IV, Section 14 is hereby added to the Bylaws to read in full as follows:
"Section 14. Record Date. The Board of Trustees may set a record date for the purpose of making any proper determination with respect to Shareholders, including, but not limited to, which Shareholders are entitled to notice of a meeting or to vote at a meeting. The record date may not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days before the date on which the action requiring the determination will be taken."
3. A new Article IV, Section 15 is hereby added to the Bylaws to read in full as follows:
"Section 15. Adjournments. A meeting of Shareholders convened on the date for which it was called may be adjourned from time to time without further notice to Shareholders to a date not more than 120 days after the original record date. A meeting of Shareholders may not be adjourned for more than 120 days after the original record date for such meeting without giving the Shareholders notice of the adjournment and the new meeting date."
EXHIBIT d(6)
AIM INVESTMENT SECURITIES FUNDS
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 1 day of June, 2000, by and between AIM Investment Securities Funds, a Delaware business trust (the "Trust") with respect to its series of shares shown on the Schedule A attached hereto, as the same may be amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the "Advisor").
RECITALS
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the "l940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), as an investment advisor and engages in the business of acting as an investment advisor;
WHEREAS, the Trust's Amended and Restated Agreement and Declaration of Trust (the "Declaration of Trust") authorizes the Board of Trustees of the Trust (the "Board of Trustees") to create separate series of shares of beneficial interest of the Trust, and as of the date of this Agreement, the Board of Trustees has created seven separate series portfolios (such portfolios and any other portfolios hereafter added to the Trust being referred to collectively herein as the "Funds"); and
WHEREAS, the Trust and the Advisor desire to enter into an agreement to provide for investment advisory services to the Funds upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the Funds and shall, in such capacity, supervise all aspects of the Funds' operations, including the investment and reinvestment of cash, securities or other properties comprising the Funds' assets, subject at all times to the policies and control of the Board of Trustees. The Advisor shall give the Trust and the Funds the benefit of its best judgment, efforts and facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant developments and economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy generally or the Funds, and whether concerning the individual issuers whose securities are included in the assets of the Funds or the activities in which such issuers engage, or with respect to securities which the Advisor considers desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented in the Funds' investment portfolios and regularly report thereon to the Board of Trustees;
(d) formulate and implement continuing programs for the purchases and sales of the securities of such issuers and regularly report thereon to the Board of Trustees; and
(e) take, on behalf of the Trust and the Funds, all actions which appear to the Trust and the Funds necessary to carry into effect such purchase and sale programs and supervisory functions as aforesaid, including but not limited to the placing of orders for the purchase and sale of securities for the Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide the following services in connection with the securities lending activities of each Fund: (a) oversee participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assist the securities lending agent or principal (the "Agent") in determining which specific securities are available for loan; (c) monitor the Agent to ensure that securities loans are effected in accordance with the Advisor's instructions and with procedures adopted by the Board of Trustees; (d) prepare appropriate periodic reports for, and seek appropriate approvals from, the Board of Trustees with respect to securities lending activities; (e) respond to Agent inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection with securities lending activities of each Fund, a lending Fund shall pay the Advisor a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate any or all of its rights, duties and obligations under this Agreement to one or more sub-advisors, and may enter into agreements with sub-advisors, and may replace any such sub-advisors from time to time in its discretion, in accordance with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as such statutes, rules and regulations are amended from time to time or are interpreted from time to time by the staff of the Securities and Exchange Commission ("SEC"), and if applicable, exemptive orders or similar relief granted by the SEC and upon receipt of approval of such sub-advisors by the Board of Trustees and by shareholders (unless any such approval is not required by such statutes, rules, regulations, interpretations, orders or similar relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all purposes herein be deemed to be independent contractors and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust.
6. Control by Board of Trustees. Any investment program undertaken by the Advisor pursuant to this Agreement, as well as any other activities undertaken by the Advisor on behalf of the Funds, shall at all times be subject to any directives of the Board of Trustees.
7. Compliance with Applicable Requirements. In carrying out its obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust, as the same may be amended from time to time under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Declaration of Trust, as the same may be amended from time to time;
(d) the provisions of the by-laws of the Trust, as the same may be amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
8. Broker-Dealer Relationships. The Advisor is responsible for decisions to buy and sell securities for the Funds, broker-dealer selection, and negotiation of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a security transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and the difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Funds on a
continuing basis. Accordingly, the price to the Funds in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other
aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Trustees may from time to time determine, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Funds to pay a broker or dealer that provides brokerage and research services to the Advisor an amount of commission for effecting a fund investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's overall responsibilities with respect to a particular Fund, other Funds of the Trust, and to other clients of the Advisor as to which the Advisor exercises investment discretion. The Advisor is further authorized to allocate the orders placed by it on behalf of the Funds to such brokers and dealers who also provide research or statistical material, or other services to the Funds, to the Advisor, or to any sub-advisor. Such allocation shall be in such amounts and proportions as the Advisor shall determine and the Advisor will report on said allocations regularly to the Board of Trustees indicating the brokers to whom such allocations have been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor does not delegate trading responsibility to one or more sub-advisors, in making decisions
regarding broker-dealer relationships, the Advisor may take into consideration the recommendations of any sub-advisor appointed to provide investment research or advisory services in connection with the Funds, and may take into consideration any research services provided to such sub-advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the 1940 Act, the Securities Exchange Act of 1934, and rules and regulations thereunder, as such statutes, rules and regulations are amended from time to time or are interpreted from time to time by the staff of the SEC, any exemptive orders issued by the SEC, and any other applicable provisions of law, the Advisor may select brokers or dealers with which it or the Funds are affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is set forth in Schedule B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses incurred in the operations of the Funds and the offering of their shares shall be borne by the Funds unless specifically provided otherwise in this Agreement. These expenses borne by the Funds include but are not limited to brokerage commissions, taxes, legal, accounting, auditing, or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of the Funds in connection with membership in investment company organizations and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Trust understands that the Advisor now acts, will continue to act and may act in the future as investment manager or advisor to fiduciary and other managed accounts, and as investment manager or advisor to other investment companies, including any offshore entities, or accounts, and the Trust has no objection to the Advisor so acting, provided that whenever the Trust and one or more other investment companies or accounts managed or advised by the Advisor have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with a formula believed to be equitable to each company and account. The Trust recognizes that in some cases this procedure may adversely affect the size of the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Trust understands that the persons employed by the Advisor to assist in the performance of the Advisor's duties under this Agreement will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or restrict the right of the Advisor or any affiliate of the Advisor to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. The Trust further understands and agrees that officers or directors of the Advisor may serve as officers or trustees of the Trust, and that officers or trustees of the Trust may serve as officers or directors of the Advisor to the extent permitted by law; and that the officers and directors of the Advisor are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors or trustees of any other firm or trust, including other investment advisory companies.
13. Effective Date, Term and Approval. This Agreement shall become effective with respect to a Fund, if approved by the shareholders of such Fund, on the Effective Date for such Fund, as set forth in Appendix A attached hereto. If so approved, this Agreement shall thereafter continue in force and effect until June 30, 2001, and may be continued from year to year thereafter, provided that the continuation of the Agreement is specifically approved at least annually:
(a) (i) by the Board of Trustees or (ii) by the vote of "a majority of the outstanding voting securities" of such Fund (as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of a party to this Agreement (other than as trustees of the Trust), by votes cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated as to the Trust or as to any one or more of the Funds at any time, without the payment of any penalty, by vote of the Board of Trustees or by vote of a majority of the outstanding voting securities of the applicable Fund, or by the Advisor, on sixty (60) days' written notice to the other party. The notice provided for herein may be waived by the party entitled to receipt thereof. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for purposes of this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless it is in writing and signed by the party against which enforcement of the amendment is sought.
16. Liability of Advisor and Fund. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Advisor or any of its officers, directors or employees, the Advisor shall not be subject to liability to the Trust or to the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. Any liability of the Advisor to one Fund shall not automatically impart liability on the part of the Advisor to any other Fund. No Fund shall be liable for the obligations of any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by applicable law, the obligations of or arising out of this Agreement are not binding upon any of the shareholders of the Trust individually but are binding only upon the assets and property of the Trust and that the shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation on personal liability as shareholders of private corporations for profit.
18. Notices. Any notices under this Agreement shall be in writing, addressed and delivered, telecopied or mailed postage paid, to the other party entitled to receipt thereof at such address as such party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Trust and that of the Advisor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
19. Questions of Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act or the Advisers Act shall be resolved by reference to such term or
provision of the 1940 Act or the Advisers Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to said Acts. In addition, where the effect of a requirement of the 1940 Act or the Advisers Act reflected in any provision of the Agreement is revised by rule, regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, regulation or order. Subject to the foregoing, this Agreement shall be governed by and construed in accordance with the laws (without reference to conflicts of law provisions) of the State of Texas.
20. License Agreement. The Trust shall have the non-exclusive right to use the name "AIM" to designate any current or future series of shares only so long as A I M Advisors, Inc. serves as investment manager or advisor to the Trust with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their respective officers on the day and year first written above.
AIM Investment Securities Funds
(a Delaware business trust)
Attest:
/s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
--------------------------------- --------------------------------
Assistant Secretary Senior Vice President
(SEAL)
Attest: AIM Advisors, Inc.
(a Delaware corporation)
/s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
--------------------------------- --------------------------------
Assistant Secretary Senior Vice President
|
(SEAL)
SCHEDULE A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM High Yield Fund June 1, 2000 AIM High Yield Fund II June 1, 2000 AIM Income Fund June 1, 2000 AIM Intermediate Government Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 |
SCHEDULE B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM HIGH YIELD FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.625%
Next $300 million 0.55%
Next $500 million 0.50%
Amount over $1 billion 0.45%
|
AIM HIGH YIELD FUND II
NET ASSETS ANNUAL RATE
---------- -----------
First $500 million 0.625%
Next $500 million 0.55%
Amount over $1 billion 0.50%
|
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MUNICIPAL BOND FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.50%
Next $300 million 0.40%
Next $500 million 0.35%
Amount over $1 billion 0.30%
|
AIM LIMITED MATURITY TREASURY FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $500 million 0.20%
Amount over $500 million 0.175%
|
AIM MONEY MARKET FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion 0.55%
Over $1 billion 0.50%
|
EXHIBIT e(7)
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(CLASS A SHARES, CLASS C SHARES AND AIM CASH RESERVE SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the 1st day of July, 2000, by and between AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the "Company"), with respect to the series of shares of its common stock set forth on Appendix A to this Agreement (the "Portfolios") and the shares, other than the Class B shares, representing the Portfolios (hereinafter referred to as the "Class A, Class C and AIM Cash Reserve Shares") and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
FIRST: The Company on behalf of the Class A, Class C and AIM Cash Reserve Shares hereby appoints the Distributor as its exclusive agent for the sale of the Class A, Class C and AIM Cash Reserve Shares to the public directly and through investment dealers and financial institutions in the United States and throughout the world in accordance with the terms of the current prospectuses applicable to the Portfolios.
SECOND: The Company shall not sell any Class A, Class C and AIM Cash Reserve Shares except through the Distributor and under the terms and conditions set forth in paragraph FOURTH below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Class A, Class C and AIM Cash Reserve Shares to any other investment company or personal holding company, or to the shareholders thereof, in exchange for all or a majority of the shares or assets of any such company; and
(B) the Company may issue Class A, Class C and AIM Cash Reserve Shares at their net asset value in connection with certain classes of transactions or to certain categories of persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), provided that any such category is specified in the then current prospectus of the applicable Class A, Class C and AIM Cash Reserve Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the Class A, Class C and AIM Cash Reserve Shares and agrees that it will use its best efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of the Class A, Class C and AIM Cash Reserve Shares shall, suspend its efforts to effectuate such sales at any time when, in the opinion of the Distributor or of the Company, no sales should be made because of market or other economic considerations or abnormal circumstances of any kind; and
(B) the Company may withdraw the offering of the Class A, Class C and
AIM Cash Reserve Shares (i) at any time with the consent of the Distributor, or
(ii) without such consent when so required by the provisions of any statute or
of any order, rule or regulation of any governmental body having jurisdiction.
It is mutually understood and agreed that the Distributor does not undertake to
sell any specific amount of the Class A, Class C and AIM Cash Reserve Shares.
The Company shall have the right to specify minimum amounts for initial and
subsequent orders for the purchase of Class A, Class C and AIM Cash Reserve
Shares.
FOURTH:
(A) The public offering price of Class A Shares or AIM Cash Reserve Shares (the "offering price") shall be the net asset value per share plus a sales charge, if any. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus and statement of additional information of the Portfolios. The sales charge shall be established by the Distributor. The Distributor may establish a schedule of contingent deferred sales charges to be imposed at the time of redemption of certain Class A Shares or AIM Cash Reserve Shares and such schedule of contingent deferred sales charges shall be disclosed in the current prospectus or statement of additional information for each Portfolio. The sales charges and contingent deferred sales charges may reflect scheduled variations in, or the elimination of, sales charges on sales of Class A Shares or AIM Cash Reserve Shares or redemption of Class A Shares or AIM Cash Reserve Shares either generally to the public, or to any specified class of investors or in connection with any specified class of transactions, in accordance with Rule 22d-1 and as set forth in the then current prospectus and statement of additional information of the Portfolios. The Distributor shall apply any scheduled variation in, or elimination of, the selling commission or contingent deferred sales charge uniformly to all offerees in the class specified.
The public offering price of the Class C shares shall be the net asset value per share of the applicable Class C shares. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus and statement of additional information of the applicable Portfolio. The Distributor may establish a schedule of contingent deferred sales charges to be imposed at the time of redemption of the Shares, and such schedule shall be disclosed in the current prospectus or statement of additional information of each Portfolio. Such schedule of contingent deferred sales charges may reflect variations in or waivers of such charges on redemptions of Class C shares, either generally to the public or to any specified class of shareholders and/or in connection with any specified class of transactions, in accordance with applicable rules and regulations and exemptive relief granted by the Securities and Exchange Commission, and as set forth in the Portfolios' current prospectus(es) or statement(s) of additional information. The Distributor and the Company shall apply any then applicable scheduled variation in or waiver of contingent deferred sales charges uniformly to all shareholders and/or all transactions belonging to a specified class.
(B) The Portfolios shall allow directly to investment dealers and other financial institutions through whom Class A Shares or AIM Cash Reserve Shares are sold such portion of the sales charge as may be payable to them and specified by the Distributor up to but not exceeding the amount of the total sales charge. The difference between any commissions so payable and the total sales charges included in the offering price shall be paid to the Distributor.
The Distributor may pay to investment dealers and other financial institutions through whom Class C shares are sold, such sales commission as the Distributor may specify from time to time. Payment of any such sales commissions shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any payments by a Portfolio to the Distributor or by a Portfolio or the Distributor to investment dealers, financial institutions and 401(k) plan service providers where such payments are made under a distribution plan adopted by the Company on behalf of each Portfolio pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem Class A, Class C and AIM Cash Reserve Shares from shareholders in accordance with the terms set forth from time to time in the current prospectus and statement of additional information of each Portfolio. The price to be paid to a shareholder to redeem Class A, Class C and AIM Cash Reserve Shares shall be equal to the net asset value of the Class A, Class C and AIM Cash Reserve Shares being redeemed, less any applicable contingent deferred sales charge. The Distributor shall be entitled to receive the amount of any applicable contingent deferred sales charge that has been subtracted from gross redemption proceeds. The Company shall pay or cause the Company's transfer agent to pay the applicable contingent deferred sales charge to the Distributor on the date net redemption proceeds are payable to the redeeming shareholder.
FIFTH: The Distributor shall act as agent of the Company on behalf of each Portfolio in connection with the sale and repurchase of Class A, Class C and AIM Cash Reserve Shares. Except with respect to such sales and repurchases, the Distributor shall act as principal in all matters relating to the promotion or the sale of Class A, Class C and AIM Cash Reserve Shares and shall enter into all of its own engagements, agreements and contracts as principal on its own account. The Distributor shall enter into agreements with investment dealers and financial institutions selected by the Distributor, authorizing such investment dealers and financial institutions to offer and sell Class A, Class C and AIM Cash Reserve Shares to the public upon the terms and conditions set forth therein, which shall not be inconsistent with the provisions of this Agreement. Each agreement shall provide that the investment dealer and financial institution shall act as a principal, and not as an agent, of the Company on behalf of the Portfolios. The Distributor or such other investment dealers or financial institutions will be deemed to have performed all services required to be performed in order to be entitled to receive the asset based sales charge portion of any amounts payable with respect to Class C Shares to the Distributor pursuant to a distribution plan adopted by the Company on behalf of each Portfolio pursuant to Rule 12b-1 under the 1940 Act upon the settlement of each sale of a Class C Share (or a share of another portfolio from which the Class C Share derives).
SIXTH: The Portfolios shall bear:
(A) the expenses of qualification of Class A, Class C and AIM Cash Reserve Shares for sale in connection with such public offerings in such states as shall be selected by the Distributor, and of continuing the qualification therein until the Distributor notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final proof and distributing the Portfolios' prospectuses and statements of additional information (including supplements thereto) relating to public offerings made by the Distributor pursuant to this Agreement (which shall not include those prospectuses and statements of additional information, and supplements thereto, to be distributed to shareholders of each Portfolio), and any other promotional or sales literature
used by the Distributor or furnished by the Distributor to dealers in connection with such public offerings, and expenses of advertising in connection with such public offerings.
(B) The Distributor shall be reimbursed for all or a portion of such expenses, and shall receive reasonable compensation for distribution related services, to the extent permitted by a distribution plan adopted by the Company on behalf of the Portfolios pursuant to Rule 12b-1 under the 1940 Act, which plan may be amended from time to time as provided therein without the consent of the Distributor.
EIGHTH: The Distributor will accept orders for the purchase of Class A, Class C and AIM Cash Reserve Shares only to the extent of purchase orders actually received and not in excess of such orders, and it will not avail itself of any opportunity of making a profit by expediting or withholding orders. It is mutually understood and agreed that the Company may reject purchase orders where, in the judgment of the Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Portfolios, and the Distributor shall each comply with all applicable provisions of the 1940 Act, the Securities Act of 1933 and of all other federal and state laws, rules and regulations governing the issuance and sale of Class A, Class C and AIM Cash Reserve Shares.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Distributor, the Company on behalf of the Portfolios agrees to indemnify the Distributor against any and all claims, demands, liabilities and expenses which the Distributor may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Portfolios, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon, and in conformity with, information furnished to the Company or Portfolio in connection therewith by or on behalf of the Distributor. The Distributor agrees to indemnify the Company and the Portfolios against any and all claims, demands, liabilities and expenses which the Company or the Portfolios may incur arising out of or based upon any act or deed of the Distributor or its sales representatives which has not been authorized by the Company or the Portfolios in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Portfolios against any and all claims, demands, liabilities and expenses which the Company or the Portfolios may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Portfolios, or any omission to state a material fact therein if such statement or omission was made in reliance upon, and in conformity with, information furnished to the Company or the Portfolios in connection therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor shall not be liable for any errors of the Portfolios' transfer agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take any action contrary to any provision of its Agreement and Declaration of Trust, or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof, shall continue in force and effect until June 30, 2001, and shall continue in force and effect from year to year thereafter, provided, that such continuance is specifically approved at least annually (a)(i) by the Board of Trustees of the Company or (ii) by the vote of a majority of the Portfolios' outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act), and (b) by vote of a majority of the Company's trustees who are not parties to this Agreement or "interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a meeting called for such purpose.
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment of any penalty, by vote of the Board of Trustees of the Company or by vote of a majority of the outstanding voting securities of each Portfolio, or by the Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its assignment, the term "assignment" having the meaning set forth in Section 2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing, addressed and delivered, or mailed postage prepaid, to the other party at such address as the other party may designate for the receipt of notices. Until further notice to the other party, it is agreed that the addresses of both the Company and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
FIFTEENTH: Notice is hereby given that, as provided by applicable law, the obligations of or arising out of this Agreement are not binding upon any of the shareholders of the Company individually, but are binding only upon the assets and property of the Company and that the shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation on personal liability as stockholders of private corporations for profit.
SIXTEENTH: This Agreement shall be governed by and construed in accordance with the laws (without reference to conflicts of law provisions) of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written.
AIM INVESTMENT SECURITIES FUNDS
Attest:
By: /s/ ROBERT H. GRAHAM
---------------------------
/s/ JIM COPPEDGE Name: Robert H. Graham
------------------------------ Title: President
Name: Jim Coppedge
Title: Assistant Secretary
A I M DISTRIBUTORS, INC.
Attest:
By: /s/ MICHAEL J. CEMO
---------------------------
/s/ OFELIA M. MAYO Name: Michael J. Cemo
------------------------------ Title: President
Name: Ofelia M. Mayo
Title: Assistant Secretary
|
APPENDIX A
TO
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Municipal Bond Fund
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Money Market Fund
EXHIBIT e(8)
THIRD AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT SECURITIES FUNDS
(CLASS A SHARES, CLASS C SHARES, AIM CASH RESERVE SHARES
AND INSTITUTIONAL CLASS SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the ____________, of ______, 2000, by and between AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the "Company"), with respect to the series of shares of beneficial interest set forth on Appendix A to this Agreement (the "Portfolios") and the shares, other than the Class B Shares, representing the Portfolios (hereinafter referred to as the "Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares") and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
FIRST: The Company on behalf of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares hereby appoints the Distributor as its exclusive agent for the sale of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares to the public directly and through investment dealers and financial institutions in the United States and throughout the world in accordance with the terms of the current prospectuses applicable to the Portfolios.
SECOND: The Company shall not sell any Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares except through the Distributor and under the terms and conditions set forth in paragraph FOURTH below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares to any other investment company or personal holding company, or to the shareholders thereof, in exchange for all or a majority of the shares or assets of any such company; and
(B) the Company may issue Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares at their net asset value in connection with certain classes of transactions or to certain categories of persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), provided that any such category is specified in the then current prospectus of the applicable Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares and agrees that it will use its best efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares shall, suspend its efforts to effectuate such sales at any time when, in the opinion of the Distributor or of the Company, no sales should be made because of market or other economic considerations or abnormal circumstances of any kind; and
(B) the Company may withdraw the offering of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares (i) at any time with the consent of the Distributor, or (ii) without such consent when so required by the provisions of any statute or of any order, rule or regulation of any governmental body having jurisdiction. It is mutually understood and agreed that the Distributor does not undertake to sell any specific amount of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares. The Company shall have the right to specify minimum amounts for initial and subsequent orders for the purchase of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares.
FOURTH:
(A) The public offering price of Class A Shares or AIM Cash Reserve Shares (the "offering price") shall be the net asset value per share plus a sales charge, if any. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus and statement of additional information of the Portfolios. The sales charge shall be established by the Distributor. The Distributor may establish a schedule of contingent deferred sales charges to be imposed at the time of redemption of certain Class A Shares or AIM Cash Reserve Shares and such schedule of contingent deferred sales charges shall be disclosed in the current prospectus or statement of additional information for each Portfolio. The sales charges and contingent deferred sales charges may reflect scheduled variations in, or the elimination of, sales charges on sales of Class A Shares or AIM Cash Reserve Shares or redemption of Class A Shares or AIM Cash Reserve Shares either generally to the public, or to any specified class of investors or in connection with any specified class of transactions, in accordance with Rule 22d-1 and as set forth in the then current prospectus and statement of additional information of the Portfolios. The Distributor shall apply any scheduled variation in, or elimination of, the selling commission or contingent deferred sales charge uniformly to all offerees in the class specified.
The public offering price of the Class C Shares shall be the net asset value per share of the applicable Class C Shares. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus and statement of additional information of the applicable Portfolio. The Distributor may establish a schedule of contingent deferred sales charges to be imposed at the time of redemption of the Class C Shares, and such schedule shall be disclosed in the current prospectus or statement of additional information of each Portfolio. Such schedule of contingent deferred sales charges may reflect variations in or waivers of such charges on redemptions of Class C Shares, either generally to the public or to any specified class of shareholders and/or in connection with any specified class of transactions, in accordance with applicable rules and regulations and exemptive relief granted by the Securities and Exchange Commission, and as set forth in the Portfolios" current prospectus(es) or statement(s) of additional information. The Distributor and the Company shall apply any then applicable scheduled variation in or waiver of contingent deferred sales charges uniformly to all shareholders and/or all transactions belonging to a specified class.
The public offering price of the Institutional Class Shares of the Company shall be the net asset value per share. Net asset value per share shall be determined in accordance with the
provisions of the then current Institutional Class Shares' prospectus and statement of additional information.
(B) The Portfolios shall allow directly to investment dealers and other financial institutions through whom Class A Shares or AIM Cash Reserve Shares are sold such portion of the sales charge as may be payable to them and specified by the Distributor up to but not exceeding the amount of the total sales charge. The difference between any commissions so payable and the total sales charges included in the offering price shall be paid to the Distributor.
The Distributor may pay to investment dealers and other financial institutions through whom Class C Shares are sold, such sales commission as the Distributor may specify from time to time. Payment of any such sales commissions shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any payments by a Portfolio to the Distributor or by a Portfolio or the Distributor to investment dealers, financial institutions and 401(k) plan service providers where such payments are made under a distribution plan adopted by the Company on behalf of the applicable shares of each Portfolio pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares from shareholders in accordance with the terms set forth from time to time in the current prospectus and statement of additional information of each Portfolio. The price to be paid to a shareholder to redeem Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares shall be equal to the net asset value of the Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares being redeemed, less any applicable contingent deferred sales charge. The Distributor shall be entitled to receive the amount of any applicable contingent deferred sales charge that has been subtracted from gross redemption proceeds. The Company shall pay or cause the Company's transfer agent to pay the applicable contingent deferred sales charge to the Distributor on the date net redemption proceeds are payable to the redeeming shareholder.
FIFTH: The Distributor shall act as agent of the Company on behalf of each Portfolio in connection with the sale and repurchase of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares. Except with respect to such sales and repurchases, the Distributor shall act as principal in all matters relating to the promotion or the sale of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares and shall enter into all of its own engagements, agreements and contracts as principal on its own account. The Distributor shall enter into agreements with investment dealers and financial institutions selected by the Distributor, authorizing such investment dealers and financial institutions to offer and sell Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares to the public upon the terms and conditions set forth therein, which shall not be inconsistent with the provisions of this Agreement. Each agreement shall provide that the investment dealer and financial institution shall act as a principal, and not as an agent, of the Company on behalf of the Portfolios. The Distributor or such other investment dealers or financial institutions will be deemed to have performed all services required to be performed in order to be entitled to receive the asset based sales charge portion of any amounts payable with respect to Class C Shares to the Distributor pursuant to a distribution plan adopted by the Company on behalf of each Portfolio pursuant to Rule 12b-1 under the 1940 Act upon the settlement of each sale of a Class C Share (or a share of another portfolio from which the Class C Share derives).
SIXTH: The Portfolios shall bear:
(A) the expenses of qualification of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares for sale in connection with such public offerings in such states as shall be selected by the Distributor, and of continuing the qualification therein until the Distributor notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final proof and distributing the Portfolios' prospectuses and statements of additional information (including supplements thereto) relating to public offerings made by the Distributor pursuant to this Agreement (which shall not include those prospectuses and statements of additional information, and supplements thereto, to be distributed to shareholders of each Portfolio), and any other promotional or sales literature used by the Distributor or furnished by the Distributor to dealers in connection with such public offerings, and expenses of advertising in connection with such public offerings.
(B) The Distributor shall be reimbursed for all or a portion of such expenses, and shall receive reasonable compensation for distribution related services, to the extent permitted by a distribution plan adopted by the Company on behalf of the applicable shares of the Portfolios pursuant to Rule 12b-1 under the 1940 Act, which plan may be amended from time to time as provided therein without the consent of the Distributor.
EIGHTH: The Distributor will accept orders for the purchase of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares only to the extent of purchase orders actually received and not in excess of such orders, and it will not avail itself of any opportunity of making a profit by expediting or withholding orders. It is mutually understood and agreed that the Company may reject purchase orders where, in the judgment of the Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Portfolios, and the Distributor shall each comply with all applicable provisions of the 1940 Act, the Securities Act of 1933 and of all other federal and state laws, rules and regulations governing the issuance and sale of Class A Shares, Class C Shares, AIM Cash Reserve Shares and Institutional Class Shares.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Distributor, the Company on behalf of the Portfolios agrees to indemnify the Distributor against any and all claims, demands, liabilities and expenses which the Distributor may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Portfolios, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon, and in conformity with, information furnished to the Company or Portfolio in connection therewith by or on behalf of the Distributor. The Distributor agrees to indemnify the Company and the Portfolios against any and all claims, demands, liabilities and expenses which the Company or the Portfolios may incur arising out of or based upon any act
or deed of the Distributor or its sales representatives which has not been authorized by the Company or the Portfolios in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Portfolios against any and all claims, demands, liabilities and expenses which the Company or the Portfolios may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Portfolios, or any omission to state a material fact therein if such statement or omission was made in reliance upon, and in conformity with, information furnished to the Company or the Portfolios in connection therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor shall not be liable for any errors of the Portfolios' transfer agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take any action contrary to any provision of its Agreement and Declaration of Trust, or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof, shall continue in force and effect until June 30, 2001, and shall continue in force and effect from year to year thereafter, provided, that such continuance is specifically approved at least annually (a)(i) by the Board of Trustees of the Company or (ii) by the vote of a majority of the Portfolios' outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act), and (b) by vote of a majority of the Company's trustees who are not parties to this Agreement or "interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a meeting called for such purpose.
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment of any penalty, by vote of the Board of Trustees of the Company or by vote of a majority of the outstanding voting securities of each Portfolio, or by the Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its assignment, the term "assignment" having the meaning set forth in Section 2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing, addressed and delivered, or mailed postage prepaid, to the other party at such address as the other party may designate for the receipt of notices. Until further notice to the other party, it is agreed that the addresses of both the Company and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
FIFTEENTH: Notice is hereby given that, as provided by applicable law, the obligations of or arising out of this Agreement are not binding upon any of the shareholders of the Company individually, but are binding only upon the assets and property of the Company and that the shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation on personal liability as stockholders of private corporations for profit.
SIXTEENTH: This Agreement shall be governed by and construed in accordance with the laws (without reference to conflicts of law provisions) of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written.
AIM INVESTMENT SECURITIES FUNDS
Attest:
By:
------------------------------- -------------------------------
Name: Name: Robert H. Graham
Title: Title: President
|
A I M DISTRIBUTORS, INC.
Attest:
By:
------------------------------- ---------------------------------
Name: Name: Michael J. Cemo
Title: Title: President
|
APPENDIX A
TO
THIRD AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Municipal Bond Fund
AIM High Yield Fund
AIM High Yield Fund II
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Money Market Fund
AIM Limited Maturity Treasury Fund
EXHIBIT f(3)
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
Effective as of March 8, 1994
As Restated September 18, 1995
As Restated March 7, 2000
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
TABLE OF CONTENTS
Page
----
ARTICLE I................................................................. 1
1.1 Definitions...................................................... 1
1.2 Plurals and Gender............................................... 3
1.3 Directors/Trustees............................................... 3
1.4 Headings......................................................... 3
1.5 Severability..................................................... 3
ARTICLE II................................................................ 3
2.1 Commencement of Participation.................................... 3
2.2 Termination of Participation..................................... 3
2.3 Resumption of Participation...................................... 4
2.4 Determination of Eligibility..................................... 4
ARTICLE III............................................................... 4
3.1 Retirement....................................................... 4
3.2 Retirement Benefit............................................... 4
3.3 Termination of Service Before Retirement......................... 4
3.4 Termination of Service by Reason of Death........................ 5
3.5 Benefits Calculated in the Aggregate for all of the AIM Funds.... 5
ARTICLE IV................................................................ 5
4.1 Death Prior to Commencement of Benefits.......................... 5
4.2 Death Subsequent to Commencement of Benefits..................... 5
4.3 Death of Spouse.................................................. 5
ARTICLE V................................................................. 6
5.1 Suspension of Benefits Upon Resumption of Service................ 6
5.2 Payments Due Missing Persons..................................... 6
|
ARTICLE VI................................................................ 6
6.1 Appointment of Administrator..................................... 6
6.2 Powers and Duties of Administrator............................... 6
6.3 Action by Administrator.......................................... 7
6.4 Participation by Administrators.................................. 7
6.5 Agents and Expenses.............................................. 8
6.6 Allocation of Duties............................................. 8
6.7 Delegation of Duties............................................. 8
6.8 Administrator's Action Conclusive................................ 8
6.9 Records and Reports.............................................. 8
6.10 Information from the AIM Funds.................................. 8
6.11 Reservation of Rights by Boards of Directors.................... 9
6.12 Liability and Indemnification................................... 9
ARTICLE VII............................................................... 9
7.1 Amendments....................................................... 9
7.2 Termination...................................................... 10
ARTICLE VIII.............................................................. 10
8.1 Rights of Creditors.............................................. 10
8.2 Liability Limited................................................ 10
8.3 Incapacity....................................................... 10
8.4 Cooperation of Parties........................................... 10
8.5 Governing Law.................................................... 11
8.6 Nonguarantee of Directorship..................................... 11
8.7 Counsel.......................................................... 11
8.8 Spendthrift Provision............................................ 11
8.9 Forfeiture for Cause............................................. 11
ARTICLE IX................................................................ 12
9.1 Notice of Denial................................................. 12
9.2 Right to Reconsideration......................................... 12
9.3 Review of Documents.............................................. 12
9.4 Decision by Administrator........................................ 12
9.5 Notice by Administrator.......................................... 12
|
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
PREAMBLE
Effective as of March 8, 1994, the regulated investment companies managed, administered and/or distributed by A I M Advisors, Inc. or its affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the directors and trustees of each of the AIM Funds who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As the Plan does not benefit any employees of the AIM Funds, it is not intended to be classified as an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
Unless a different meaning is plainly implied by the context, the following terms as used in this Plan shall have the following meanings:
(a) "Accrued Benefit" shall mean, as of any date prior to a Participant's Retirement date, his Retirement Benefit commencing on such Retirement date, but based upon his Compensation and Years of Service computed as of such date of determination.
(b) "Actuary" shall mean the independent actuary selected by the Administrator.
(c) "Administrator" shall mean the administrative committee provided for in Article VI.
(d) "AIM Funds" shall mean those regulated investment companies managed, administered or distributed by A I M Advisors, Inc. or its affiliates, set forth on Appendix A hereto, as such Appendix may be amended from time to time.
(e) "Board of Directors" shall mean the Board of Directors or Board of Trustees of each of the AIM Funds.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
(g) "Compensation" shall mean, for any Director, the amount of the retainer paid or accrued by the AIM Funds for such Director during the twelve month period immediately
preceding the Director's Retirement, including amounts deferred under a separate agreement between the AIM Funds and the Director. The amount of such retainer Compensation shall be as determined by the Administrator.
(h) "Deferred Retirement Date" shall mean the last day of the Plan Year in which a Participant terminated Service after his Normal Retirement Date.
(i) "Director" shall mean an individual who is a director or trustee of one or more of the AIM Funds which have adopted the Plan but who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates.
(j) "Disability" shall mean the inability of the Participant to participate in meetings of the Board of Directors, either in person or by telephone, for a period of at least nine (9) months.
(k) "Effective Date" shall mean March 8, 1994.
(l) "Fund" shall mean an AIM Fund which has adopted this Plan.
(m) "Mandatory Retirement Date" shall mean the last day of the Plan Year in which a participant has reached the age of 72. Such Mandatory Retirement Date may be extended upon the majority vote of the Boards of Directors of the AIM Funds.
(n) "Normal Retirement Date" shall mean the last day of the Plan Year in which a Participant has both attained age 65 (or at least age 55 in the event of the Director's termination of Service by reason of death or Disability) and has completed at least five continuous and non-forfeited Years of Service (and thirty months of Service with one or more of the AIM Funds).
(o) "Participant" shall mean a Director who has met all of the eligibility requirements of the Plan and who is currently included in the Plan as provided in Article II hereof.
(p) "Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees" as described herein or as hereafter amended from time to time.
(q) "Plan Year" shall mean the calendar year.
(r) "Retirement" shall mean a Director's termination of his active Service with the AIM Funds on or after his Normal Retirement Date, due to his death, Disability, or voluntary or involuntary termination of his Service.
(s) "Retirement Benefit" shall mean the benefit described under
Section 3.2 hereof.
(t) "Service" shall mean an individual's serving as a Director of one or more of the AIM Funds. Furthermore, any unbroken service provided by a Participant (i) to an AIM Fund immediately prior to its being managed or administered by AIM Advisors, Inc. (or any of
its affiliates) or (ii) to a predecessor of an AIM Fund immediately prior to its being merged into such AIM Fund, will be taken into account in determining such Participant's Years of Service, subject to all restrictions and other forfeiture provisions contained herein.
(u) "Year of Service" shall mean a twelve consecutive month period of
Service. For all purposes in this Plan, if a Participant's Service terminates
prior to his Retirement, he shall forfeit credit for all Years of Service
completed prior to such termination unless (a) he again becomes a Director and
(b) the number of Years of Service he accumulated prior to such termination
exceeded the number of years in which he did not serve as a Director.
Where appearing in the Plan, the masculine gender shall include the feminine and neuter genders, and the singular shall include the plural, and vice versa, unless the context clearly indicates a different meaning.
Where appropriate, the term "director" shall refer to "trustee", "directorship" shall refer to "trusteeship" and "Board of Directors" shall refer to "Board of Trustees."
The headings and sub-headings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof.
In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein.
ARTICLE II
PARTICIPATION
Each Director shall become a Participant hereunder on the date his directorship of one or more of the AIM Funds commences.
After commencement or resumption of his participation, a Director shall remain a Participant until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death;
(c) The date on which he otherwise incurs a termination of Service; or
(d) The effective date of the termination of the Plan.
Any Participant whose Service terminates and who thereafter again becomes a Director shall resume participation immediately upon again becoming a Director except that, as provided in Section 1.1(u) hereof, if his Service is terminated prior to his Normal Retirement Date, for all purposes of this Plan he shall forfeit credit for all Years of Service completed prior to such termination of his Service.
The Administrator shall determine the eligibility of Directors in accordance with the provisions of this Article.
ARTICLE III
BENEFITS UPON
RETIREMENT AND OTHER TERMINATION OF SERVICE
In order to receive Retirement Benefits under this Plan a Director must reach
the age of 65 (55 in the event of death or disability), the Normal Retirement
Date, as defined in Section 1.1(n) before retiring. Each Director must retire
on reaching the age of 72, the Mandatory Retirement Date, as defined in Section
1.1(m). Such Mandatory Retirement Date may be extended upon the majority vote
of the Board of Directors of the AIM Funds.
Upon Retirement a Participant shall be entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or next following his date of Retirement, payable in quarterly installments for a period of no more than ten (10) years (or, if less, the number of his Years of Service) equal to seventy-five percent (75%) of his Compensation.
In the event that a Participant's Service terminates by reason of death, Disability or removal by the Board for cause (as defined in Section 8.9) prior to his Normal Retirement Date, he shall not be entitled to receive any benefits hereunder. If a Participant's Service terminates for any other reason and he has accumulated at least five (5) continuous and non-forfeited Years of Service, he shall be entitled to receive his Accrued Benefit determined as of such date of termination.
No benefits will be paid under this Plan with respect to a Participant after his death other than as provided in Article IV.
With respect to each Participant, the benefits payable hereunder shall be based on the aggregate Compensation paid by the AIM Funds and on the Participant's non-forfeited Years of Service. Each Fund's share of the obligation to provide such benefits shall be determined by use of accounting methods adopted by the Administrator.
ARTICLE IV
DEATH BENEFITS
In the event of a Participant's death subsequent to his Normal Retirement Date, but prior to the commencement of his Retirement Benefits under Article III hereof, the surviving spouse (if any) of such Participant shall be entitled to receive a quarterly survivor's benefit for a period of no more than ten (10) years (or, if less, the number of the Participant's Years of Service) beginning on the first day of the calendar quarter next following the date of the Participant's death equal to fifty percent (50%) of the amount of the quarterly installments of Retirement Benefits that would have been paid to the Participant under Sections 3.2 or 3.3 hereof had his Retirement occurred on his date of death.
In the event a Participant dies after the commencement of his Retirement Benefit under Article III, but prior to the cessation of the payment of such Retirement Benefits, the surviving spouse (if any) of such Participant shall be entitled to receive survivor's benefits equal to fifty percent (50%) of the amount of the annual Retirement Benefit payable to the Participant under Article III hereunder, paid at such times, and for such period, as such Retirement Benefit would have continued to have been paid to the Participant had he not died.
(a) In the event a Participant is not survived by a spouse, no benefits will be paid hereunder upon the Participant's death.
(b) If a deceased Participant's surviving spouse dies while receiving survivor's benefits hereunder, any installments not paid at the time of the surviving spouse's death shall be forfeited.
ARTICLE V
SUSPENSION OF BENEFITS, ETC.
In the case of a Participant who, at a time when he is receiving Retirement Benefits under Article III of this Plan, resumes Service with any AIM Fund, such Retirement Benefits shall be suspended until his subsequent Retirement, termination of Service or death. Subject to the Years of Service limitations of Section 3.2 hereof, in the event of his Retirement or termination of Service following such a suspension, the quarterly amount of his remaining Retirement Benefits shall thereafter be adjusted, if appropriate, to reflect any additional Years of Service completed by, or a higher rate of Compensation received by, such Participant.
The Administrator shall make a reasonable effort to locate all persons entitled to benefits (including Retirement Benefits and survivor's benefits for spouses) under the Plan; however, notwithstanding any provisions of this Plan to the contrary, if, after a period of 5 years from the date any of such benefits first become due, any such persons entitled to benefits have not been located, their rights under the Plan shall stand suspended. Before this provision becomes operative, the Administrator shall send a certified letter to all such persons (if any) at their last known address advising them that their benefits under the Plan shall be suspended. Any such suspended amounts shall be held by the AIM Funds for a period of 3 additional years (or a total of 8 years from the time the benefits first became payable) and thereafter such amounts shall be forfeited.
ARTICLE VI
ADMINISTRATOR
This Plan shall be administered by the Nominating and Compensation Committees of the Boards of Directors of the AIM Funds. The members of such committees are not "interested persons" (within the meaning of Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM Funds. The term "Administrator" as used in this Plan shall refer to the members of such committees, either individually or collectively, as appropriate.
Except as provided below, the Administrator shall have the following duties and responsibilities in connection with the administration of this Plan:
(a) To promulgate and enforce such rules, regulations and procedures as shall be proper for the efficient administration of the Plan;
(b) To determine all questions arising in the administration, interpretation and application of the Plan, including questions of eligibility and of the status and rights of Participants and any other persons hereunder;
(c) To decide any dispute arising hereunder; provided, however, that no Administrator shall participate in any matter involving any questions relating solely to his own participation or benefits under this Plan;
(d) To advise the Boards of Directors of the AIM Funds regarding the known future need for funds to be available for distribution;
(e) To correct defects, supply omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan;
(f) To compute the amount of benefits and other payments which shall be payable to any Participant or surviving spouse in accordance with the provisions of the Plan and to determine the person or persons to whom such benefits shall be paid;
(g) To make recommendations to the Boards of Directors of the AIM Funds with respect to proposed amendments to the Plan;
(h) To file all reports with government agencies, Participants and other parties as may be required by law, whether such reports are initially the obligation of the AIM Funds, or the Plan;
(i) To engage the Actuary of the Plan and to cause the liabilities of the Plan to be evaluated by the Actuary; and
(j) To have all such other powers as may be necessary to discharge its duties hereunder.
The Administrator may elect a Chairman and Secretary from among its members and may adopt rules for the conduct of its business. A majority of the members then serving shall constitute a quorum for the transacting of business. All resolutions or other action taken by the Administrator shall be by vote of a majority of those present at such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent signed by at least a majority of the members. All documents, instruments, orders, requests, directions, instructions and other papers shall be executed on behalf of the Administrator by either the Chairman or the Secretary of the Administrator, if any, or by any member or agent of the Administrator duly authorized to act on the Administrator's behalf.
No Administrator shall be precluded from becoming a Participant in the Plan if he would be otherwise eligible, but he shall not be entitled to vote or act upon matters or to sign any documents relating specifically to his own participation under the Plan, except when such
matters or documents relate to benefits generally. If this disqualification results in the lack of a quorum, then the Boards of Directors, by majority vote of the members of a majority of such Boards of Directors (a "Majority Vote"), shall appoint a sufficient number of temporary Administrators, who shall serve for the sole purpose of determining such a question.
The Administrator may employ agents and provide for such clerical, legal, actuarial, accounting, medical, advisory or other services as it deems necessary to perform its duties under this Plan. The cost of such services and all other expenses incurred by the Administrator in connection with the administration of the Plan shall be allocated to each Fund pursuant to the method utilized under Section 3.5 hereof with respect to costs related to benefit accruals. For purposes of the preceding sentence, if an individual serves as a Director for more than one Fund, he shall be deemed to be a separate Director for each such Fund in determining the aggregate number of Directors of the AIM Funds.
The duties, powers and responsibilities reserved to the Administrator may be allocated among its members so long as such allocation is pursuant to written procedures adopted by the Administrator, in which case no Administrator shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts or omissions of any other Administrator.
The Administrator may delegate any of its duties to employees of A I M Advisors, Inc. or any of its affiliates or to any other person or firm, provided that the Administrator shall prudently choose such agents and rely in good faith on their actions.
Any action on matters within the discretion of the Administrator shall be final and conclusive.
The Administrator shall maintain adequate records of its actions and proceedings in administering this Plan and shall file all reports and take all other actions as it deems appropriate in order to comply with any federal or state law.
The AIM Funds shall promptly furnish all necessary information to the Administrator to permit it to perform its duties under this Plan. The Administrator shall be entitled to rely upon the accuracy and completeness of all information furnished to it by the AIM Funds, unless it knows or should have known that such information is erroneous.
When rights are reserved in this plan to the Boards of Directors, such rights shall be exercised only by Majority Vote of the Boards of Directors, except where the Boards of Directors, by unanimous written resolution, delegate any such rights to one or more persons or to the Administrator. Subject to the rights reserved to the Boards of Directors as set forth in this Plan, no member of the Boards of Directors shall have any duties or responsibilities under this Plan, except to the extent he shall be acting in the capacity of an Administrator.
(a) The Administrator shall perform all duties required of it under this Plan in a prudent manner. The Administrator shall not be responsible in any way for any action or omission of the AIM Funds or their employees in the performance of their duties and obligations as set forth in this Plan. The Administrator also shall not be responsible for any act or omission of any of its agents provided that such agents were prudently chosen by the Administrator and that the Administrator relied in good faith upon the action of such agents.
(b) Except for its own gross negligence, willful misconduct or willful breach of the terms of this Plan, the Administrator shall be indemnified and held harmless by the AIM Funds against any and all liability, loss, damages, cost and expense which may arise, occur by reason of, or be based upon, any matter connected with or related to this Plan or its administration (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending any litigation, commenced or threatened, or in settlement of any such claim).
ARTICLE VII
AMENDMENTS AND TERMINATION
The Boards of Directors reserve the right at any time and from time to time, and retroactively if deemed necessary or appropriate by them, to amend in whole or in part by Majority Vote any or all of the provisions of this Plan, provided that:
(a) No amendment shall make it possible for any part of a Participant's or former Participant's Retirement Benefit to be used for, or diverted to, purposes other than for the exclusive benefit of such Participant or surviving spouse, except to the extent otherwise provided in this Plan;
(b) No amendment may reduce any Participant's or former Participant's Retirement Benefit as of the effective date of the amendment;
Amendments may be made in the form of Board of Directors' resolutions or separate written document.
Except as provided below, the Boards of Directors reserve the right to terminate this Plan at any time by Majority Vote by giving to the Administrator notice in writing of such desire to terminate. The Plan shall terminate upon the date of receipt of such notice and the rights of all Participants to their Retirement Benefits (determined as of the date the Plan is terminated) shall become payable upon the effective date of the termination of the Plan in quarterly installments or in an actuarially equivalent lump sum as determined by the Administrator.
ARTICLE VIII
MISCELLANEOUS
(a) The Plan is unfunded. Neither the Participants nor any other persons shall have any interest in any fund or in any specific asset or assets of any of the AIM Funds by reason of any Accrued or Retirement Benefit hereunder, nor any rights to receive distribution of any Retirement Benefit except and as to the extent expressly provided hereunder.
(b) The Accrued and Retirement Benefits of each Participant are unsecured and shall be subject to the claims of the general creditors of the AIM Funds.
Neither the AIM Funds, the Administrator, nor any agents, employees, officers, directors or shareholders of any of them, nor any other person shall have any liability or responsibility with respect to this Plan, except as expressly provided herein.
If the Administrator shall receive evidence satisfactory to it that a Participant or surviving spouse entitled to receive any benefit under the Plan is, at the time when such benefit becomes payable, physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of such Participant or surviving spouse and that no guardian, committee or other representative of the estate of such Participant or surviving spouse shall have been duly appointed, the Administrator may make payment of such benefit otherwise payable to such Participant or surviving spouse to such other person or institution, and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit.
All parties to this Plan and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Plan or any of its provisions.
All rights under the Plan shall be governed by and construed in accordance with rules of Federal law applicable to such plans and, to the extent not preempted, by the laws of the State of Texas without regard to principles of conflicts of law. No action shall be brought by or on behalf of any Participant for or with respect to benefits due under this Plan unless the person bringing such action has timely exhausted the Plan's claim review procedure. Any such action must be commenced within three years. This three-year period shall be computed from the earlier of (a) the date a final determination denying such benefit, in whole or in part, is issued under the Plan's claim review procedure or (b) the date such individual's cause of action first accrued. Any dispute, controversy or claim arising out of or in connection with this Plan (including the applicability of this arbitration provision) and not resolved pursuant to the Plan's claim review procedure shall be determined and settled by arbitration conducted by the American Arbitration Association ("AAA") in the County and State of the Funds' principal place of business and in accordance with the then existing rules, regulations, practices and procedures of the AAA. Any award in such arbitration shall be final, conclusive and binding upon the parties to the arbitration and may be enforced by either party in any court of competent jurisdiction. Each party to the arbitration will bear its own costs and fees (including attorney's fees).
Nothing contained in this Plan shall be construed as a guaranty or right of any Participant to be continued as a Director of one or more of the AIM Funds (or of a right of a Director to any specific level of Compensation) or as a limitation of the right of the AIM Funds to remove any of its directors.
The Administrator may consult with legal counsel, who may be counsel for one or more of the Boards of Directors of the AIM Funds and for the Administrator, with respect to the meaning or construction of this Plan, its obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel.
A Participant's interest in his Accrued Benefit or Retirement Benefit may not be transferred, alienated, assigned nor become subject to execution, garnishment or attachment, and any attempt to do so will render benefits hereunder immediately forfeitable.
Notwithstanding any other provision of this Plan to the contrary, any benefits to which a Participant (or his surviving spouse) may otherwise be entitled hereunder will be forfeited in the event the Administrator, in its sole discretion, determines that a Participant's termination of Service is due to such Participant's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Director.
ARTICLE IX
CLS PROCEDURE
If a Participant is denied any Retirement Benefit (or a surviving spouse is denied a survivor's benefit) under this Plan, either in total or in an amount less than the full Retirement Benefit to which he would normally be entitled, the Administrator shall advise the Participant (or surviving spouse) in writing of the amount of his Retirement Benefit (or survivor's benefit), if any, and the specific reasons for the denial. The Administrator shall also furnish the Participant (or surviving spouse) at that time with a written notice containing:
(a) A specific reference to pertinent Plan provisions.
(b) A description of any additional material or information necessary for the Participant (or surviving spouse) to perfect his claim, if possible, and an explanation of why such material or information is needed.
(c) An explanation of the Plan's claim review procedure.
Within 60 days of receipt of the information stated in Section 9.1 above, the Participant (or surviving spouse) shall, if he desires further review, file a written request for reconsideration with the Administrator.
So long as the Participant's (or surviving spouse's) request for review is pending (including the 60 day period in 9.2 above), the Participant (or surviving spouse) or his duly authorized representative may review pertinent Plan documents and may submit issues and comments in writing to the Administrator.
A final and binding decision shall be made by the Administrator within 60 days of the filing by the Participant (or surviving spouse) of his request for reconsideration, provided, however, that if the Administrator, in its discretion, feels that a hearing with the Participant (or surviving spouse) or his representative present is necessary or desirable, this period shall be extended an additional 60 days.
The Administrator's decision shall be conveyed to the Participant (or surviving spouse) in writing and shall include specific reasons for the provisions on which the decision is based.
APPENDIX A
March 7, 2000
For the purposes of the Retirement Plan for Eligible Directors/Trustees "AIM Funds" shall mean each of the regulated investment companies constituting classes or series of shares of the following entities:
AIM ADVISOR FUNDS, INC.
AIM EQUITY FUNDS, INC.
AIM FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM SPECIAL OPPORTUNITIES FUNDS
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
EXHIBIT f(7)
AIM FUNDS
DIRECTOR DEFERRED COMPENSATION AGREEMENT
As Amended March 7, 200O
AIM FUNDS
AGREEMENT, made on this ____ day of _______, 20___, by and between the registered open-end investment companies listed on Appendix A hereto (the "Funds"), and _______________________________________________ (the "Director") residing at ____________________________________________.
WHEREAS, the Funds and the Director have entered into agreements pursuant to which the Director will serve as a director/trustee of the Funds; and
WHEREAS, if the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds, they now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, the Funds and the Director hereby agree as follows:
1.1 Definitions. Unless a different meaning is plainly implied by the context, the following terms as used in this Agreement shall have the following meanings:
(a) "Beneficiary" shall mean such person or persons designated pursuant to Section 4.3 hereof to receive benefits after the death of the Director.
(b) "Boards of Directors" shall mean the respective Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors' fees paid by each of the Funds to the Director during a Deferral Year prior to reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or amounts of the Director's Compensation deferred under the provisions of Section 3 of this Agreement.
(f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof (or pursuant to any prior agreement) and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds.
2.1 Commencement of Compensation Deferrals. The Director may elect, on a form provided by, and submitted to, the Presidents of the respective Funds, to commence Compensation Deferrals under Section 3 hereof for the period beginning on the later of (i) the date this Agreement is executed or (ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of all of the Funds; or
(b) The effective date of the termination of this Agreement.
(a) On or prior to the first day of any Deferral Year, the Director may elect, on the form described in Section 2.1 hereof, to defer the receipt of all or a portion of his Compensation for such Deferral Year. Such writing shall set forth the amount of such Compensation Deferral (in whole percentage amounts). Such election shall continue in effect for all subsequent Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each payment of Compensation by the Funds to the Director based upon the percentage amount elected by the Director under Section 3.1 (a) hereof.
(c) The Director may cancel or modify the amount of his Compensation Deferrals on a prospective basis by submitting to the Presidents of the Funds a revised Compensation Deferral election form. Such change will be effective as of the first day of the Deferral Year following the date such revision is submitted to the Presidents of the Funds.
(a) Each Fund shall establish a bookkeeping Deferral Account to which will be credited an amount equal to the Director's Compensation Deferrals under this Agreement made with respect to Compensation earned from each such Fund. Compensation Deferrals shall be allocated to the Deferral Accounts on the first business day following the date such Compensation Deferrals are withheld from the Director's Compensation. As of the date of this Agreement, the Deferral Accounts also shall be credited with the amounts credited to the Director under each other outstanding elective deferred compensation agreement entered into by and between the Funds and the Director which is superseded by this Agreement pursuant to Section 6.11 hereof. The Deferral Accounts shall be debited to reflect any distributions from such Accounts. Such debits shall be allocated to the Deferral Accounts as of the date such distributions are made.
(b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Deferral Accounts are invested in the manner set forth under Section 3.3, below) attributable to the period following the next preceding Valuation Date shall be credited to and/or deducted from the Director's Deferral Accounts.
(a) (1) The Director may select, from various options made available by the Funds, the investment media in which all or part of his Deferral Accounts shall be deemed to be invested.
(2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation by giving written direction to the Presidents of the Funds in such manner and at such time as the Funds may permit, but no less frequently than quarterly on thirty (30) days' notice prior to the end of a calendar quarter. A timely change to a Director's investment designation shall become effective as soon as practicable following receipt by the Presidents of the Funds.
(3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If-
(1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections.
The Funds shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount in the Deferral Accounts, as of a reasonably current date.
(a) Designation of Date. Each deferral direction given pursuant to
Section 3.1 shall include designation of the Payment Date for the value of the
amount deferred. Such Payment Date shall be the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. At least one year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the second anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash in a single sum unless the Participant elects, at the time a Payment Date is selected pursuant to paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal quarterly installments over a period not to exceed ten (10) years. In addition, at least one year before the Payment Date, a Director may change the method of payment previously selected.
(e) Irrevocability. Except as provided in paragraphs 4.1(b) and 4.1(d), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows:
(1) Upon the Director's death, payment shall be made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d) provided the designation of such method had been made at least one year before such termination occurred, except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts,
(3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in accordance with the method of payment selected pursuant to paragraph 4.1(d), commencing as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the
Director's Beneficiary shall be the person or persons so designated by the
Director in a written instrument submitted to the Presidents of the Funds. In
the event the Director fails to properly designate a Beneficiary, his
Beneficiary shall be the person or persons in the first of the following classes
of successive preference Beneficiaries surviving at the death of the Director:
the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such
benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited.
(a) The Funds and the Director may, by a written instrument signed by, or on behalf of, such parties, amend this Agreement at any time and in any manner.
(b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that:
(1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and
(2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of this Agreement, such Accounts shall continue to be maintained in accordance with the provisions of this Agreement until the time they are paid out.
(a) This Agreement is unfunded. Neither the Director nor any other persons shall have any interest in any specific asset or assets of the Funds by reason of any Deferral Accounts hereunder, nor any rights to receive distribution of his Deferral Accounts except and as to the extent expressly provided hereunder. The Funds shall not be required to purchase, hold or dispose of any investments pursuant to this Agreement; however, if in order to cover their obligations hereunder the Funds elect to purchase any investments the same shall continue for all purposes to be a part of the general assets and property of the Funds, subject to the claims of their general creditors and no person other than the Funds shall by virtue of the provisions of this Agreement have any interest in such assets other than an interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person.
6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives.
6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
The Funds
By:
---------------------------- --------------------------------------
Witness Name:
Title:
----------------------------
Witness
-----------------------------------------
Director
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For the purposes of the Deferred Compensation Agreement "AIM Funds" shall mean each of the regulated investment companies constituting classes or series of shares of the following entities:
AIM EQUITY FUNDS, INC.
AIM FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM STRATEGIC INCOME FUND, INC.
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the "Agreement") dated as of______________________________ by and between the undersigned and the AIM Funds, I hereby make the following elections:
Starting with Compensation to be paid to me with respect to services provided by me to the AIM Funds after the date this election Form is received by the AIM Funds, I hereby elect that ______ percent (__%) of my Compensation (as defined under the Agreement) be reduced and that the Fund establish a bookkeeping account credited with amounts equal to the amount so reduced (the "Deferral Account"). The Deferral Account shall be further credited with income equivalents as provided under the Agreement. I understand that this election will remain in effect with respect to Compensation I earn in subsequent years unless I modify or revoke it. I further understand that such modification or revocation will be effective only prospectively and will apply commencing with the Compensation I earn in the calendar year that begins after the change is received by you.
I hereby designate _____________1 (select the first month in any calendar quarter) in the year ____________ (select a year that is at least two years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I [_] do [_] do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement.
I hereby elect to receive the amounts credited to my Deferral Account in (check one)
[_] a single payment in cash
[_] annual installments for a period of _________ (select no more than 10 years)
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account.
I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof Dated as of the day and year first above written.
WITNESS: DIRECTOR:
----------------------------- ---------------------------------
WITNESS: RECEIVED:
AIM Funds
-----------------------------
By:
-----------------------
Date:
-----------------------
|
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the "Agreement") by and between the undersigned and the AIM Funds, I hereby elect that my Deferral Account under the Agreement be considered to be invested as follows (in multiples of 10%):
NAME OF FUND %
------------ ---
____________________________________ __ %
____________________________________ __ %
____________________________________ __ %
____________________________________ __ %
____________________________________ __ %
____________________________________ __ %
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I acknowledge that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. Furthermore, I acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has reserved the right to disregard the elections made above to consider my Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
------------------------- -----------------------------
WITNESS: RECEIVED:
AIM Funds
By:
------------------------- ----------------------------
Date:
--------------------------
|
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the "Agreement") by and between the undersigned and the AIM Funds, I hereby make the following beneficiary designations:
I hereby appoint the following as my Primary Beneficiary(ies) to receive at my death the amounts credited to my Deferral Account under the Agreement. In the event I am survived by more than one Primary Beneficiary, such Primary Beneficiaries shall share equally in such amounts unless I indicate otherwise on an attachment to this form:
--------------------------------------------------------------------- Name Relationship --------------------------------------------------------------------- Address --------------------------------------------------------------------- City State Zip |
In the event I am not survived by any Primary Beneficiary, I hereby appoint the following as Secondary Beneficiary(ies) to receive death benefits under the Agreement. In the event I am survived by more than one Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless I indicate otherwise on an attachment to this form:
--------------------------------------------------------------------- Name Relationship --------------------------------------------------------------------- Address --------------------------------------------------------------------- City State Zip |
I understand that I may revoke or amend the above designations at any time. I further understand that if I am not survived by a Primary or Secondary Beneficiary, my Beneficiary shall be as set forth under the Agreement.
WITNESS: DIRECTOR:
------------------------- -----------------------------
WITNESS: RECEIVED:
AIM Funds
By:
------------------------- ----------------------------
Date:
--------------------------
|
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the "Agreement") by and between the undersigned and the AIM Funds, pursuant to which I have previously elected to defer Compensation,
I hereby designate _________1 (select the first month in any calendar quarter) in the year _________ (select a year that is at least two years after the year this election is made) as the Payment Date for the amounts previously credited to my Deferral Account and amounts subsequently credited thereto. If my Retirement (as defined in the Agreement) occurs sooner, I [_] do [_] do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement.
I hereby elect to receive the amounts credited to my Deferral Account in (check one)
[_] a single payment in cash
[_] annual installments for a period of ________ (select no more than 10 years)
I understand that this change in payment method will not be given effect unless my Payment Date is at least one year from the date hereof and I do not cease to be a Director within such year.
I understand that I may amend this designation in the manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
------------------------- -----------------------------
WITNESS: RECEIVED:
AIM Funds
By:
------------------------- ----------------------------
Date:
--------------------------
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EXHIBIT g(4)
[AIM LOGO APPEARS HERE]
--Registered Trademark--
P.O. Box 4333
Houston, TX 77210-4333
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
713-626-1919
A I M Advisors, Inc.
June 1, 2000
Ms. Mayra Sacco
The Bank of New York
Relationship Manager
100 Church Street
10th Floor
New York, N.Y. 10286
Ms. Sacco:
Pursuant to the terms and conditions of a certain Agreement and Plan of Reorganization ("Plan"), between AIM Funds Group, a Delaware business trust ("AFG"), and AIM Investment Securities Funds, a Delaware business trust ("AISF"), AFG transfer substantially all the assets of its AIM Municipal Bond Fund series (the "Predecessor Fund") to AISF in exchange for shares of beneficial interest of AISF's newly-created AIM Municipal Bond Fund series (the "New Fund") and the assumption by New Fund of substantially all the liabilities of Predecessor Fund. Following this transfer of assets, New Fund will distribute shares of beneficial interest to Predecessor Fund's shareholders, pro rata, in exchange for their shares of Predecessor Fund, and Predecessor Fund's AIM Municipal Bond Fund series will subsequently be dissolved. This transfer of assets will occur on June 1, 2000 ("Closing Date").
Pursuant to Article XVIII, number 5 of the Custodian Contract of October 19, 1995, as further amended and supplemented, (the "Contract"), between the Predecessor Fund and The Bank of New York, the Predecessor Fund hereby requests that, as of the close of business on June 1, 2000, you act under the terms of the Contract, including the fee schedule relating thereto, as Custodian for the New Fund, which shall be deemed to have succeeded to the Predecessor Fund's obligations, rights and duties under the Contract.
The Predecessor Fund hereby further requests that you agree that the obligations of the New Fund under the Contract shall not be binding upon any of the New Fund's trustees, shareholders, nominees, officers agents, or employees of the New Fund personally, but shall be binding only upon the assets and property of the New Fund to which such obligations relate.
Please sign and return the enclosed copy of this letter to indicate your agreement to the assumption of the Agreement described above, and your waiver of any notice requirement under the Agreement.
This letter may be executed in counterparts.
Very truly yours,
AIM FUNDS GROUP
By: /s/ CAROL F. RELIHAN
--------------------------------
Senior Vice President
|
[AIM LOGO APPEARS HERE]
--Registered Trademark--
ACCEPTED AND AGREED:
The BANK OF NEW YORK
By: /s/ JAMES E. HILLMAN -------------------------------- Name: James E. Hillman Title: Senior Vice President Date: June 2000 |
By signature below, AIM Investment Securities Funds, a Delaware trust, agrees to succeed to AIM Funds Group's rights, obligations and duties under the Contract.
ACCEPTED AND AGREED:
AIM INVESTMENT SECURITIES FUNDS
By: /s/ CAROL F. RELIHAN
--------------------------------
Name: Carol F. Relihan
Title: Senior Vice President
Date:
---------------------------
|
EXHIBIT g(5)
[AIM LOGO APPEARS HERE]
--Registered Trademark--
P.O. Box 4333
Houston, TX 77210-4333
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
713-626-1919
A I M Management Group Inc.
August 30, 2000
Mr. Ira Rosner
The Bank of New York
Relationship Manager
100 Church Street
10th Floor
New York, N.Y. 10286
Mr. Rosner:
Pursuant to Resolutions adopted by the Board of Trustees of AIM Investment Securities Funds ("AISF"), a Delaware business trust, AISF, on behalf of its AIM Money Market Fund portfolio, is changing custodians from State Street Bank and Trust Company to The Bank of New York ("BONY"). This change in custodians will occur at a date to be determined in conjunction with BONY (the "Closing Date").
Pursuant to Article XVII, number 5 of the BONY Custodian Contract of June 16, 1987, as further amended and supplemented on October 15, 1993 (the "Contract"), AISF hereby requests that, as of the close of business on the Closing Date, you act under the terms of the Contract, including the fee schedule relating thereto, as Custodian for AIM Money Market Fund.
AISF hereby further requests that you agree that the obligations of the AIM Money Market Fund under the Contract shall not be binding upon any of AISF's trustees, shareholders, nominees, officers agents, or employees of AISF personally, but shall be binding only upon the assets and property of AISF to which such obligations relate.
Please sign and return the enclosed copy of this letter to indicate your agreement to the change in custodian described above, and your waiver of any notice requirement under the Agreement.
This letter may be executed in counterparts.
Very truly yours,
AIM INVESTMENT SECURITIES FUNDS
By: /s/ CAROL F. RELIHAN
----------------------------
Name: Carol F. Relihan
Title: Senior Vice President
Date: 08/30/00
---------------------
|
ACCEPTED AND AGREED:
The BANK OF NEW YORK
By: /s/ JORGE E. RAMOS --------------------------- Name: Jorge E. Ramos Title: Vice President Date: |
EXHIBIT g(7)(a)
This Contract between each entity set forth in Appendix A hereto (as such Appendix A may be amended from time to time) (each such entity and each entity made subject to this Contract in accordance with Paragraphs 17 and 18, referred to herein as a "Fund") and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, a Fund may be authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, each Fund so authorized intends that this Contract be applicable to each of its series set forth on Appendix A hereto (as such Appendix A may be amended from time to time) (such series together with all other series subsequently established by the Fund and made subject to this Contract in accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
Each Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities") pursuant to the provisions of the Fund's articles of incorporation, agreement and declaration of trust, by-laws and/or registration statement (as applicable, the "Governing Documents"). Each Fund on behalf of its Portfolio(s) agrees to deliver to the Custodian all securities and cash of such Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by such Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of capital stock or beneficial interest of each Fund representing interests in the Portfolios, ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors or the Board of
Trustees of the applicable Fund on behalf of the applicable Portfolio(s) (as
appropriate and in each case, the "Board"), and provided that the Custodian
shall have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for each Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the applicable provisions of
Article 3.
2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States including all domestic securities owned by such Portfolio, other than (a) securities which are maintained pursuant to Section 2.10 in a U.S. Securities System (as defined in Section 2.10) and b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission ("CFTC") and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the Fund ("Transfer Agent"), for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from
time to time in the currently effective prospectus and statement of additional information of the Fund, related to the Portfolio ("Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and
15) For any other proper trust or corporate purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Trustees or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities of the Portfolio to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper trust or corporate purpose, as applicable, and naming the person or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of a Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment advisor as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of a Portfolio under the terms of this Contract shall be in "street name" or other good delivery form. If, however, a Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of each Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between any Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from such Fund on behalf of a Portfolio, make federal funds available to such Portfolio as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the applicable Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data in its possession as may be necessary to assist the Fund in arranging, for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.11; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Portfolio or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Article 5 of this Contract;
2) In connection with conversion, exchange or surrender
of securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Portfolio, including but not limited to the
following payments for the account of the Portfolio:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to the Fund's Governing Documents;
6) For payment of the amount of dividends received in respect of securities sold short; and
7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the Portfolio, a certified copy of a resolution of the Board or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper trust or corporate purpose, as applicable, and naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Portfolio is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from a Fund on behalf of a Portfolio to so pay in advance, the Custodian shall be absolutely liable to such Fund for such securities to the same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may at any time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S Securities Systems. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in a clearing agency registered with the SEC under
Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account of the Custodian in the U.S. Securities System (a "U.S. Securities System Account") which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report obtained by the Custodian on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S Securities System;
5) The Custodian shall have received from the Fund on behalf of the Portfolio the initial or annual certificate, as the case may be, required by Article 14 hereof; and
6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System
by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may deposit and/or maintain securities owned by a Portfolio in the Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the applicable Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Portfolio which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transaction in the Direct Paper System for the account of the Portfolio; and
6) The Custodian shall provide the Fund on behalf of the Portfolio with any report on its system of internal accounting control as the Fund may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant
to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange (or the CFTC or any registered contract market), or
of any similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or
options thereon purchased or sold by the Portfolio, (iii) for
the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities
and Exchange Commission ("SEC") or interpretative opinion of
the staff of the SEC, relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the applicable
Board or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate or trust purposes, as applicable.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action.
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Portfolio's securities and other assets maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 5 of this Contract, together with a certified resolution of the Fund's Board, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub-custodian. Upon receipt of Proper Instructions, each Fund may instruct the Custodian to cease the employment of any one or more such sub-custodians for maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under the 1940 Act, and b) cash and cash equivalents in such amounts as the Custodian or the applicable Fund may determine to be reasonably necessary to effect the Portfolio's foreign securities transactions. The Custodian shall identify on its books as belonging to the applicable Fund, the foreign securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in writing by the Custodian and each Fund, assets of the Portfolios shall be maintained in a clearing agency which acts as a securities depository or in a book-entry system for the central handling of securities located outside of the United States (each a "Foreign Securities System") only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof (Foreign Securities Systems and U.S. Securities Systems are collectively referred to herein as the "Securities Systems"). Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof.
3.4 [Reserved.]
3.5 Agreements with Foreign Banking Institutions. Each agreement
with a foreign banking institution shall provide that: (a) the
assets of each Portfolio will not be subject to any right,
charge, security interest, lien or claim of any kind in favor
of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of
each Portfolio will be freely transferable without the payment
of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets
as belonging to each applicable Portfolio; (d) officers of or
auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable
law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian; and (e) assets of the Portfolios held by the foreign sub-custodian will be subject only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of any Fund, the Custodian will use its best efforts to arrange for the independent accountants of such Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the Portfolio(s) held by foreign sub-custodians, including but not limited to an identification of entities having possession of the Portfolio(s) securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of each applicable Portfolio indicating, as to securities acquired for a Portfolio, the identity of the entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided in paragraph Co) of this Section 3.8, the provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign securities of each Fund held outside the United States by foreign sub-custodians. (b) Notwithstanding any provision of this Contract to the contrary, settlement and payment for securities received for the account of each applicable Portfolio and delivery of securities maintained for the account of each applicable Portfolio may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. (c) Securities maintained in the custody of a foreign sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and each Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a foreign banking institution as a foreign sub-custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and each Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of any Fund, it shall be entitled to be subrogated to the fights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that such Fund has not been made whole for any such loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub-custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 3.10, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or Co) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If any Fund requires the Custodian to advance cash or securities for any purpose for the benefit of a Portfolio including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should such Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolios assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each Fund, during the month of June, information concerning the foreign sub-custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to each Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform each Fund in the event that the Custodian learns of a material adverse change in the financial condition of a foreign sub-custodian or any material loss of the assets of a Fund or in the case of any foreign sub-custodian not the subject of an exemptive order from the SEC is notified by such foreign sub-custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract, the provisions hereof shall not apply where the custody of the Portfolios assets are maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the 1940 Act meeting the qualification set forth in Section 26(a) of said Act. The appointment of any such branch as a sub-custodian shall be governed by paragraph 1 of this Contract Cash held for each
Portfolio of each Fund in the United Kingdom shall be maintained in an interest beating account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on any Fund or the Custodian as custodian of such Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of each Fund to notify the Custodian of the obligations imposed on such Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist each Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which each Fund has provided such information.
The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of each Fund and deposit into the account of the appropriate Portfolio such payments as are received for Shares of that Portfolio issued or sold from time to time by applicable Fund. The Custodian will provide timely notification to such Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the limitations of the Governing Documents and any applicable votes of the Board of any Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by a Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between a Fund and the Custodian.
Proper Instructions as used throughout this Contract includes the following:
(a) a writing signed or initialed by one or more person or persons as a Board shall have from time to time authorized. Each such writing shall set forth the specific transaction or type or transaction involved, including a specific statement of the purpose for which such action is requested;
(b) communications effected directly between electro-mechanical or electronic devices provided that each Fund and the Custodian agree to securities procedures, including but not limited to, the security procedures listed on the Funds Transfer Addendum attached hereto;
(c) oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. Each Fund shall cause all oral instructions to be confirmed in writing or through electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset account which has been established pursuant to Section 2.12 hereof, shall include instructions received by the Custodian in accordance with the provisions of any three-party agreement, to which any Fund and the Custodian are each a party, governing such account or accounts.
The Custodian may in its discretion, without express authority from the applicable Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the applicable Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive form;
3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the applicable Board.
The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the applicable Fund. The Custodian may receive and accept a certified copy of a vote of the applicable Board of a Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board pursuant to the Governing Documents as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary.
The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the applicable Board o to keep the books of account of each Portfolio and/or compute the net asset value per share of the outstanding Shares or, if directed in writing to do so by the applicable Fund on behalf of the Portfolio, shall itself keep such books of account and/or compute such net asset value per Share. If so directed, the Custodian shall also calculate daily the net income of the Portfolio as described in the applicable Fund's Prospectus related to such Portfolio and shall advise such Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of such Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of each Portfolio shall be made at the time or times described from time to time in the applicable Fund's Prospectus.
The Custodian shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the applicable Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the applicable Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of such Fund and employees and agents of the SEC. The Custodian shall, at a Fund's request, supply such Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by a Fund and for such compensation as shall be agreed upon between such Fund and the Custodian, include certificate numbers in such tabulations.
The Custodian shall take all reasonable action, as the applicable Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from such Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, Form N-2 (if applicable), and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.
The Custodian shall provide the applicable Fund, on behalf of each of the Portfolios at such times as such Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System, relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between each Fund on behalf of each applicable Portfolio and the Custodian.
So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to any Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for a Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical failures or
interruptions, communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters or other similar events or acts;
(ii) errors by any Fund or any Investment Advisor in their instructions to the
Custodian provided such instructions have been in accordance with this Contract;
(iii) the insolvency of or acts or omissions by a Securities System; (iv) any
delay or failure of any broker, agent or intermediary, central bank or other
commercially prevalent payment or clearing system that is not an affiliate of
the Custodian to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
any Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract.
If a Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, such Fund on behalf of
the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) for the benefit of a Portfolio or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should a Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement.
This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated with respect to any party by an instrument in writing delivered or mailed, postage prepaid to the other parties, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the applicable Board has approved the initial use of a particular Securities System by such Portfolio, as required by Rule 17f-4 under the 1940 Act and that the Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the applicable Board has approved the initial use of the Direct Paper System by such Portfolio; provided further, however, that each Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Fund's Governing Documents, and further provided, that each Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.
Termination of this Contract with respect to any particular Portfolio shall in no way affect the rights and duties under this Contract with respect to any other Funds or Portfolios.
Upon termination of the Contract with respect to any Portfolio, such Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements.
If a successor custodian for one or more Funds or Portfolios shall be appointed by the applicable Board, the Custodian shall, upon termination with respect to the applicable Fund: (i) deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder; (ii) transfer
to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System; and (iii) transfer to the successor custodian all records created and maintained by the Custodian with respect to each such Portfolio pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the applicable Board, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or certified copy of a vote of the applicable Board shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Portfolio and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof with respect to any Fund owing to failure of such Fund to procure the certified copy of the vote referred to or of the applicable Board to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect.
In connection with the operation of this Contract, the Custodian and each Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by all parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Fund's Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract.
In the event that any Fund establishes one or more series of Shares in addition to those listed on Appendix A attached hereto with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder.
In the event that any entity in addition to those listed on Appendix A
attached hereto desires to have the Custodian render services as custodian under
the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such entity shall become a
Fund hereunder and be bound by all terms, conditions and provisions hereof
including, without limitation, the representations and warranties set forth in
Section 22 below.
This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.
This Contract supersedes and terminates, as of the date hereof, all prior contracts between each Fund on behalf of each of the Portfolios and the Custodian relating to the custody of each Fund's assets.
This Contract and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
All references herein to the "Fund" are to each of the funds listed on Appendix A hereto individually, as if this Contract were between such individual Fund and the Custodian. In the case of a series fund or trust, all references to the "Portfolio" are to the individual series or portfolio of such fund or trust, or to such fund or trust on behalf of the individual series or portfolio, as appropriate. Any reference in this Contract to "the parties" shall mean the Custodian and such other individual Fund as to which the matter pertains. Each party hereby represents and warrants to each other that (i) it has the requisite power and authority under applicable laws and its Governing Documents, as applicable, to enter into and perform this Contract, (ii) all requisite proceedings have been taken to authorize it to enter into and perform this Contract, and (iii) its entrance into this Contract shall not cause a material breach or be in material conflict with any other agreement or obligation of any party or any law or regulation applicable to it.
With respect to any Fund which is a party to this Contract and which is organized as a Delaware business trust, the term "Fund" means and refers to the trustees from time to time serving under the applicable trust agreement of such trust, as the same may be amended from time to time (the "Declaration of Trust"). It is expressly agreed that the obligations of any such
Fund hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Fund personally, but bind only the trust property of the Fund as set forth in the applicable Declaration of Trust. In the case of each Fund which is a Delaware business trust (in each case, a "Trust"), the execution and delivery of this Agreement on behalf of the Trust has been authorized by the trustees, and signed by an authorized officer of the Trust, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually, but shall bind only the trust property of the Trust as provided in its Declaration of Trust.
SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the role, the Custodian needs each Fund to indicate whether it authorizes the Custodian to provide such Fund's name, address, and share position to requesting companies whose stock the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or do not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Fund's name, address, and share positions.
|
The Custodian and each Fund agree to be bound by the terms of the Remote Access Services Addendum attached hereto.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the 1st day of May, 2000.
ATTEST EACH OF THE ENTITIES SET FORTH ON
APPENDIX A ATTACHED HERETO
By: /s/ STEPHEN I. WINER By: /s/ CAROL F. RELIHAN
----------------------------- -------------------------------
Name: Carol F. Relihan
-----------------------------
Title: Senior Vice President
----------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By: /s/ STEPHANIE L. POSTER By: /s/ RONALD E. LOGUE
----------------------------- -------------------------------
Vice President
Name: Ronald E. Logue
-----------------------------
Title: Vice Chairman
----------------------------
|
APPENDIX A
AIM ADVISOR FUNDS, INC. AIM VARIABLE INSURANCE FUNDS
o AIM Advisor Flex Fund o AIM V.I. Aggressive Growth Fund
o AIM Advisor International Value Fund o AIM V.I. Balanced Fund
o AIM Advisor Large Cap Value Fund o AIM V.I. Blue Chip Fund
o AIM Advisor Real Estate Fund o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
AIM EQUITY FUNDS, INC. o AIM V.I. Dent Demographic Trends Fund
o AIM Aggressive Growth Fund o AIM V.I. Diversified Income Fund
o AIM Blue Chip Fund o AIM V.I. Global Growth and Income Fund
o AIM Capital Development Fund o AIM V.I. Global Utilities Fund
o AIM Charter Fund o AIM V.I. Government Securities Fund
o AIM Constellation Fund o AIM V.I. Growth and Income Fund
o AIM Dent Demographic Trends Fund o AIM V.I. Growth Fund
o AIM Emerging Growth Fund o AIM V.I. High Yield Fund
o AIM Large Cap Basic Value Fund o AIM V.I. International Equity Fund
o AIM Large Cap Growth Fund o AIM V.I. Money Market Fund
o AIM MidCap Growth Fund o AIM V.I. Telecommunications and
o AIM Weingarten Fund Technology Fund
o AIM V.I. Value Fund
AIM FUNDS GROUP
o AIM Balanced Fund AIM FLOATING RATE FUND
o AIM Global Utilities Fund
o AIM High Yield Fund AIM GROWTH SERIES
o AIM Income Fund
o AIM Intermediate Government Fund o AIM Basic Value Fund
o AIM Money Market Fund o AIM New Pacific Growth Fund
o AIM Select Growth Fund o AIM Euroland Growth Fund
o AIM Value Fund o AIM Japan Growth Fund
o AIM Mid Cap Equity Fund
AIM INTERNATIONAL FUNDS, INC. o AIM Small Cap Growth Fund
o AIM Asian Growth Fund
o AIM European Development Fund AIM INVESTMENT FUNDS
o AIM Global Aggressive Growth Fund
o AIM Global Growth Fund o AIM Global Health Care Fund
o AIM Global Income Fund o AIM Global Telecommunications and Technology Fun
o AIM International Equity Fund o AIM Latin American Growth Fund
o AIM Developing Markets Fund
AIM INVESTMENT SECURITIES FUNDS o AIM Global Government Income Fund d
o AIM High Yield Fund II o AIM Strategic Income Fund
o AIM Global Growth & Income Fund
AIM SPECIAL OPPORTUNITIES FUNDS
o AIM Small Cap Opportunities Fund AIM SERIES TRUST
o AIM Mid Cap Opportunities Fund o AIM Global Trends Fund
o AIM Large Cap Opportunities Fund
AIM SUMMIT FUND, INC.
|
o GLOBAL INVESTMENT PORTFOLIO
o Global Consumer Products and
Services Portfolio
o Global Financial Services Portfolio
o Global Infrastructure Portfolio
o Global Resources Portfolio
o GROWTH PORTFOLIO
o Small Cap Portfolio
o Value Portfolio
o EMERGING MARKETS DEBT PORTFOLIO
SCHEDULE A
17f-5 APPROVAL
The Board of Directors/Trustees of each entity set forth on Appendix A to the Master Custodian Contract to which this Schedule A is attached has approved certain foreign banking institutions and foreign securities depositories within State Street's Global Custody Network for use as subcustodians for the Fund's securities, cash and cash equivalents held outside of the United States. Board approval is as indicated by the Fund's Authorized Officer:
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
STATE STREET'S ENTIRE GLOBAL CUSTODY NETWORK LISTED BELOW
-------
/s/ CFR Argentina Citibank, N.A. Caja de Valores S.A.
-------
/s/ CFR Australia Westpac Banking Corporation Austraclear Limited
-------
Reserve Bank Information and
Transfer System
/s/ CFR Austria Erste Bank der Oesterreichischen Oesterreichische Kontrollbank AG
------- Sparkassen AG (Wertpapiersammelbank Division)
Bahrain HSBC Bank Middle East None
------- (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
/s/ CFR Bangladesh Standard Chartered Bank None
-------
/s/ CFR Belgium Fortis Bank NV/as. Caisse Interprofessionnelle de Depots
------- et de Virements de Titres S.A.
Banque Nationale de Belgique
/s/ CFR Bermuda The Bank of Bermuda Limited None
-------
Bolivia Citibank, N.A. None
-------
Botswana Barclays Bank of Botswana Limited None
-------
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Brazil Citibank, N.A. Companhia Brasileira be Liquidacao e
------- Custodia
------- Bulgaria ING Bank N.V. Central Depository AD
Bulgarian National Bank
/s/ CFR Canada State Street Trust Company Canada Canadian Depository
------- for Securities Limited
/s/ CFR Chile Citibank, N.A. Deposito Central de Valores S.A.
-------
/s/ CFR People's Republic The HongKong and Shanghai Shanghai Securities Central Clearing &
------- of China Banking Corporation Limited, Registration Corporation
Shanghai and Shenzhen branches
Shenzhen Securities Clearing
Co., Ltd.
/s/ CFR Colombia Citibank Colombia S.A. Deposito Centralizado de Valores
------- Sociedad Fiduciaria
Costa Rica Banco BCT S.A. Central de Valores S.A.
-------
/s/ CFR Croatia Privredna Banka Zagreb d.d. Ministry of Finance
-------
National Bank of Croatia
Sredisnja Depozitarna Agencija
/s/ CFR Cyprus The Cyprus Popular Bank Ltd. None
-------
/s/ CFR Czech Republic Ceskoslovenska Obchodi Stredisko cennych papiru
------- Banka, A.S.
Czech National Bank
/s/ CFR Denmark Den Danske Bank Vaerdipapircentralen (Danish
------- Securities Center)
Ecuador Citibank, N.A. None
-------
/s/ CFR Egypt Egyptian British Bank Misr Company for Clearing, Settlement,
------- (as delegate of The Hongkong and and Depository
Shanghai Banking Corporation
Limited)
------- Estonia Hansabank Eesti Vaartpaberite Keskdepositoorium
/s/ CFR Finland Merita Bank Plc. Finnish Central Securities
------- Depository
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR France Paribas, S.A. Societe Interprofessionnelle
-------- pour la Compensation des
Valeurs Mobilieres
/s/ CFR Germany Dresdner Bank AG Deutsche Borse Clearing AG
--------
Ghana Barclays Bank Of Ghana Limited None
--------
/s/ CFR Greece National Bank of Greece S.A. Central Securities Depository
-------- (Apothetirion Titlon AE)
Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
/s/ CFR Hong Kong Standard Chartered Bank Central Clearing and
-------- Settlement System
Central Moneymarkets Unit
/s/ CFR Hungary Citibank Rt. Kozponti Elszamolohaz es Ertektar
-------- (Budapest) Rt. (KELER)
Iceland Icebank Ltd. None
--------
/s/ CFR India Deutsche Bank AG The National Securities Depository
-------- Limited
Central Depository Services India
Limited
Reserve Bank of India
The Hongkong and Shanghai The National Securities Depository
-------- Banking Corporation Limited Limited
Central Depository Services India
Limited
Reserve Bank of India
/s/ CFR Indonesia Standard Chartered Bank Bank Indonesia
--------
PT Kustodian Sentral Efek Indonesia
/s/ CFR Ireland Bank of Ireland Central Bank of Ireland
-------- Securities Settlement Office
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Israel Bank Hapoalim B.M. Tel Aviv Stock Exchange
------- Clearing House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse
system)
/s/ CFR Italy Paribas, S.A. Monte Titoli S.p.A.
-------
Banca d'Italia
Ivory Coast Societe Generale de Banques Depositaire Central -
------- en Cote d'Ivoire Banque de Reglement
Jamaica Scotiabank Jamaica Trust Jamaica Central Securities
------- and Merchant Bank Limited Depository
/s/ CFR Japan The Fuji Bank, Limited Japan Securities Depository
------- Center (JASDEC)
Bank of Japan Net System
The Sumitomo Bank, Limited Japan Securities Depository
------- Center (JASDEC)
Bank of Japan Net System
Jordan HSBC Bank Middle East None
------- (as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
Kenya Barclays Bank of Kenya Limited Central Bank of Kenya
-------
/s/ CFR Republic of Korea The Hongkong and Shanghai Korea Securities Depository Corporation
------- Banking Corporation Limited
Latvia A/s Hansabank Latvian Central Depository
-------
Lebanon HSBC Bank Middle East Custodian and Clearing Center of
------- (as delegate of the Hongkong and Financial Instruments for Lebanon and
Shanghai Banking Corporation the Middle East (MIDCLEAR) S.A.L.
Limited)
Central Bank of Lebanon
Lithuania Vilniaus Bankas AB Central Securities Depository of
------- Lithuania
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
-------- Malaysia Berhad Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping Systems
Mauritius The Hongkong and Shanghai Central Depository & Settlement
-------- Banking Corporation Limited Co. Ltd.
/s/ CFR Mexico Citibank Mexico, S.A. S.D. INDEVAL
-------- (Instituto para el Deposito de
Valores)
Morocco Banque Commerciale du Maroc Maroclear
--------
/s/ CFR The Netherlands MeesPierson N.V. Nederlands Centraal Instituut voor
-------- Giraal Effectenverkeer B.V. (NECIGEF)
Namibia (via) Standard Bank of South Africa None
--------
/s/ CFR New Zealand ANZ Banking Group New Zealand Central Securities
-------- (New Zealand) Limited Depository Limited
/s/ CFR Norway Christiania Bank og Verdipapirsentralen (the Norwegian
-------- Kreditkasse ASA Central Registry of Securities)
Oman HSBC Bank Middle East Muscat Securities Market Depository &
-------- (as delegate of The Hongkong and Securities Registration Company
Shanghai Banking Corporation Limited)
/s/ CFR Pakistan Deutsche Bank AG Central Depository Company of
-------- Pakistan Limited
State Bank of Pakistan
Palestine HSBC Bank Middle East The Palestine Stock Exchange
-------- (as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
/s/ CFR Panama BankBoston, N.A. None
--------
/s/ CFR Peru Citibank, N.A. Caja de Valores y Liquidaciones,
-------- CAVALIICLV S.A.
/s/ CFR Philippines Standard Chartered Bank Philippines Central Depository, Inc.
--------
|
Registry of Scripless Securities (ROSS) of the Bureau of Treasury
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Poland Citibank (Poland) S.A. National Depository of Securities
------- (Krajowy Depozyt Papierow
Wartosciowych SA)
Central Treasury Bills Registrar
/s/ CFR Portugal Banco Comercial Portugues Central de Valores Mobiliarios
-------
------- Qatar HSBC Bank Middle East Doha Securities Market
/s/ CFR Romania ING Bank N.V. National Securities Clearing,
------- Settlement and Depository Company
Bucharest Stock Exchange Registry
Division
National Bank of Romania
------- Russia Credit Suisse First Boston AO, Moscow None
(as delegate of Credit Suisse
First Boston, Zurich)
/s/ CFR Singapore The Development Bank Central Depository (Pte)
------- of Singapore Limited Limited
Monetary Authority of Singapore
/s/ CFR Slovak Republic Ceskoslovenska Obchodni Stredisko cennych papierov SR
------- Banka, A.S. Bratislava, a.s.
National Bank of Slovakia
/s/ CFR Slovenia Bank Austria Creditanstalt Klirinsko Depotna Druzba d.d.
------- d.d. Ljubljana.
/s/ CFR South Africa Standard Bank of South Africa Limited The Central Depository Limited
-------
Strate Ltd.
/s/ CFR Spain Banco Santander Central Servicio de Compensacion y
------- Hispano, S.A. Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
/s/ CFR Sri Lanka The Hongkong and Shanghai Central Depository System
------- Banking Corporation Limited (Pvt) Limited
------- Swaziland Standard Bank Swaziland Limited None
|
FOUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Sweden Skandinaviska Enskilda Banken Vardepapperscentralen, VPC AB
-------- (the Swedish Central Securities
Depository)
/s/ CFR Switzerland UBS AG SIS - SegaIntersettle
--------
/s/ CFR Taiwan-R.O.C. Central Trust of China Taiwan Securities Central
-------- or Depository Co., Ltd.
-------- --------------------------------
(Client Designated Subcustodian)
/s/ CFR Thailand Standard Chartered Bank Thailand Securities Depository
-------- Company Limited
-------- Trinidad & Tobago Republic Bank Limited None
-------- Tunisia Banque Internationale Societe Tunisienne Interprofessionelle pour
Arabe de Tunisie La Compensation et de Depots de
Valeurs Mobilieres
/s/ CFR Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S.
-------- (TAKASBANK)
Central Bank of Turkey
/s/ CFR Ukraine ING Bank Ukraine National Bank of Ukraine
--------
/s/ CFR United Kingdom State Street Bank and Trust The Bank of England,
-------- Company, London branch Central Gilts Office and
Central Moneymarkets Office
/s/ CFR Uruguay BankBoston N.A. None
--------
/s/ CFR Venezuela Citibank, N.A. Central Bank of Venezuela
--------
-------- Vietnam The Hongkong and Shanghai None
Banking Corporation Limited
-------- Zambia Barclays Bank of Zambia Limited LuSE Central Shares Depository Limited
Bank of Zambia
-------- Zimbabwe Barclays Bank of Zimbabwe Limited None
|
FUND OFFICER INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY -------- ------- ------------ ------------------ -------- Euroclear (The Euroclear System)/ State Street London Limited -------- Cedelbank S.A/State Street London Limited |
CERTIFIED BY:
/s/ CAROL F. RELIHAN 5-1-2000 ------------------------------- ------------- FUND'S AUTHORIZED OFFICER DATE |
ADDENDUM to that certain Master Custodian Contract dated as of May 1, 2000 (the "Agreement") between the entities set forth on Exhibit A thereto (each, a "Customer") and State Street Bank and Trust Company ("State Street").
State Street has developed and utilizes proprietary accounting and other systems in conjunction with the custodian services which State Street provides to the Customer. In this regard, State Street maintains certain information in databases under its control and ownership which it makes available to its customers (the "Remote Access Services").
State Street agrees to provide the Customer, and its designated investment advisors, consultants or other third parties authorized by State Street who agree to abide by the terms of this Addendum ("Authorized Designees") with access to In-Sight(SM) as described in Exhibit A (the "System") on a remote basis for the purpose of obtaining and analyzing reports and information.
The Customer agrees to comply, and to cause its Authorized Designees to comply, with remote access operating standards and procedures and with user identification or other password control requirements and other security procedures as may be issued from time to time by State Street for use of the System and access to the Remote Access Services. The Customer agrees to advise State Street immediately in the event that it learns or has reason to believe that any person to whom it has given access to the System or the Remove Access Services has violated or intends to violate the terms of this Addendum and the Customer will cooperate with State Street in seeking injunctive or other equitable relief. The Customer agrees to discontinue use of the System and Remote Access Services, if requested, for any security reasons cited by State Street.
Fees and charges for the use of the System and the Remote Access Services and related payment terms shall be as set forth in the custody fee schedule in effect from time to time between the parties (the "Fee Schedule"). The Customer shall be responsible for any tariffs, duties or taxes imposed or levied by any government or governmental agency by reason of the transactions contemplated by this Addendum, including, without limitation, federal, state and local taxes, use, value added and personal property taxes (other than income, franchise or similar taxes which may be imposed or assessed against State Street). Any claimed exemption from such tariffs, duties or taxes shall be supported by proper documentary evidence delivered to State Street.
The System and Remote Access Services described herein and the databases, computer programs, screen formats, report formats, interactive design techniques, formulae, processes, systems, software, knowhow, algorithms, programs, training aids, printed materials, methods, books, records, files, documentation and other information made available to the Customer by State Street as part of the Remote Access Services and through the use of the System and all copyrights, patents, trade secrets and other proprietary rights of
State Street related thereto are the exclusive, valuable and confidential property of State Street and its relevant licensors (the "Proprietary Information"). The Customer agrees on behalf of itself and its Authorized Designees to keep the Proprietary Information confidential and to limit access to its employees and Authorized Designees (under a similar duty of confidentiality) who require access to the System for the purposes intended. The foregoing shall not apply to Proprietary Information in the public domain or required by law to be made public.
The Customer agrees to use the Remote Access Services only in connection with the proper purposes of this Addendum. The Customer will not, and will cause its employees and Authorized Designees not to, (i) permit any third party to use the System or the Remote Access Services, (ii) sell, rent, license or otherwise use the System or the Remote Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under this Addendum, (iii) use the System or the Remote Access Services for any fund, trust or other investment vehicle without the prior written consent of State Street, or (iv) allow or cause any information transmitted from State Street's databases, including data from third party sources, available through use of the System or the Remote Access Services, to be redistributed or retransmitted for other than use for or on behalf of the Customer, as State Street's customer.
The Customer agrees that neither it nor its Authorized Designees will modify the System in any way, enhance or otherwise create derivative works based upon the System, nor will the Customer or its Authorized Designees reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of the System.
The Customer acknowledges that the disclosure of any Proprietary Information, or of any information which at law or equity ought to remain confidential, will immediately give rise to continuing irreparable injury to State Street inadequately compensable in damages at law and that State Street shall be entitled to obtain immediate injunctive relief against the breach or threatened breach of any of the foregoing undertakings, in addition to any other legal remedies which may be available.
State Street represents and warrants that it is the owner of and has the right to grant access to the System and to provide the Remote Access Services contemplated herein. Because of the nature of computer information technology and the necessity of relying upon third party sources, and data and pricing information obtained form third parties, the System and Remote Access Services are provided "AS IS", and the Customer and its Authorized Designees shall be solely responsible for the investment decisions, regulatory reports and statements produced using the Remote Access Services. State Street and its relevant licensors will not be liable to the Customer or its Authorized Designees for any direct or indirect, special, incidental, punitive or consequential damages arising out of or in any way connected with the System or the Remote Access Services, nor shall either party be responsible for delays or nonperformance under this Addendum arising out of any cause or event beyond such party's control.
State Street will take reasonable steps to ensure that its products (and those of its third-party suppliers) reflect the available state of the art technology to offer products that are Year 2000 compliant, including, but not limited to, century recognition of dates, calculations that correctly compute same century and multi century formulas and date values, and interface values that reflect the date issues arising between now and the next one-hundred years, and if any changes are required, State Street will make the changes to its products at no cost to you and in a commercially reasonable time frame and will require third-party suppliers to do likewise. The Customer will do likewise for its systems.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET FOR ITSELF AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
State Street will defend or, at our option, settle any claim or action brought against the Customer to the extent that it is based upon an assertion that access to the System or use of the Remote Access Services by the Customer under this Addendum constitutes direct infringement of any United States patent or copyright or misappropriation of a trade secret, provided that the Customer notifies State Street promptly in writing of any such claim or proceeding and cooperates with State Street in the defense of such claim or proceeding. Should the System or the Remote Access Services or any part thereof become, or in State Street's opinion be likely to become, the subject of a claim of infringement or the like under the patent or copyright or trade secret laws of the United States, State Street shall have the right, at State Street's sole option, to (i) procure for the Customer the right to continue using the System or the Remote Access Services, (ii) replace or modify the System or the Remote Access Services so that the System or the Remote Access Services becomes noninfringing, or (iii) terminate this Addendum without further obligation.
Either party to the Custodian Agreement may terminate this Addendum (i) for any reason by giving the other party at least one-hundred and eighty (180) days' prior written notice in the case of notice of termination by State Street to the Customer or thirty (30) days' notice in the case of notice from the Customer to State Street of termination, or (ii) immediately for failure of the other party to comply with any material term and condition of the Addendum by giving the other party written notice of termination. This Addendum shall in any event terminate within ninety (90) days after the termination of the Custodian Agreement. In the event of termination, the Customer will return to State Street all copies of documentation and other confidential information in its possession or in the possession of its Authorized Designees. The foregoing provisions with respect to confidentiality and infringement will survive termination for a period of three (3) years.
No term hereof is intended to alter the standard of care applicable to State Street, as set forth in the Agreement, with respect to data made available to the Customer via the Remote Access Services. This Addendum and the exhibit hereto constitutes the entire understanding of the parties to the Custodian Agreement with respect to access to the System and the Remote Access Services. This Addendum cannot be modified or altered except in a writing duly executed by each of State Street and the Customer and shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
By its execution of the Custodian Agreement, the Customer, for itself and its Authorized Designees, accepts the terms of this Addendum.
IN-SIGHT(SM)
System Product Description
In-Sight(SM) provides information delivery and on-line access to State Street. In-Sight(SM) allows users a single point of entry into the many views of data created by the diverse systems and applications. Reports and data from systems such as Investment Policy Monitor(SM), Multicurrency Horizon(SM), Securities Lending, Performance & Analytics can be accessed though In-Sight(SM). This Internet-enabled application is designed to run from a Web browser and perform across low-speed data line or corporate high-speed backbones. In-Sight(SM) also offers users a flexible toolset, including an ad-hoc query function, a custom graphics package, a report designer, and a scheduling capability. Data and reports offered through In-Sight(SM) will continue to increase in direct proportion with the customer roll out, as it is viewed as the information delivery system will grow with State Street's customers.
EXHIBIT g(7)(b)
This Amendment to the Custodian Contract is made as of May 1, 2000, by and between each entity set forth in Appendix A hereto (each such entity referred to herein as the "Fund") and State Street Bank and Trust Company (the "Custodian"). Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed to such terms in the Custodian Contract referred to below.
WHEREAS, each Fund and the Custodian entered into a Master Custodian Contract dated as of May 1, 2000 (as amended and in effect from time to time, the "Contract"); and
WHEREAS, each Fund so authorized may issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, (each such series, together with all other series subsequently established by each Fund and made subject to the Contract in accordance with the terms thereof, shall be referred to as a "Portfolio", and, collectively, the "Portfolios"); and
WHEREAS, each Fund and the Custodian desire to amend certain provisions of the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund and the Custodian desire to amend and restate certain other provisions of the Contract relating to the terms and conditions of the custody of assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter contained, the parties hereby agree to amend the Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 25 of the Contract are hereby amended, as of the effective date of this Amendment, by renumbering same as Articles 5 through 26, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective date of this Amendment, as set forth below.
Capitalized terms in this Article 3 of the Contract shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment; economic and financial infrastructure (including any Mandatory
Securities Depositories operating in the country); prevailing or developing custody and settlement practices; laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country; and factors comprising the "prevailing country risk", including the effects of foreign law on the safekeeping of Portfolio assets, the likelihood of expropriation, nationalization, freezing, or confiscation of a Portfolio's assets and any reasonably foreseeable difficulties in repatriating a Portfolio's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act, except that the term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of a Portfolio's investments (including foreign currencies) for which the primary market is outside the United States, currency contracts that are settled outside the United States and such cash and cash equivalents as are reasonably necessary to effect a Portfolio's transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if a
Fund determines to place Foreign Assets in a country outside the United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
Each applicable Fund, by resolution adopted by its Board of Trustees or Board of Directors (as appropriate and in each case, the "Board"), hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Article 3 with respect to Foreign Assets held outside the United States, and the Custodian hereby accepts such delegation, as Foreign Custody Manager of each Portfolio.
The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to (a) the countries listed on Schedule A hereto as approved by the applicable Fund's Board, which list of Board-approved countries may be amended from time to time by a Fund with the agreement of the Foreign Custody Manager, and (b) the custody arrangements set forth on such Schedule A. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians
selected by the Foreign Custody Manager to maintain the assets of each
Portfolio, which list of Eligible Foreign Custodians may be amended from time to
time in the sole discretion of the Foreign Custody Manager. Mandatory Securities
Depositories are listed on Schedule B to this Contract, which Schedule B may be
amended from time to time by the Foreign Custody Manager. The Foreign Custody
Manager will provide amended versions of Schedules A and B in accordance with
Section 3.7 of this Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account, or to place or maintain Foreign Assets, in a country listed on Schedule A, and the fulfillment by a Fund of the account opening requirements for such country (if any), the Foreign Custody Manager shall be deemed to have been appointed by the Board as Foreign Custody Manager with respect to that country and to have accepted the delegation. Execution of this Amendment by a Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each Board-approved country listed on Schedule A in which the Custodian has previously placed or currently maintains Foreign Assets pursuant to the terms of the Contract. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board to the Custodian as Foreign Custody Manager for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager of the Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the applicable Fund. Thirty days (or such longer period as to which the parties agree in writing) after receipt of any such notice by the applicable Fund, the Custodian shall have no further responsibility as Foreign Custody Manager to a Portfolio with respect to the country as to which the Custodian's acceptance of delegation is withdrawn.
Subject to the provisions of this Article 3, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodians selected by the Foreign Custody Manager in each country listed as "approved" on Schedule A, as such Schedule is amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place or maintain the Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation, the factors specified in Rule 17f-5(c)(1).
The Foreign Custody Manager shall determine that the contract (or the rules or established practices or procedures in the case of an Eligible Foreign Custodian that is a foreign securities depository or clearing agency) governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian, selected by the Foreign Custody Manager, the Foreign Custody Manager shall maintain a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian, and (ii) the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules or established practices and procedures in the case of an Eligible Foreign Custodian selected by the Foreign Custody Manager which is a foreign securities depository or clearing agency that is not a Mandatory Securities Depository). The Foreign Custody Manager shall provide the Board with information at least annually as to the factors used in such monitoring system. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian that it has selected are no longer appropriate, the Foreign Custody Manager shall promptly transfer each Fund's Foreign Assets to another Eligible Foreign Custodian in the market and shall notify the Board in accordance with Section 3.7 hereunder.
For purposes of this Article 3, each Fund's Board shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of a Portfolio, and such Board shall be deemed to be monitoring on a continuing basis such Country Risk to the extent that such Board considers necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, each Fund on behalf of the Portfolios and the Custodian expressly acknowledge and agree that the Foreign Custody Manager shall not be delegated any responsibilities under this Article 3 with respect to Mandatory Securities Depositories, and that the determination by or on behalf of each Fund's Board to place the Foreign Assets in a particular country shall be deemed to include the determination to place such Foreign Assets eligible for any Mandatory Securities Depository with such Mandatory Securities Depository, whether the Mandatory Securities Depository exists at the time the Foreign Assets are acquired, or after the acquisition thereof.
In performing the responsibilities delegated to it, the Foreign Custody Manager shall exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.
The Foreign Custody Manager shall report at least quarterly on the Foreign Assets held with each Eligible Foreign Custodian and in connection therewith if applicable, provide to the Board amended Schedules A or B at the end of the calendar quarter in which an amendment to either Schedule has occurred. The Foreign Custody Manager will make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Article 3 promptly after the occurrence of the material change.
The Foreign Custody Manager represents to each Fund that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.
Each Fund represents to the Custodian that its Board has determined that it is reasonable for such Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Contract to the Custodian as the Foreign Custody Manager of each Portfolio.
Each Fund's Board's delegation to the Custodian as Foreign Custody Manager of a Portfolio shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty days after receipt by the non-terminating party of such notice. The provisions of Section 3.3 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the applicable Fund with respect to designated countries.
If at any time prior to termination of this Amendment the Custodian as a matter of standard business practice, accepts delegation as Foreign Custody Manager for its U.S. mutual fund clients on terms materially different than set forth in this Amendment, the Custodian hereby agrees to negotiate with each Fund in good faith with respect thereto.
Terms used in this Article 4 and not defined below shall have the meanings ascribed them in the Contract or in this Amendment:
"Foreign Securities System" means either a clearing agency or a securities depository which is listed on Schedule A hereto or a Mandatory Securities Depository.
"Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian.
The Custodian shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
Foreign securities shall be maintained in a Foreign Securities System in a designated country only through arrangements implemented by the Foreign Sub-Custodian in such country pursuant to the terms of this Contract.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of a Portfolio held by such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
(i) upon sale of such foreign securities for the applicable Portfolio in accordance with reasonable market practice in the country where such Foreign Assets are held or traded, including, without limitation: (A)
delivery against expectation of receiving later payment; or (B), in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign securities;
(iii) to the depository agent in connection with tender or other similar offers for foreign securities of the applicable Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian (or such Foreign Sub-Custodian)) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with reasonable market practices in the country where such securities are held or traded; provided that in any such case the Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by any Fund requiring a pledge of assets by the applicable Portfolio;
(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions, a copy of a resolution of the applicable
Board or of an Executive Committee of the applicable Board so authorized by the Board, signed by an officer of the applicable Fund and certified by its Secretary or an Assistant Secretary that the resolution was duly adopted and is in full force and effect (a "Certified Resolution"), specifying the Foreign Assets to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such Foreign Assets shall be made.
Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, moneys of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the applicable Portfolio, unless otherwise directed by Proper Instructions, in accordance with reasonable market settlement practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign securities of the applicable Portfolio;
(iii) for the payment of any expense or liability of the applicable
Portfolio including but not limited to the following payments:
interest, taxes, investment advisory fees, transfer agency
fees, fees under this Contract, legal fees, accounting fees,
and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the applicable Portfolio, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities; and
(viii) for any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a Certified Resolution specifying the amount of such
payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made.
Notwithstanding any provision of this Contract to the contrary, settlement and payment for Foreign Assets received for the account of a Portfolio and delivery of Foreign Assets maintained for the account of a Portfolio may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs generally accepted by Institutional Clients, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer. For purposes of this Contract, "Institutional Clients" means U.S. registered investment companies or major U.S. based commercial banks, insurance companies, pension funds or substantially similar institutions which, as a part of their ordinary business operations, purchase or sell securities and make use of global custody services.
The Custodian shall provide to each Fund's Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian, including without limitation information relating to Foreign Securities Systems, described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such revision shall result in each Fund's Board being provided with substantively less information than had been previously provided hereunder and, provided further, that the Custodian shall in any event provide to each Fund's Board and to A I M Advisors, Inc. annually the following information and opinions with respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with
respect to U.S. registered mutual funds (a) access of a fund's
independent public accountants to books and records of a
Foreign Sub-Custodian or Foreign Securities System, (b) a
fund's ability to recover in the event of bankruptcy or
insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (c) a fund's ability to recover in the event of a loss
by a Foreign Sub-Custodian or Foreign Securities System, and
(d) the ability of a foreign investor to convert cash and cash
equivalents to U.S. dollars;
(ii) summary of information regarding Foreign Securities Systems; and
(iii) country profile information containing market practice for (a) delivery versus payment, (b) settlement method, (c) currency restrictions, (d) buy-in practices, (e) foreign ownership limits, and (f) unique market arrangements.
The foreign securities maintained in the custody of a Foreign Custodian (other than bearer securities) shall be registered in the name of the applicable Fund (on behalf of the
applicable Portfolio) or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the applicable Fund agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities, except to the extent that the applicable Fund incurs loss or damage due to failure of such nominee to meet its standard of care as set forth in the Contract. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of the applicable Fund (on behalf of the applicable Portfolio) under the terms of this Contract unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.
Sub-Custodians from issuers of the foreign securities being held for the account
of a Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the applicable Fund written information so received by the
Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
Subject to the standard of care to which the Custodian is held under this
Contract, the Custodian shall not be liable for any untimely exercise of any
tender, exchange or other right or power in connection with foreign securities
or other property of the applicable Portfolio at any time held by it unless (i)
the Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least two New York business days prior to the date on
which the Custodian is to take action to exercise such right or power.
other relevant facts concerning tax treatment of such Fund and further to inform the Custodian if such Fund is or becomes the beneficiary of any special ruling or treatment not applicable to the general nationality and category of entity of which such Fund is a part under general laws and treaty provisions. The Custodian shall be entitled to rely on any information supplied by the applicable Fund. The Custodian may engage reasonable professional advisors disclosed to each Fund by the Custodian, which may include attorneys, accountants or financial institutions in the regular business of investment administration and may rely upon advice received therefrom.
The Custodian shall be liable to each Fund on account of any actions or omissions of any Foreign Sub-Custodian to the same extent as such Foreign Sub-Custodian shall be liable to the Custodian.
The Custodian shall maintain separate and distinct records for each Portfolio and the assets allocated solely with such Portfolio shall be held and accounted for separately from the assets of each Fund associated solely with any other Portfolio. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Portfolio shall be enforceable against the assets of such Portfolio only, and not against the assets of any Fund generally or the assets of any other Portfolio.
III. Except as specifically superseded or modified herein, the terms and provisions of the Contract shall continue to apply with full force and effect. In the event of any conflict between the terms of the Contract prior to this Amendment and this Amendment, the terms of this Amendment shall prevail. If the Custodian is delegated the responsibilities of Foreign Custody Manager pursuant to the terms of Article 3 hereof, in the event of any conflict between the provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall prevail.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in its name and behalf by its duly authorized representative as of the date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
/s/ STEPHANIE L. POSTER By: /s/ RONALD E. LOGUE ---------------------------- ---------------------------------- Stephanie L. Poster Name: Ronald E. Logue Vice President Title: Vice Chairman |
WITNESSED BY:
EACH OF THE ENTITIES SET FORTH ON
APPENDIX A ATTACHED HERETO
/s/ STEPHEN I. WINER By: /s/ CAROL F. RELIHAN ---------------------------- ---------------------------------- Name: Stephen I. Winer Name: Carol F. Relihan Title: Assistant Secretary Title: Senior Vice President |
APPENDIX A
AIM ADVISOR FUNDS, INC. AIM VARIABLE INSURANCE FUNDS
o AIM Advisor Flex Fund o AIM V.I. Aggressive Growth Fund
o AIM Advisor International Fund o AIM V.I. Balanced Fund
o AIM Advisor Large Cap Value Fund o AIM V.I. Blue Chip Fund
o AIM Advisor Real Estate Fund o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
AIM EQUITY FUNDS, INC. o AIM V.I. Dent Demographic Trends Fund
o AIM Aggressive Growth Fund o AIM V.I. Diversified Income Fund
o AIM Blue Chip Fund o AIM V.I. Global Growth and Income Fund
o AIM Capital Development Fund o AIM V.I. Global Utilities Fund
o AIM Charter Fund o AIM V.I. Government Securities Fund
o AIM Constellation Fund o AIM V.I. Growth and Income Fund
o AIM Dent Demographic Trends Fund o AIM V.I. Growth Fund
o AIM Emerging Growth Fund o AIM V.I. High Yield Fund
o AIM Large Cap Basic Value Fund o AIM V.I. International Equity Fund
o AIM Large Cap Growth Fund o AIM V.I. Money Market Fund
o AIM Mid Cap Growth Fund o AIM V.I. Telecommunications and
o AIM Weingarten Fund Technology Fund
o AIM V.I. Value Fund
AIM FUNDS GROUP
o AIM Balanced Fund AIM FLOATING RATE FUND
o AIM Global Utilities Fund
o AIM High Yield Fund AIM GROWTH SERIES
o AIM Income Fund
o AIM Intermediate Government Fund o AIM Basic Value Fund
o AIM Money Market Fund o AIM New Pacific Growth Fund
o AIM Select Growth Fund o AIM Euroland Growth Fund
o AIM Value Fund o AIM Japan Growth Fund
o AIM Mid Cap Equity Fund
AIM INTERNATIONAL FUNDS, INC. o AIM Small Cap Growth Fund
o AIM Asian Growth Fund
o AIM European Development Fund AIM INVESTMENT FUNDS
o AIM Global Aggressive Growth Fund
o AIM Global Growth Fund o AIM Global Health Care Fund
o AIM Global Income Fund o AIM Global Telecommunications and Technology Fund
o AIM International Equity Fund o AIM Latin American Growth Fund
o AIM Developing Markets Fund
AIM INVESTMENT SECURITIES FUNDS o AIM Global Government Income Fund
o AIM High Yield Fund II o AIM Strategic Income Fund
o AIM Global Growth & Income Fund
AIM SPECIAL OPPORTUNITIES FUNDS
o AIM Small Cap Opportunities Fund AIM SERIES TRUST
o AIM Mid Cap Opportunities Fund o AIM Global Trends Fund
o AIM Large Cap Opportunities Fund
AIM SUMMIT FUND, INC.
|
o GLOBAL INVESTMENT PORTFOLIO
o Global Consumer Products and
Services Portfolio
o Global Financial Services Portfolio
o Global Infrastructure Portfolio
o Global Resources Portfolio
o GROWTH PORTFOLIO
o Small Cap Portfolio
o Value Portfolio
o EMERGING MARKETS DEBT PORTFOLIO
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Fortis Bank NV/as. --
Bermuda The Bank of Bermuda Limited --
Bolivia Citibank, N.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
|
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d. --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt Egyptian British Bank --
(as delegate of The Hongkong
and Shanghai Banking Corporation
Limited)
Estonia Hansabank --
Finland Merita Bank Plc. --
France Paribas, S.A. --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Rt. --
|
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Iceland Icebank Ltd.
India Deutsche Bank A.G. --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Paribas, S.A. --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Limited
Japan The Fuji Bank, Limited Japan Securities Depository
Center (JASDEC)
The Sumitomo Bank, Limited
Jordan HSBC Bank Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia A/s Hansabank --
|
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Lebanon HSBC Bank Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse ASA
Oman HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank A.G. --
Palestine HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Panama BankBoston, N.A. --
Peru Citibank, N.A. --
|
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Portugal Banco Comercial Portugues --
Qatar HSBC Bank Middle East --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria Creditanstalt d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander Central Hispano, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
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SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Taiwan - R.O.C Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ukraine ING Bank Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay BankBoston N.A. --
Venezuela Citibank, N.A. --
Vietnam The Hongkong and Shanghai --
Banking Corporation Limited
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
|
Euroclear (The Euroclear System)/State Street London Limited
Cedelbank S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depots et de Virements
de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada Canadian Depository for Securities Limited
Chile Deposito Central de Valores S.A.
People's Republic Shanghai Securities Central Clearing & Registration
of China Corporation
Shenzhen Securities Clearing Co., Ltd.
Colombia Deposito Centralizado de Valores
Costa Rica Central de Valores S.A.
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Croatia Ministry of Finance
National Bank of Croatia
Sredisnja Depozitarna Agencija
Czech Republic Stredisko cennych papirfi
Czech National Bank
Denmark Vaerdipapircentralen (Danish Securities Center)
Egypt Misr Company for Clearing, Settlement, and Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland Finnish Central Securities Depository
France Societe Interprofessionnelle pour la Compensation des
Valeurs Mobilieres
Germany Deutsche Borse Clearing AG
Greece Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong Central Clearing and Settlement System
Central Moneymarkets Unit
Hungary Kozponti Elszamolohaz es Ertektar
(Budapest) Rt. (KELER)
[Mandatory for Gov't Bonds and dematerialized
equities only; SSB does not use for other securities]
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
India The National Securities Depository Limited
Central Depository Services India Limited
Reserve Bank of India
Indonesia Bank Indonesia
PT Kustodian Sentral Efek Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel Tel Aviv Stock Exchange Clearing
House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse system)
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica Jamaica Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia Latvian Central Depository
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Lebanon Custodian and Clearing Center of Financial
Instruments for Lebanon and the Middle East
(MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania Central Securities Depository of Lithuania
Malaysia Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping System
Mauritius Central Depository & Settlement Co. Ltd.
Mexico S.D. INDEVAL
(Instituto para el Deposito de Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor Giraal
Effectenverkeer B.V. (NECIGEF)
New Zealand New Zealand Central Securities Depository Limited
Norway Verdipapirsentralen (the Norwegian Central Registry
of Securities)
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Oman Muscat Securities Market Depository & Securities
Registration Company
Pakistan Central Depository Company of Pakistan Limited
State Bank of Pakistan
Palestine The Palestine Stock Exchange
Peru Caja de Valores y Liquidaciones
CAVALIICLV S.A.
Philippines Philippines Central Depository, Inc.
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
Poland National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych SA)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios
Qatar Doha Securities Market
Romania National Securities Clearing, Settlement and
Depository Company
Bucharest Stock Exchange Registry Division
National Bank of Romania
Singapore Central Depository (Pte)
Limited
Monetary Authority of Singapore
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Slovak Republic Stredisko cennych papierov SR
Bratislava, a.s.
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Strate Ltd.
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen VPC AB
(the Swedish Central Securities Depository)
Switzerland SIS-SegaIntersettle
Taiwan - R.O.C. Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle pour la
Compensation et de Depots de
Valeurs Mobilieres
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Turkey Takas ve Saklama Bankasi A.S. (TAKASBANK)
Central Bank of Turkey
Ukraine National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Venezuela Central Bank of Venezuela
Zambia LuSE Central Shares Depository Limited
Bank of Zambia
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE C
MARKET INFORMATION
PUBLICATION/TYPE OF
INFORMATION BRIEF DESCRIPTION
------------------- -----------------
(FREQUENCY)
The Guide to Custody in An overview of safekeeping and settlement practices and procedures in each market in which State Street
----------------------- Bank and Trust Company offers custodial services.
World Markets
-----------------------
(annually)
Global Custody Network Information relating to the operating history and structure of depositories and subcustodians located in
----------------------- the markets in which State Street Bank and Trust Company offers custodial services, including
Review transnational depositories.
-----------------------
(annually)
Global Legal Survey With respect to each market in which State Street Bank and Trust Company offers custodial services,
----------------------- opinions relating to whether local law restricts (i) access of a fund's independent public accountants
(annually) to books and records of a Foreign Sub-Custodian or Foreign Securities System, (ii) the Fund's ability
to recover in the event of bankruptcy or insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (iii) the Fund's ability to recover in the event of a loss by a Foreign Sub-Custodian or Foreign
Securities System, and (iv) the ability of a foreign investor to convert cash and cash equivalents to
U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts State Street Bank and Trust Company has entered into with each
----------------------- subcustodian in the markets in which State Street Bank and Trust Company offers subcustody services to
(annually) its US mutual fund clients.
Network Bulletins Developments of interest to investors in the markets in which State Street Bank and Trust Company offers
(weekly): custodial services.
Foreign Custody With respect to markets in which State Street Bank and Trust Company offers custodial services which
Advisories (as exhibit special custody risks, developments which may impact State Street's ability to deliver expected
necessary): levels of service.
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EXHIBIT h(6)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made this 1 day of June, 2000 by and between A I M ADVISORS, INC., a Delaware corporation (the "Administrator") and AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust (the "Trust") with respect to the separate series set forth in Appendix A to this Agreement, as the same may be amended from time to time (the "Portfolios").
WITNESSETH:
WHEREAS, the Trust is an open-end investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust, on behalf of the Portfolios, has retained the Administrator to perform (or arrange for the performance of) accounting, shareholder servicing and other administrative services as well as investment advisory services to the Portfolios, and that the Administrator may receive reasonable compensation or may be reimbursed for its costs in providing such additional services, upon the request of the Board of Trustees and upon a finding by the Board of Trustees that the provision of such services is in the best interest of the Portfolios and their shareholders; and
WHEREAS, the Board of Trustees has found that the provision of such administrative services is in the best interest of the Portfolios and their shareholders, and has requested that the Administrator perform such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the provision of, any or all of the following services by the Administrator or its affiliates:
(a) the services of a principal financial officer of the Trust (including related office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Trust and the Portfolios, including the review of daily net asset value calculations and the preparation of tax returns; and the services (including related office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer;
(b) supervising the operations of the custodian(s), transfer agent(s) or dividend agent(s) for the Portfolios; or otherwise providing services to shareholders of the Portfolios; and
(c) such other administrative services as may be furnished from time to time by the Administrator to the Trust or the Portfolios at the request of the Trust's Board of Trustees.
2. The services provided hereunder shall at all times be subject to the direction and supervision of the Trust's Board of Trustees.
3. As full compensation for the services performed and the facilities furnished by or at the direction of the Administrator, the Portfolios shall reimburse the Administrator for expenses incurred by them or their affiliates in accordance with the methodologies established from time to time by the Trust's Board of Trustees. Such amounts shall be paid to the Administrator on a quarterly basis.
4. The Administrator shall not be liable for any error of judgment or for any loss suffered by the Trust or the Portfolios in connection with any matter to which this Agreement relates, except a loss resulting from the Administrator's willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement.
5. The Trust and the Administrator each hereby represent and warrant, but only as to themselves, that each has all requisite authority to enter into, execute, deliver and perform its obligations under this Agreement and that this Agreement is legal, valid and binding, and enforceable in accordance with its terms.
6. Nothing in this Agreement shall limit or restrict the rights of any director, officer or employee of the Administrator who may also be a trustee, officer or employee of the Trust to engage in any other business or to devote his time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, nor limit or restrict the right of the Administrator to engage in any other business or to render services of any kind to any other corporation, firm, individual or association.
7. This Agreement shall become effective with respect to a Portfolio on the Effective Date for such Portfolio, as set forth in Appendix A attached hereto. This Agreement shall continue in effect until June 30, 2001, and may be continued from year to year thereafter, provided that the continuation of the Agreement is specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of "a majority of the outstanding voting securities" of such Portfolio (as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of a party to this Agreement (other than as trustees of the Trust), by votes cast in person at a meeting specifically called for such purpose.
This Agreement shall terminate automatically in the event of its assignment (as defined in Section 2(a) (4) of the 1940 Act).
8. This Agreement may be amended or modified with respect to one or more Portfolios, but only by a written instrument signed by both the Trust and the Administrator.
9. Notice is hereby given that, as provided by applicable law, the obligations of or arising out of this Agreement are not binding upon any of the shareholders of the Trust individually but are binding only upon the assets and property of the Trust and that the shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation on personal liability as stockholders of private corporations for profit.
10. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite 100, Houston, Texas 77046, Attention: President, with a copy to the General Counsel, or (b) to the Trust at Eleven Greenway Plaza, Suite 100, Houston, Texas 77046, Attention: President, with a copy to the General Counsel.
11. This Agreement contains the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof.
12. This Agreement shall be governed by and construed in accordance with the laws (without reference to conflicts of law provisions) of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
A I M ADVISORS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
------------------------------- --------------------------------
Assistant Secretary Senior Vice President
|
(SEAL)
AIM INVESTMENT SECURITIES FUNDS
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
------------------------------- --------------------------------
Assistant Secretary Senior Vice President
|
(SEAL)
APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM INVESTMENT SECURITIES FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM High Yield Fund June 1, 2000 AIM High Yield Fund II June 1, 2000 AIM Income Fund June 1, 2000 AIM Intermediate Government Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 |
EXHIBIT h(8)(i)
AMENDMENT NO. 7 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSPlus FORMS PROCESSING SOFTWARE
THIS AMENDMENT, dated as of the 29th day of February, 2000 is made to
the Remote Access and Related Services Agreement dated as of December 23, 1994,
as amended (the "Agreement") between each registered investment company listed
on Exhibit 1 of the Agreement (the "Fund") and FIRST DATA INVESTOR SERVICES
GROUP, INC. (k/n/a PFPC Inc.) ("PFPC").
WITNESSETH
WHEREAS, the Fund and PFPC desire to amend certain provisions of the Agreement;
NOW THEREFORE, the Fund and PFPC agree that as of the date first referenced above, the Agreement shall be amended as follows:
1. All references to "First Data Investor Services Group, Inc." and "Investor Services Group" are hereby deleted and replaced with "PFPC Inc." and "PFPC" respectively.
2. Exhibit 1 of the Agreement is hereby deleted and replaced with the attached revised Exhibit 1.
3. Schedule C -- "Fee Schedule" is hereby amended by adding the following new subsection i to Section III -- "Additional Fees":
"i. IMPRESSPlus Forms Processing Fees. The following fees shall cover costs associated with the Fund's use of the Forms Processing Software, maintenance and support and the costs associated with the integration of the associated software with IMPRESSPlus.
Number of user licenses purchased: 300 (125 max. concurrent users) Total License Fee: $842,400* Monthly Maintenance Fee: $15,600**
*Calculated at $2,808 per user license ($78 per month per user license). Additional concurrent user licenses may be purchased by the Fund during the term of this Agreement and PFPC will apply appropriate volume discounts at the time of purchase.
**Calculated at $52 per user license per month.
The License Fee includes:
(a) All ICR/OCR software, including AEG recognition engine, Form ID, PerfectPost Address Validation, Image pre-processing Module, FormWare JobFlow, FormWare Completion, and Edit/Export Module;
(b) One copy of System and User documentation;
(c) A completed ICR/OCR application to handle and process AIM's New Account form;
(d) Quarterly PerfectPost updates each year;
(e) Attendance at the IMPRESS Plus User Group meetings; and
(f) Installation and implementation of the application and integrated solution.
Delivery
PFPC shall deliver to the Fund and install IMPRESSPlus Forms Processing 1.0, as customized as described herein, no later than six (6) months following the Fund's acceptance of the Forms Processing Functional Specifications (the "Delivery Date"). The Fund and PFPC agree to use good faith efforts to finalize the Forms Processing Functional Specifications document as soon as reasonably practicable.
Payment Terms:
1/3 of Total License Fee ($280,800) is due and payable thirty (30) days after effective date of this Amendment No. 7: Monthly License Fee payments in the amount of $20,800 (Totaling $561,600) will begin to accrue upon delivery of the software and the obligation of the Fund to begin paying the Monthly License Fee shall commence upon Acceptance (described below), provided, however,
(a) If Acceptance occurs between one (1) day following the Delivery Date and sixty (60) days following the Delivery Date, then the initial Monthly License Fee payable by the Fund shall include (i) the Monthly License Fee for the month in which Acceptance occurs; and (ii) any accrued Monthly License Fees. However, if Acceptance does not occur at or prior to sixty (60) days following the Delivery Date, then (x) any accrued Monthly License Fees shall be forfeited by PFPC, (y) the initial Monthly License Fee shall equal $20,800, and (z) the initial Monthly License Fee shall apply to the month in which Acceptance occurs. The forgoing described forfeiture of fees shall in no event apply if the cause of the delay results from any action or inaction of the Fund, or its affiliates.
(b) PFPC shall be entitled to an additional payment in an amount equal to $10,000 for each fifteen (15) day period prior to the Delivery Date in which actual delivery occurs. Such additional payment shall be made within thirty (30) days of Acceptance.
(c) Notwithstanding the above, in all instances, (i) the Fund's obligation to pay the Monthly Maintenance Fee shall commence during the calendar month of Acceptance; and (ii) the Fund's obligation to pay Monthly License Fees shall terminate on December 31, 2002.
Other Costs.
All AIM-specific optional customizations and enhancements not otherwise identified as "included" in the License and Maintenance Fees identified herein will be billed at a rate of $150/hour with mutually agreed upon project definition and functional requirements.
Training will be billed at $2,500 per student per class. The Fund agrees to send at least one individual to at least two (2) training classes.
The Fund may purchase additional copies of user and technical documentation at a cost of $100 per copy.
Acceptance. The Fund shall be deemed to have accepted the IMPRESSPlus Forms Processing Software on the earlier of (i) the Fund's first use of any software component to process live production data; or (ii) twenty-one (21) days after delivery of the software, provided, however, acceptance shall be deemed not to have occurred during the aforementioned twenty-one day period if during such period the Fund notifies PFPC in writing and can demonstrate that the software is unable to perform any of the following acceptance criteria:
(a) scan documents into the "Recognition" or a comparable alternate activity in the Impress Imaging Application using existing Ricoh and Kodak scanners;
(b) recognize the document based on form geography and/or bar codes;
(c) recognize and appropriately reject missing pages, blank fields and client annotations in the document margins;
(d) perform recognition process and deliver the documents to specified associates for verification and/or correction;
(e) automated workflow based on form ID and pre-determined recognition conditions
(f) allow the user to discontinue verification/correction in favor of data entry from image on applications that could not be read;
(g) automatically update all IMPRESSPlus Imaging system indexes. These consist of Transaction Type, Fund#, Account#, document workflow history, and the information contained in the four transaction free form indexes;
(h) automatically update to the FSR system, on a near time basis, all new account information recognized on the new account form;
(i) update the FSR system utilizing existing application edits found on the online system; and
(j) include standard reporting functionality provided by FormWare. Predetermined reports include, Operator Batch Detail, Operator Job Summary, Operator Keystroke, Operator Summary & Operator Time. AIM may customize reports utilizing FormWare data elements.
In the event that the Fund so notifies PFPC and demonstrates that one or more or the acceptance criteria stated above has not been met, PFPC and the Fund agree to use best efforts to resolve any such failures and upon resolution. Acceptance shall be deemed to have occurred.
4. Section 1.1 of Exhibit 1 of Schedule G of the Agreement is hereby amended by adding the following to the list of PFPC software products:
"IMPRESSPlus Forms Processing 1.0"
5. Section 2.1.3 of Exhibit 1 of Schedule G of the Agreement is hereby amended by adding the following:
"2.1.3 Captiva Software. The following Third Party Software is licensed directly to the Fund by PFPC subject to the mandatory Captiva Software Corporation ("Captiva") software license terms and conditions ("Captiva Terms") to be provided to the Fund upon delivery of the Captiva Software. To the extent that the Captiva Terms conflict with or differ from the other terms and conditions in the Agreement, the Captiva Terms shall prevail with respect to the Captiva Software.
Captiva Formware -- 300 seat availability maximum 125 concurrent users
Notwithstanding any provision of the Agreement to the contrary, upon termination of this Agreement, the Fund shall retain a perpetual license with respect to the Captiva Software, provided however, the Fund's use of the Captive Software shall be governed by the Captiva Terms and provided that PFPC shall have no further responsibility to the Fund with respect to the use by the Fund thereof.."
6. Exhibit 1.1 of Schedule G -- "Specifications" is amended by adding the following new section:
"IMPRESSPlus Forms Processing
The IMPRESSPlus Forms Processing system is an integrated ICR/OCR solution for mutual fund transaction processing. The IMPRESSPlus Forms Processing system utilizes PFPC existing workflow technology and Captiva Software Corporation's FormWare product. This integrated solution provides the user with the capability to process shareholder transactions, maintenance and new account set up through Intelligent Character Recognition. This technology will allow for population of specified information, from established form types to the PFPC FSR shareholder recordkeeping system with reduced keystrokes by a data entry operator."
7. The Agreement, as previously amended and as amended by this Amendment, ("Modified Agreement") constitutes the entire agreement between the parties with respect to the subject matter hereof. The Modified Agreement supersedes all prior and contemporaneous agreements between the parties in connection with the subject matter hereof. No officer,
employee, servant or other agent of either party is authorized to make any representation, warranty, or other promises not expressly contained herein with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, as of the day and year first above written.
On behalf of the Funds and respective PFPC INC.
Portfolios And Classes Set Forth In (f/k/a First Data Investor Services
Exhibit 1 of the Agreement which may Group, Inc.)
be amended from time to time.
By: /s/ CAROL F. RELIHAN By: /s/ DEBRLEE GOLDBERG
----------------------------------- --------------------------------
Name: Carol F. Relihan Name: Debrlee Goldberg
--------------------------------- ------------------------------
Title: Senior Vice President Title: Senior Vice President
-------------------------------- -----------------------------
|
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0001 AIM WEINGARTEN FUND - CLASS A 0002 AIM CONSTELLATION FUND - CLASS A 0006 AIM BALANCED FUND - CLASS A 0007 AIM LIMITED MATURITY TREASURY FUND - CLASS A 0008 AIM TAX-FREE INTERMEDIATE FUND 0010 AIM CHARTER FUND - CLASS A 0016 AIM INTERNATIONAL EQUITY FUND - CLASS A 0017 AIM HIGH INCOME MUNICIPAL FUND - CLASS A 0018 AIM MID CAP GROWTH FUND - CLASS A 0019 AIM LARGE CAP OPPORTUNITIES FUND - CLASS A 0030 AIM EUROPEAN DEVELOPMENT FUND - CLASS A 0031 AIM ASIAN GROWTH FUND - CLASS A 0034 AIM SMALL CAP OPPORTUNITIES FUND - CLASS A 0035 AIM HIGH YIELD FUND II - CLASS A 0036 AIM MID CAP OPPORTUNITIES FUND - CLASS A 0037 AIM LARGE CAP GROWTH FUND - CLASS A 0038 AIM DENT DEMOGRAPHIC TRENDS FUND - CLASS A 0039 AIM LARGE CAP BASIC VALUE FUND - CLASS A 0081 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS A 0082 AIM GLOBAL GROWTH FUND - CLASS A 0083 AIM GLOBAL INCOME FUND - CLASS A 0301 AIM WEINGARTEN FUND - CLASS C 0302 AIM CONSTELLATION FUND - CLASS C 0303 AIM MUNICIPAL BOND FUND - CLASS C 0305 AIM VALUE FUND - CLASS C 0306 AIM BALANCED FUND - CLASS C 0307 AIM AGGRESSIVE GROWTH FUND - CLASS C 0308 AIM GLOBAL UTILITIES FUND - CLASS C 0310 AIM CHARTER FUND - CLASS C 0314 AIM CAPITAL DEVELOPMENT FUND - CLASS C 0315 AIM BLUE CHIP FUND - CLASS C 0316 AIM INTERNATIONAL EQUITY FUND - CLASS C 0317 AIM HIGH INCOME MUNICIPAL FUND - CLASS |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0318 AIM MID CAP GROWTH FUND - CLASS C 0319 AIM LARGE CAP OPPORTUNITIES FUND - CLASS C 0320 AIM ADVISOR LARGE CAP VALUE FUND - CLASS C 0322 AIM ADVISOR FLEX FUND - CLASS C 0325 AIM ADVISOR REAL ESTATE FUND - CLASS C 0326 AIM ADVISOR INTERNATIONAL VALUE FUND - CLASS C 0330 AIM EUROPEAN DEVELOPMENT FUND - CLASS C 0331 AIM ASIAN GROWTH FUND - CLASS C 0334 AIM SMALL CAP OPPORTUNITIES FUND - CLASS C 0335 AIM HIGH YIELD FUND II - CLASS C 0336 AIM MID CAP OPPORTUNITIES FUND - CLASS C 0337 AIM LARGE CAP GROWTH FUND - CLASS C 0338 AIM DENT DEMOGRAPHIC TRENDS FUND - CLASS C 0339 AIM LARGE CAP BASIC VALUE FUND - CLASS C 0342 AIM NEW PACIFIC GROWTH FUND - CLASS C 0343 AIM EUROLAND GROWTH FUND - CLASS C 0344 AIM JAPAN GROWTH FUND - CLASS C 0346 AIM MID CAP EQUITY FUND - CLASS C 0348 AIM STRATEGIC INCOME FUND - CLASS C 0349 AIM GLOBAL GOVERNMENT INCOME FUND - CLASS C 0350 AIM SELECT GROWTH FUND - CLASS C 0351 AIM GLOBAL HEALTH CARE FUND - CLASS C 0353 AIM LATIN AMERICAN GROWTH FUND - CLASS C 0357 AIM GLOBAL FINANCIAL SERVICES FUND - CLASS C 0358 AIM EMERGING MARKETS DEBT FUND - CLASS C 0359 AIM GLOBAL INFRASTRUCTURE FUND - CLASS C 0360 AIM INTERMEDIATE GOVERNMENT FUND - CLASS C 0361 AIM GLOBAL RESOURCES FUND - CLASS C 0362 AIM GLOBAL CONSUMER PRODS & SERVICES - CLASS C 0363 AIM BASIC VALUE FUND - CLASS C 0364 AIM SMALL CAP GROWTH FUND - CLASS C 0365 AIM INCOME FUND - CLASS C 0375 AIM HIGH YIELD FUND - CLASS C |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0376 AIM DEVELOPING MARKETS FUND - CLASS C 0378 AIM GLOBAL GROWTH AND INCOME FUND - CLASS C 0379 AIM GLOBAL TELECOM. & TECH. FUND - CLASS C 0380 AIM MONEY MARKET FUND - CLASS C 0381 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS C 0382 AIM GLOBAL GROWTH FUND - CLASS C 0383 AIM GLOBAL INCOME FUND - CLASS C 0384 AIM GLOBAL TRENDS FUND - CLASS C 0402 AIM INCOME FUND - CLASS A 0403 AIM MUNICIPAL BOND FUND - CLASS A 0404 AIM INTERMEDIATE GOVERNMENT FUND - CLASS A 0405 AIM VALUE FUND - CLASS A 0406 AIM SELECT GROWTH FUND - CLASS A 0407 AIM AGGRESSIVE GROWTH FUND - CLASS A 0408 AIM GLOBAL UTILITIES FUND - CLASS A 0421 AIM CASH RESERVE SHARES 0422 AIM TAX-EXEMPT CASH FUND 0425 AIM HIGH YIELD FUND - CLASS A 0430 CG GUARANTEED ACCT 71-73 0431 CG GUARANTEED ACCT 74-77 0432 CG GUARANTEED ACCT 1978 0433 CG GUARANTEED ACCT 1979 0434 CG GUARANTEED ACCT 1980 0435 CG GUARANTEED ACCT 1981 0436 CG GUARANTEED ACCT 1982 0437 CG GUARANTEED ACCT 1983 0438 CG GUARANTEED ACCT 1984 0439 CG GUARANTEED ACCT 1985 0440 CG GUARANTEED ACCT 1985A 0441 CG GUARANTEED ACCT 1985B 0442 CG GUARANTEED ACCT 1986 0443 CG GUARANTEED ACCT 1986A 0444 CG GUARANTEED ACCT 1987 |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0445 CG GUARANTEED ACCT 1988 0446 CG GUARANTEED ACCT 1989 0447 CG GUARANTEED ACCT 1990 0448 CG GUARANTEED ACCT 1991 0449 CG GUARANTEED ACCT 1992 0460 AIM TAX-EXEMPT BOND FUND OF CONNECTICUT 0514 AIM CAPITAL DEVELOPMENT FUND - CLASS A 0515 AIM BLUE CHIP FUND - CLASS A 0520 AIM ADVISOR LARGE CAP VALUE FUND - CLASS A 0522 AIM ADVISOR FLEX FUND - CLASS A 0525 AIM ADVISOR REAL ESTATE FUND - CLASS A 0526 AIM ADVISOR INTERNATIONAL VALUE FUND - CLASS A 0542 AIM NEW PACIFIC GROWTH FUND - CLASS A 0543 AIM EUROLAND GROWTH FUND - CLASS A 0544 AIM JAPAN GROWTH FUND - CLASS A 0546 AIM MID CAP EQUITY FUND - CLASS A 0548 AIM STRATEGIC INCOME FUND - CLASS A 0549 AIM GLOBAL GOVERNMENT INCOME FUND - CLASS A 0551 AIM GLOBAL HEALTH CARE FUND - CLASS A 0553 AIM LATIN AMERICAN GROWTH FUND - CLASS A 0557 AIM GLOBAL FINANCIAL SERVICES FUND - CLASS A 0558 AIM EMERGING MARKETS DEBT FUND - CLASS A 0559 AIM GLOBAL INFRASTRUCTURE FUND - CLASS A 0561 AIM GLOBAL RESOURCES FUND - CLASS A 0562 AIM GLOBAL CONSUMER PRODS & SERVICES - CLASS A 0563 AIM BASIC VALUE FUND - CLASS A 0564 AIM SMALL CAP GROWTH FUND - CLASS A 0576 AIM DEVELOPING MARKETS FUND - CLASS A 0578 AIM GLOBAL GROWTH AND INCOME FUND - CLASS A 0579 AIM GLOBAL TELECOM. & TECH. FUND - CLASS A 0584 AIM GLOBAL TRENDS FUND - CLASS A 0602 AIM CONSTELLATION FUND - CLASS B 0607 AIM AGGRESSIVE GROWTH FUND - CLASS B |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0614 AIM CAPITAL DEVELOPMENT FUND - CLASS B 0615 AIM BLUE CHIP FUND - CLASS B 0617 AIM HIGH INCOME MUNICIPAL FUND - CLASS B 0618 AIM MID CAP GROWTH FUND - CLASS B 0619 AIM LARGE CAP OPPORTUNITIES FUND - CLASS B 0620 AIM ADVISOR LARGE CAP VALUE FUND - CLASS B 0622 AIM ADVISOR FLEX FUND - CLASS B 0625 AIM ADVISOR REAL ESTATE FUND - CLASS B 0626 AIM ADVISOR INTERNATIONAL VALUE FUND - CLASS B 0630 AIM EUROPEAN DEVELOPMENT FUND - CLASS B 0631 AIM ASIAN GROWTH FUND - CLASS B 0634 AIM SMALL CAP OPPORTUNITIES FUND - CLASS B 0635 AIM HIGH YIELD FUND II - CLASS B 0636 AIM MID CAP OPPORTUNITIES FUND - CLASS B 0637 AIM LARGE CAP GROWTH FUND - CLASS B 0638 AIM DENT DEMOGRAPHIC TRENDS FUND - CLASS B 0639 AIM LARGE CAP BASIC VALUE FUND - CLASS B 0640 AIM WEINGARTEN FUND - CLASS B 0642 AIM NEW PACIFIC GROWTH FUND - CLASS B 0643 AIM EUROLAND GROWTH FUND - CLASS B 0644 AIM JAPAN GROWTH FUND - CLASS B 0645 AIM CHARTER FUND - CLASS B 0646 AIM MID CAP EQUITY FUND - CLASS B 0648 AIM STRATEGIC INCOME FUND - CLASS B 0649 AIM GLOBAL GOVERNMENT INCOME FUND - CLASS B 0650 AIM SELECT GROWTH FUND - CLASS B 0651 AIM GLOBAL HEALTH CARE FUND - CLASS B 0653 AIM LATIN AMERICAN GROWTH FUND - CLASS B 0655 AIM GLOBAL UTILITIES FUND - CLASS B 0657 AIM GLOBAL FINANCIAL SERVICES FUND - CLASS B 0658 AIM EMERGING MARKETS DEBT FUND - CLASS B 0659 AIM GLOBAL INFRASTRUCTURE FUND - CLASS B 0660 AIM INTERMEDIATE GOVERNMENT FUND - CLASS B |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0661 AIM GLOBAL RESOURCES FUND - CLASS B 0662 AIM GLOBAL CONSUMER PRODS & SERVICES - CLASS B 0663 AIM BASIC VALUE FUND - CLASS B 0664 AIM SMALL CAP GROWTH FUND - CLASS B 0665 AIM INCOME FUND - CLASS B 0670 AIM MUNICIPAL BOND FUND - CLASS B 0675 AIM HIGH YIELD FUND - CLASS B 0676 AIM DEVELOPING MARKETS FUND - CLASS B 0678 AIM GLOBAL GROWTH AND INCOME FUND - CLASS B 0679 AIM GLOBAL TELECOM. & TECH. FUND - CLASS B 0680 AIM MONEY MARKET FUND - CLASS B 0684 AIM GLOBAL TRENDS FUND - CLASS B 0685 AIM BALANCED FUND - CLASS B 0690 AIM VALUE FUND - CLASS B 0691 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS B 0692 AIM GLOBAL GROWTH FUND - CLASS B 0693 AIM GLOBAL INCOME FUND - CLASS B 0694 AIM INTERNATIONAL EQUITY FUND - CLASS B 0695 AIM FLOATING RATE FUND 0790 AIM SUMMIT FUND, INC. CLASS II SHARES 0842 AIM NEW PACIFIC GROWTH FUND - ADVISOR 0843 AIM EUROLAND GROWTH FUND - ADVISOR 0844 AIM JAPAN GROWTH FUND - ADVISOR 0846 AIM MID CAP EQUITY FUND - ADVISOR 0848 AIM STRATEGIC INCOME FUND - ADVISOR 0849 AIM GLOBAL GOVERNMENT INCOME FUND - ADVISOR 0851 AIM GLOBAL HEALTH CARE FUND - ADVISOR 0853 AIM LATIN AMERICAN GROWTH FUND - ADVISOR 0857 AIM GLOBAL FINANCIAL SERVICES FUND - ADVISOR 0858 AIM EMERGING MARKETS DEBT FUND - ADVISOR 0859 AIM GLOBAL INFRASTRUCTURE FUND - ADVISOR 0861 AIM GLOBAL RESOURCES FUND - ADVISOR 0862 AIM GLOBAL CONSUMER PRODS & SERVICES - ADVISOR |
EXHIBIT 1
List of Funds
Fund # Fund Name ------ --------- 0863 AIM BASIC VALUE FUND - ADVISOR 0864 AIM SMALL CAP GROWTH FUND - ADVISOR 0876 AIM DEVELOPING MARKETS FUND - ADVISOR 0878 AIM GLOBAL GROWTH & INCOME FUND - ADVISOR 0879 AIM GLOBAL TELECOM. & TECH. FUND - ADVISOR 0884 AIM GLOBAL TRENDS FUND - ADVISOR |
EXHIBIT h(8)(j)
AMENDMENT No. 8 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR AccessTA SERVICES
THIS AMENDMENT, dated as of the 26th day of June, 2000 is made to the Remote Access and Related Services Agreement dated as of December 23, 1994, as amended (the "Agreement") between each registered investment company listed on Exhibit 1 of the Agreement (the "Fund") and PFPC Inc. ("PFPC").
WITNESSETH
WHEREAS, the Fund desires to enable its employees and the employees of its affiliates to conduct certain shareholder account inquiries and initiate transactions in shareholder accounts through the use of PFPC's proprietary AccessTA interface and PFPC desires to allow such access and provide certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and PFPC agree that as of the date first referenced above, the PFPC Agreement shall be amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same meanings as ascribed them in the Agreement. In addition, the following definitions are hereby incorporated into the Agreement:
(a) "End-User" shall mean any employee of the Funds or any employee of any affiliate of the Funds that access the PFPC recordkeeping system via AccessTA.
(b) "AccessTA" shall mean the PFPC proprietary interface (API) utilized to facilitate the communication between the PFPC Systems applications and the Funds systems applications and to allow End-Users to facilitate account inquiries and initiate transactions.
2. Responsibilities of PFPC. In addition to the services rendered by PFPC as set forth in the Agreement, PFPC agrees to provide the following services for the fees set forth in the Schedule of AccessTA Fees attached hereto as Schedule A of this Amendment:
(a) In accordance with the written AccessTA procedures and product functionality documentation provided to the Fund by PFPC, PFPC shall enable End-Users to access the PFPC System directly through the use of the PFPC AccessTA API in order to conduct Shareholder account inquiries and facilitate transactions in Shareholder accounts.
(b) Maintenance and support of the PFPC AccessTA API, which includes the following:
(i) error corrections, minor enhancements and interim upgrades to the AccessTA API which are made generally available by PFPC to customers utilizing the PFPC AccessTA API;
(ii) help desk support to provide assistance to Fund employees with the Fund's use of the AccessTA API.
(c) Maintenance and support shall not include (i) access to or use of any substantial added functionality, new interfaces, new architecture, new platforms, new versions or major development efforts, unless made generally available by PFPC to its customers, as determined solely by PFPC; or (ii) development of customized features developed for other PFPC clients. Maintenance and support will be provided for customized features developed for the Fund.
(d) Maintenance of the necessary hardware required to host the AccessTA API in PFPC's facility. The Fund shall receive prior notification of any routine maintenance or upgrade of software on the Fund's AccessTA hardware or on the AccessTA Gateway hardware used by the Fund. Such maintenance shall be scheduled at a time mutually agreeable to both parties. In the case of emergency maintenance, PFPC shall give the Fund as much prior notice as possible.
(e) PFPC shall provide the performance standards that are set out in
Section F of the Agreement.
(f) PFPC will expand or reduce the number of AccessTA servers used by the Fund upon the Fund's request. The Fund shall be responsible for the purchase of any additional AccessTA hardware required to complete any requested expansion.
(g) The Fund will have unlimited usage of the AccessTA product for the Fund's internal applications not provided by PFPC.
(h) PFPC will continue to expand the number of APIs available through the AccessTA product and these APIs will be available to AIM under the terms and conditions of this Agreement.
(i) PFPC will develop custom Fund AIM APIs upon AIM's request and the Fund will agree to pay for such custom work based on an estimate of work received from PFPC. Any custom work shall be the property of AIM.
(j) PFPC will provide the Fund AccessTA servers access to the FSR production, acceptance and test regions used by the Fund. The production, acceptance and test AccessTA servers and AccessTA gateways will be available for the Fund's use on the same schedule as the corresponding FSR system that AccessTA uses to retrieve information.
(k) The Fund will purchase the AccessTA servers used by the Fund and PFPC will provide the AccessTA Gateway servers. The AccessTA servers purchased and used by the Fund will not be used by PFPC or any other PFPC client.
If PFPC does not perform the functions listed above, the Fund may take action as outlined in Section 14(c) of the Agreement.
3. Mainframe Resource Utilization. If Funds use of AccessTA causes PFPC mainframe CICS, DASD, or CPU resources ("Mainframe Resource Usage") to increase beyond the threshold described below (the "Usage Threshold"), (i) upon written notification from PFPC, the Funds shall have thirty days to make reasonable efforts to modify those applications used by the Funds, which interface with the mainframe via AccessTA in order to reduce such Mainframe Resource Usage below the Usage Threshold; and (ii) in the event that, after thirty days the Fund does not reduce the Mainframe Resource Usage below the threshold described below, PFPC may then institute, a fee representing the then current cost of additional Mainframe Resource Usage plus twenty percent (20%) for such excess Mainframe Resource Usage. The Usage Threshold shall be determined by a rolling account growth rate for a twelve (12) month period plus a five percent (5%) Mainframe Resource Usage increase during the same twelve month period.
The Agreement, as previously amended and as amended by this Amendment, ("Modified Agreement") constitutes the entire agreement between the parties with respect to the subject matter thereof. The Modified Agreement supersedes all prior and contemporaneous agreements between the parties in connection with the subject matter thereof. No officer, employees, servant or other agent of either party is authorized to make any representation, warranty, or other promises not expressly contained herein with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, as of the day and year first above written.
On behalf of the Funds and PFPC INC.
respective Portfolios and
Classes set forth in Exhibit 1
of the Agreement which may be
amended from time to time.
By: /s/ CAROL F. RELIHAN By: /s/ DEBORAH GOLDBERG
------------------------------- -----------------------------
Name: Carol F. Relihan Name: Deborah Goldberg
----------------------------- ---------------------------
Title: Title: Senior Vice President
---------------------------- --------------------------
|
Schedule A
AccessTA Fees
One Time Set up: $90,000 for the license of the AccessTA product
for use with the Fund's internally developed
systems.
|
*Annual Software Maintenance: $25,000 per year. This includes software upgrades on the AccessTA servers and correcting any improperly functioning AccessTA APIs within a reasonable period of time.
*Annual Hardware Maintenance: $10,000 per year. These support fees will cover PFPC's costs for supporting, maintaining and upgrading AIM's AccessTA servers and the shared AccessTA gateway servers used by AIM. These fees will include the installation of AccessTA hardware at PFPC and in the PFPC production environment, installation of all necessary 3rd party and AccessTA software and post implementation support.
Customized Development $150 per hour
*The above maintenance fees shall be capped at a maximum increase of 5% per year. Such increase shall only take effective at the beginning of each subsequent year. The term of this Amendment No. 8 shall run concurrently with the term of the Agreement dated December 23, 1994. During the final year of the main Agreement, any charges for maintenance under this Amendment No. 8 shall be pro-rated to coincide with the termination of the main Agreement.
EXHIBIT h(8)(k)
AMENDMENT No. 9 - RESTATED AND AMENDED
AMENDMENT No. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNet(TM) SERVICES
THIS RESTATED AMENDMENT, dated as of the 26th day of June, 2000 is made to the Remote Access and Related Services Agreement dated as of December 23, 1994, as amended (the "Agreement") between each registered investment company listed on Exhibit 1 of the Agreement (the "Fund") and PFPC Inc., f/k/a First Data Investor Services Group, Inc. ("PFPC").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial Planners to access accounts and conduct certain account transactions through the use of the Internet and PFPC desires to allow such access and provide certain services as more fully described below in connection therewith;
WHEREAS, the parties desire to restate and amend Amendment Number 6 to the Agreement dated August , 1999 previously executed by the parties
NOW THEREFORE, the Fund and PFPC agree that as of the date first referenced above, PFPC Agreement shall be amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same meanings as ascribed them in the Agreement. In addition, the following definitions are hereby incorporated into Agreement:
(a) "Account Inquiry" shall mean any access to the PFPC System via IMPRESSNet--Registered Trademark-- initiated by an End-User which is not a Financial Transaction.
(a) "End-User" shall mean any Shareholder or Financial Planner that accesses the PFPC recordkeeping system via IMPRESSNet--Registered Trademark--.
(b) "Financial Planner" shall mean any investment advisor, broker-dealer, financial planner or any other person authorized to act on behalf of a Shareholder.
(c) "Financial Transaction" shall mean purchase, redemption, exchange or any other transaction involving the movement of Shares initiated by an End-User.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the Internet used by the Fund to provide information to its shareholders and potential shareholders.
(e) "IMPRESSNet--Registered Trademark--" shall mean the PFPC proprietary system consisting of the PFPC Secure Net Gateway and the PFPC Web Transaction Engine and shall also be deemed to
be part of, and included within the definition of "FDISG System" and "FDISG Facilities", as those terms are defined in the Agreement.
(f) "PFPC Secure Net Gateway" shall mean the system of computer hardware and software and network established by PFPC to provide access between PFPC recordkeeping system and the Internet.
(g) "PFPC Web Transaction Engine" shall mean the system of computer hardware and software created and established by PFPC in order to enable Shareholders of the Fund to perform the transactions contemplated hereunder.
(h) "Internet" shall mean the communications network comprised of multiple communications networks linking education, government, industrial and private computer networks.
(i) "Shares" refers collectively to such shares of capital stock or beneficial interest, as the case may be, or class thereof, of a Fund as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares of the Fund.
2. Responsibilities of PFPC. In addition to the services rendered by PFPC as set forth in the Agreement, PFPC agrees to provide the following services for the fees set forth in the Schedule of IMPRESSNet--Registered Trademark-- Fees attached hereto as Schedule A of this Amendment:
(a) In accordance with the written IMPRESSNet--Registered Trademark--
procedures and product functionality documentation provided to the
Fund by PFPC, PFPC shall, through the use of the PFPC Web Transaction
Engine and Secure Net Gateway enable End-Users to utilize the
Internet to access the PFPC System in order to perform account
inquiries and transactions in Shareholder accounts.
IMPRESSNet--Registered Trademark-- shall be accessible by End-Users
in order to perform transactions in Shareholder accounts via the
Internet at least 95% of the time during any 24 hour period, excluding
a) the standard Initial Program Loads (IPL) which shall be scheduled
from 9:00 p.m. Saturday through 7:00 a.m. Sunday Central Time, and b)
the software change windows which shall be scheduled from 12:00 a.m.
Friday through 4:00 a.m. Friday Central Time and 12:00 a.m. Monday
through 4:00 a.m. Monday Central Time.
(b) Process the set up of personal identification numbers ("PIN") for End-Users which shall include verification of initial identification numbers issued, reset and activate personalized PIN's and reissue new PIN's in connection with lost PIN's.
(c) Installation services which shall include, review and sign off on the Fund's network requirements, recommending method of linking to the PFPC Web Transaction Engine, installing network hardware and software, implementing the network connectivity, and testing the network connectivity and performance;
(d) Maintenance and support of the PFPC Secure Net Gateway and the PFPC Web Transaction Engine, which includes the following:
(i) error corrections, minor enhancements and interim
upgrades to IMPRESSNet--Registered Trademark-- which
are made generally available by PFPC to IMPRESSNet
--Registered Trademark-- customers;
(ii) help desk support to provide assistance to Fund
employees with the Fund's use of IMPRESSNet--Registered
Trademark--.
Maintenance and support shall not include (i) access to or use of any
substantial added functionality, new interfaces, new architecture, new
platforms, new versions or major development efforts, unless made
generally available by PFPC to IMPRESSNet--Registered Trademark--
clients, as determined solely by PFPC; or (ii) development of
customized features.
(e) Maintenance and upkeep of the security infrastructure and
capabilities described in the procedures and product functionality
documentation.
(f) Prepare and forward monthly usage reports to the Fund which shall
provide the Fund with a summary of activity and functionality used by
End-Users. In addition, the Fund will be provided web-site access for
determination of daily usage activity.
3. Responsibility of the Fund. In connection with the services provided by
PFPC hereunder, the Fund shall be responsible for the following:
(a) establishment and maintenance of the Fund Home Page on the
Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable End-Users to access the Fund Home
Page and/or the Investor Services System via the Internet;
(c) provide PFPC with access to and information regarding the Fund Home
Page in order to enable PFPC to provide the services contemplated
hereunder.
4 Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software paid for by the Fund. Such exclusivity would
extend for a period of nine (9) months from the date the enhancement is
placed into the production libraries. Software exclusivity would be
waived if the Fund accepts either of the following conditions:
a). If prior to implementation, PFPC or other PFPC clients agree to
share in the expense of the enhancements.
b). At any time during the 9 months following implementation, PFPC or
other PFPC clients agree to share the expense for the enhancements.
|
The Agreement, as previously amended and as amended by this Amendment, ("Modified Agreement") constitutes the entire agreement between the parties with respect to the subject
matter hereof. The Modified Agreement supersedes all prior and contemporaneous agreements between the parties in connection with the subject matter hereof. No officer, employee, servant or other agent of either party is authorized to make any representation, warranty, or other promises not expressly contained herein with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, as of the day and year first above written.
On behalf of the Funds and respective Portfolios and Classes set forth in Exhibit 1 of the Agreement which may be amended from time to time.
PFPC INC.
By: /s/ JEAN A. MILLER By: /s/ DEBORAH GOLDBERG
------------------------------- ----------------------------
Name: Jean A. Miller Name: Deborah Goldberg
----------------------------- -------------------------
Title: Director Applications Title: Senior Vice President
---------------------------- -------------------------
|
SCHEDULE A
IMPRESSNet(TM) FEES
WEB TRANSACTION ENGINE
SET UP FEE: $150.00 PER HOUR
o Reviewing client network requirements and signing off on the
requirements
o Recommending method of linking to the Web Transaction Engine
o Installing the network hardware and software
o Implementing the network connectivity
o Testing the network connectivity and performance
FINANCIAL TRANSACTION COST:
NUMBER OF TRANSACTIONS PER MONTH FEE PER TRANSACTION
-------------------------------- -------------------
0-10,000 $.50
10,001-20,000 $.40
20,001+ $.25
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ACCOUNT INQUIRY COSTS: $.05 per inquiry*
*At such time as when the Account Inquiry Fees received by PFPC reach a threshold of $40,000 per month for any one month period, the parties in good faith agree to review the above pricing for possible adjustment
SOFTWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Releases of new versions of Web Transaction Engine (does not include
customization)
o Maintain security infrastructure with auditing function for the
purpose of Fund and Shareholder protection
o Monthly Usage Reports and web access as described in Paragraph 2(f)
of this Restated Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in
Exhibit 1)
o Prompt and reasonable classification of submitted enhancements as
minor or major
o Minor enhancement completed within five (5) business days of
submission
o Prompt notification of issues affecting the functionality or
availability of the site
o Notification of upgrades or changes to the site (These should be
made well in advance of moving into production)
o The option to test upgrades or changes
HARDWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Does not include client hardware and software requirements.
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance agreements
The Software Maintenance Fee and Hardware Maintenance Fee shall remain unchanged until December 31, 2002. During each one year term of the agreement after December 31, 2002, the Software Maintenance Fee and Hardware Maintenance Fee may be changed no more than 5% than the then-current Software Maintenance Fee and Hardware Maintenance Fee upon 90 days' prior written notice to the Funds. Such change to the Software Maintenance Fee and Hardware Maintenance Fee shall be effective at the beginning of the next one year term of the Agreement.
CUSTOMIZED DEVELOPMENT: $150 PER HOUR
The above referenced fees do not include fees associated with third party software products which may be required to utilize future releases of IMPRESSNet(TM).
EXHIBIT 1 of SCHEDULE A
IMPRESSNET HELP DESK AND ESCALATION PROCEDURES
This is directed to the IMPRESSNet staff as well as the customer base to ensure a common understanding of the expectations surrounding help desk support.
It is assumed that each site has a front line of technical support which filters out calls and determines that the issue is IMPRESSNet related and is severe enough to justify immediate attention. It is requested that off-hour calls be reserved for major production or data integrity issues.
Once an issue is determined to be IMPRESSNet related, the client representative
(either the user or a point of contact) should call the PFPC Help Desk at (508)
871-8550.
The Help Desk has a list of primary and secondary developers on call by product. It is advantageous to provide a clear and concise problem statement to the Help Desk personnel along with a telephone number and point of contact. The caller should be sure to obtain a ticket number to facilitate progress tracking if necessary.
o The Help Desk will call and/or page the primary on-call developer and allow 15 minutes for a return call.
o If no response is received, the Help Desk will call and/or page the secondary on call and wait 10 minutes for a return call.
o If no response is received, the manager on call will be called and/or paged.
o If no response is received, the Help Desk personnel will contact the Vice President of Corporate Systems and then the Manager of the Environmental Support Group.
o Finally, if no response is received the Help Desk personnel has access to SCONCALL (special procedures utilized by help desk personnel)
Once the developer or manager is assigned the call, they are responsible for seeing that the issue is satisfactorily addressed. They are not necessarily responsible for physically addressing the issue.
The assigned person will contact the designated client personnel to inform them the issue is being addressed and to collect any relevant information.
If an issue will take more than an hour to resolve, the assigned person will periodically update the Help Desk with a progress status.
Once the issue has been addressed it is the responsibility of the assigned person to notify the Help Desk that the issue can be marked as "resolved".
The Help Desk will contact the client to obtain confirmation of resolution prior to closing the ticket.
If there has been a lack of response on a particular issue after the specified time period, please contact your Client Service or IMPRESSNet Manager.
EXHIBIT h(8)(l)
AMENDMENT NUMBER 10 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of July 28, 2000 is made to the Remote Access and Related Services Agreement dated December 23, 1994, as amended (the "Agreement") between each registered investment company listed on Exhibit 1 of the Agreement (the "Fund") and PFPC Inc. ("PFPC").
WITNESSETH
WHEREAS, the Fund and PFPC desire to further amend the Agreement to reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree that as of the date first referenced above, the Agreement shall be amended as follows:
1. Paragraph 9(b) is hereby deleted in its entirety and replaced with the following:
"Notwithstanding the foregoing Section 9(a) or anything else contained in this Agreement to the contrary, PFPC's liability hereunder shall in no event exceed the sum of all amounts paid by all Funds to PFPC during the 12 month period immediately preceding the event giving rise to the liability."
2. Section III "Additional Fees" of Schedule C "Fee Schedule" is hereby amended to add the following paragraphs to subsection h:
"(vii) IMPRESS Plus COLD/Internet Access Software License Fees - The Fund shall pay an initial license fee of $80,000 (the "License Fee"), which includes the use of certain additional INSCI Software. The License Fee shall be due upon the first production usage of IMPRESS Plus COLD/Internet Access software.
(viii) IMPRESS Plus COLD/Internet Access Software Usage Fees. In addition to the License Fee set in section (vii) forth above, the Fund shall pay a monthly usage fee of $1,000 (the "Usage Fee, which includes the use of the additional INSCI Software. The Usage Fee shall commence on the first production usage of IMPRESS Plus COLD/Internet Access software.
(ix) IMPRESS Plus COLD/Internet Access Installation Fees. - Thirty
(30) days following the execution of this Amendment Number [10] to
the Agreement and receipt of an invoice, the Fund shall pay to PFPC
a one-time installation fee of $25,000. Installation activities
include:
o Hardware installation at PFPC site
o IMPRESS Plus COLD/Internet Access application installation
o IMPRESS Plus COLD/Internet Access third party software
installation
o Network Design Assistance
o Project Management
o Post Installation Support
(x) Additional IMPRESS Plus COLD/Internet Access Fees:
o Application Enhancements - $150/hr
(xi) Maintenance and Support for IMPRESS Plus COLD/Internet Access software includes items listed in Section III.b above and the following:
o Hardware support and maintenance
(xii) IMPRESS Plus COLD/Internet Access License, Usage, and Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1 of Schedule G
o Customization or application integration
o Support for IMPRESS Plus COLD/Internet Access applications
customized or built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of hardware,
network, and software components not included in Schedule G
o Travel Expenses for install and support staff for on-site visits
(billed separately per Schedule D)
o Application Source Code
(xiii) IMPRESS Plus COLD/Internet Access Hardware and Network Fees:
One-time* Monthly Support Fee*
--------- --------------------
(Due Upon Execution)
Hardware $35,190.76 $500.00
|
*Fee is subject to change based on actual vendor costs"
3. Exhibit 1 of Schedule G is hereby amended as follows:
(a) Section 1.1 is amended by adding "IMPRESS Plus COLD/Internet Access Release 1.0" to the list of IMPRESS Plus software products.
(b) Section 2.1.5 "INSCI Software" is amended by adding the following new INSCI software products:
"WEBCOINS Software License (2)
WEBCOINS Native IDS for Metacode (2)"
4. Exhibit 1.1 of Schedule G "Specifications" is hereby amended to add the IMPRESS Plus COLD/Internet Access Specifications attached hereto as Exhibit 1.1a of Schedule G.
5. Exhibit 2.3 of Schedule G is hereby amended by adding the following
Equipment:
Quantity Category Description
--------------------------------------------------------------------------------
2 Servers Dell PowerEdge 6350, 550MHz/1MB, Redundant Power,
Base (220-4174)
--------------------------------------------------------------------------------
2 OS Microsoft NTS 4.0 on CD, 10 Client Access Licenses,
OEM Packaging, US Version, Factory Install (430-2185)
--------------------------------------------------------------------------------
|
The Agreement, as previously amended and as amended by this Amendment, ("Modified Agreement") constitutes the entire agreement between the parties with respect to the subject matter hereof. The Modified Agreement supersedes all prior and contemporaneous agreements between the parties in connection with the subject matter hereof. No officer, employee, servant or other agent of either party is authorized to make any representation, warranty, or other promises not expressly contained herein with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, as of the day and year first above written.
On behalf of the Funds and respective Portfolios and Classes set forth in Exhibit 1 of the Agreement, as may be amended from time to time.
By: /s/ JEAN A. MILLER
-------------------------------
Title: Director of Applications
---------------------------
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PFPC INC.
By: /s/ DEBORAH GOLDBERG
-------------------------------
Title: Senior Vice President
----------------------------
|
EXHIBIT 1.1a of Schedule G
SPECIFICATIONS
TABLE OF CONTENTS
III. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY
F. Computer Output to Laser Disc (COLD)/Internet Access
This item is the property of PFPC Inc. (PFPC) of Wilmington, Deleware, and contains confidential and trade secret information. This item may not be transferred from the custody or control of PFPC except as authorized by, and then only by way of loan for limited purposes. It must be returned to PFPC upon request and, in all events, upon completion of the purpose of the loan. Neither this item nor the information it contains may be used or disclosed to persons not having a need for such use or disclosure consistent with the purpose of the loan, without the prior written consent of PFPC.
Copyright PFPC Inc.
1994 - 2000
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of PFPC Inc. No disclosure or use of any portion of these materials may be made without the express written consent of PFPC Inc.
IMPRESS Plus COLD/Internet Access Specifications
OVERVIEW
To allow an end user to download or view statements and tax forms over the
Internet. End users include shareholders, financial intermediaries, and
employees of the Fund.
REQUIREMENTS:
The end users will be given the opportunity to select criteria in which to view
statements and/or tax forms. End users will have the ability to download their
statements and tax forms via Adobe Acrobat. It is assumed that statements and
tax forms are set up in PDF files and loaded on the COLD server. INSCI product
COINSERV, manages the storage of the forms on a UNIX based server. WebCOINS
provides an API to allow Internet access to the COINSERV server through the use
of Active Server Pages (ASP).
RETAIL
OBJECTIVE:
To allow shareholders the ability to receive statements and tax forms online.
Every statement and tax form will need to follow a pre-set index that will allow
retrieval of the forms by shareholder. The fields that will be included in the
indices:
o Management Company
o Fund Number
o Account Number
o Social Security Number/Employee Identification Number
o As of Date
o Report Type
BROKER/DEALER
OBJECTIVE:
To allow broker/dealer, reps and financial planner to view/download statements
and tax forms online. They will only be allowed to view statements and tax forms
by tax identification number, BIN number, or account number.
The financial intermediary can potentially select at what level they want to view statements and tax forms: the rep level, branch level or broker/dealer level. The security for each level will be determined by the User ID assigned to the user.
Every statement and tax form will need to follow a pre-set index that will allow retrieval of the forms by financial intermediary. The fields that will be include in the indices:
o Management Company
o Dealer/Office/Rep Number - If only representative level access is given then
the appropriate data is limited to only the representative's client accounts.
If office level access is given then both the Dealer and Office will be able
to type in any Rep number at the associated office and view the associated
accounts. The same scheme would apply at the Dealer level where the user could
type in any combination of Office and Rep numbers associated with that Dealer.
o BIN
o Fund Number
o Account Number
o Tax ID - Selecting this option allows the financial intermediary to retrieve
statements and tax forms for either an Employee Identification Number or
Social Security Number.
o Report Date
o Report Type
EXHIBIT h(13)(d)
AMENDMENT NUMBER 3 TO THE AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 2000 is made to the Amended and Restated Transfer Agency and Service Agreement dated December 29, 1997, as amended (the "Agreement") between AIM Investment Securities Funds (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 11 of the Agreement.
Paragraph 1 of the Fee Schedule is hereby deleted in its entirety and replaced with the following:
"1. For performance by the Transfer Agent pursuant to this Agreement, the Fund agrees on behalf of each of the Portfolios to pay the Transfer Agent an annualized fee for shareholder accounts that are open during any monthly period as set forth below, and an annualized fee of $ .70 per shareholder account that is closed during any monthly period. Both fees shall be billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of the annualized fee for all such accounts.
Per Account Fee
Fund Type Annualized
--------- ---------------
Class A, B and C
Non-Daily Accrual Funds $15.20
Class A, B and C
Monthly Dividend and Daily Accrual Funds 16.20"
|
Paragraph 4 of the Fee Schedule is hereby deleted in its entirety and replaced with the following:
"4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year (paid by investor per
tax I.D. number).
Balance Credit The total fees due to the Transfer Agent from all
funds affiliated with the Fund shall be reduced
by an amount equal to the investment income
earned by the Transfer Agent on the DDA balances
of the disbursement accounts for those funds.
Remote Services Fee $3.60 per open account per year, payable
monthly and $1.80 per closed account per year,
payable monthly."
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect, except that Amendment Number 1 dated January 1, 1999 is hereby terminated.
AIM INVESTMENT SECURITIES FUNDS
By: /s/ ROBERT H. GRAHAM
----------------------------
President
ATTEST:
/s/ CAROL F. RELIHAN
-------------------------
Secretary
|
A I M FUND SERVICES, INC.
By: /s/ TONY D. GREEN
----------------------------
President
ATTEST:
/s/ LISA A. MOSS
-------------------------
Assistant Secretary
|
EXHIBIT h(14)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of the date indicated on Exhibit "A" between AIM Advisor Funds, AIM Equity Funds, AIM Funds Group, AIM International Funds, Inc., AIM Investment Securities Funds, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, Short-Term Investments Co., Short-Term Investments Trust, and Tax-Free Investments Co. (each a "Company" and collectively, the "Companies"), on behalf of the portfolios listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Companies and AIM agree as follows:
1. Each Company, for itself and its Funds, and AIM agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, AIM will not charge any administrative fee under each Fund's advisory agreement in connection with securities lending activities.
2. Neither a Company nor AIM may remove or amend the fee waivers to a Company's detriment prior to requesting and receiving the approval of the Fund's Board to remove or amend such fee waiver as described on the attached Exhibit "A". AIM will not have any right to reimbursement of any amount so waived.
Unless a Company, by vote of its Board of Directors/Trustees, or AIM terminates the fee waiver, or a Company and AIM are unable to reach an agreement on the amount of the fee waiver to which the Company and AIM desire to be bound, the fee waiver will continue indefinitely with respect to such Company. Exhibit "A" will be amended to reflect the new date through which a Company and AIM agree to be bound.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Company or AIM with respect to any other fee waivers, expense reimbursements and/or expense limitations
IN WITNESS WHEREOF, each Company, on behalf of itself and its Funds listed in Exhibit "A" to this Memorandum of Agreement, and AIM have entered into this Memorandum of Agreement as of the date written above.
AIM ADVISOR FUNDS
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM SUMMIT FUND
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
By: /s/ ROBERT H. GRAHAM
------------------------------
Title: President
---------------------------
|
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------
Title: President
---------------------------
|
EXHIBIT "A"
AIM ADVISOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Advisor Flex Fund September 11, 2000 AIM Advisor International Value Fund September 11, 2000 AIM Advisor Real Estate Fund September 11, 2000 |
AIM EQUITY FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM Aggressive Growth Fund June 21, 2000 AIM Blue Chip Fund June 21, 2000 AIM Capital Development Fund June 21, 2000 AIM Charter Fund June 21, 2000 AIM Constellation Fund June 21, 2000 AIM Dent Demographic Trends Fund June 21, 2000 AIM Emerging Growth Fund June 21, 2000 AIM Large Cap Basic Value June 21, 2000 AIM Large Cap Growth Fund June 21, 2000 AIM Mid Cap Growth Fund June 21, 2000 AIM Weingarten Fund June 21, 2000 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM Balanced Fund June 1, 2000 AIM European Small Company Fund August 30, 2000 AIM Global Utilities Fund June 1, 2000 AIM International Emerging Growth Fund August 30, 2000 AIM New Technology Fund August 30, 2000 AIM Select Growth Fund June 1, 2000 AIM Small Cap Equity Fund August 30, 2000 AIM Value Fund June 1, 2000 AIM Value II Fund August 30, 2000 |
AIM INTERNATIONAL FUNDS, INC.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM Asian Growth Fund June 21, 2000 AIM European Development Fund June 21, 2000 AIM Global Aggressive Growth Fund June 21, 2000 AIM Global Growth Fund June 21, 2000 AIM Global Income Fund June 21, 2000 AIM International Equity Fund June 21, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend fee waiver. Such commitments are evergreen until amended and apply to each Fund.
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- AIM High Yield Fund II June 1, 2000 AIM High Yield Fund June 1, 2000 AIM Income Fund June 1, 2000 AIM Intermediate Government Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 |
AIM SUMMIT FUND
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM Summit Fund July 24, 2000 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM High Income Municipal Fund June 1, 2000 AIM Tax-Exempt Bond Fund of Connecticut June 1, 2000 AIM Tax-Exempt Cash Fund June 1, 2000 AIM Tax-Free Intermediate Fund June 1, 2000 |
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. Growth and Income Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Equity Fund May 1, 2000 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. Telecommunications and Technology Fund May 1, 2000 AIM V.I. Value Fund May 1, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend fee waiver. Such commitments are evergreen until amended and apply to each Fund.
SHORT-TERM INVESTMENTS CO.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- ---------------- Liquid Assets Portfolio June 1, 2000 Prime Portfolio June 1, 2000 |
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- Government & Agency Portfolio June 1, 2000 Government TaxAdvantage Portfolio June 1, 2000 Treasury Portfolio June 1, 2000 |
TAX-FREE INVESTMENTS CO.
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- Cash Reserve Portfolio June 1, 2000 |
* Committed until the Company or AIM requests and receives the approval of the Company's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Fund.
EXHIBIT j(1)
CONSENT OF COUNSEL
AIM INVESTMENT SECURITIES FUNDS
We hereby consent to the use of our name and to the reference to our firm under the caption "Miscellaneous Information - Legal Matters" in the Statement of Additional Information for AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Money Market Fund, AIM Municipal Bond Fund and the Class A Shares of AIM Limited Maturity Treasury Fund and in the Statement of Additional Information for the Institutional Class of AIM Limited Maturity Treasury Fund, both of which are included in Post-Effective Amendment No. 14 to the Registration Statement under the Securities Act of 1933, as amended (No. 33-39519) and Amendment No. 18 to the Registration Statement under the Investment Company Act of 1940, as amended (No. 811-5686) on Form N-1A of AIM Investment Securities Funds.
/S/ BALLARD SPAHR ANDREWS & INGERSOLL
----------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
November 6, 2000
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Exhibit j(2)
[DECHERT LOGO APPEARS HERE]
November 1, 2000
AIM Investment Securities Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046
Dear Sirs:
We hereby consent to the reference to our firm in Post-Effective Amendment No. 14 to the Registration Statement of AIM Investment Securities Funds. In giving such consent, however, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, and the rules and regulations thereunder.
Very truly yours,
/s/ DECHERT PRICE & RHOADS |
EXHIBIT j(3)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders of AIM Investment Securities Funds:
We consent to the use of our reports on AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Limited Maturity Treasury Fund, AIM Money Market Fund, and AIM Municipal Bond Fund (series of AIM Investment Securities Funds) dated September 1, 2000 included herein and to the references to our firm under the heading "Financial Highlights" in the Prospectuses and "Audit Reports" in the Statements of Additional Information.
/s/ KPMG LLP Houston, Texas November 15, 2000 |
EXHIBIT m(5)
FOURTH AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS A SHARES, CLASS C SHARES
AND AIM CASH RESERVE SHARES)
SECTION 1. AIM Investment Securities Funds (the "Fund") on behalf of the series of the Shares of beneficial interest set forth in Appendix A attached hereto (the "Portfolios") may act as a distributor of the Class A shares, Class C shares and AIM Cash Reserve shares of such Portfolios (the "Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur pursuant to the terms of this Master Distribution Plan expenses at the rates set forth in Appendix A per annum of the average daily net assets of the Fund attributable to the Shares, subject to any applicable limitations imposed from time to time by applicable rules of the National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Appendix A may be used to finance any activity which is primarily intended to result in the sale of the Shares, including, but not limited to, expenses of organizing and conducting sales seminars, advertising programs, finders fees, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature, overhead, supplemental payments to dealers and other institutions as asset-based sales charges. Amounts set forth in Appendix A may also be used to finance payments of service fees under a shareholder service arrangement to be established by A I M Distributors, Inc. ("Distributors") as the Fund's distributor in accordance with Section 4, and the costs of administering the Plan. To the extent that amounts paid hereunder are not used specifically to reimburse Distributors for any such expense, such amounts may be treated as compensation for Distributors' distribution-related services. All amounts expended pursuant to the Plan shall be paid to Distributors and are the legal obligation of the Fund and not of Distributors. That portion of the amounts paid under the Plan that is not paid to, or paid or advanced by Distributors to dealers or other institutions, for providing personal continuing shareholder service as a service fee pursuant to Section 4 shall be deemed an asset-based sales charge. The distribution agreement with any Distributor shall provide that the portion of the amounts set forth in Appendix A that is an asset based sales charge with respect to Class C Shares shall be deemed to be paid for services rendered by the Distributor or any Dealers in placing the Class C Shares, which services are fully performed upon the settlement of each sale of a Class C Share (or share of another portfolio from which the Class C Share derives). No provision of this Plan shall be interpreted to prohibit any payments by the Fund during periods when the Fund has suspended or otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part for the implementation by Distributors of shareholder service arrangements with respect to the Shares. The maximum service fee paid to any service provider shall be twenty-five one-hundredths of one percent (0.25%) per annum of the average daily net assets of the Fund attributable to the Shares owned by the customers of such service provider.
(b) Pursuant to this program, Distributors may enter into agreements substantially in the form attached hereto as Exhibit A ("Service Agreements") with such broker-dealers ("Dealers") as may be selected from time to time by Distributors for the provision of distribution-related personal shareholder services in connection with the sale of Shares to the Dealers' clients and customers ("Customers") who may from time to time directly or beneficially own Shares. The distribution-related personal continuing shareholder services to be rendered by Dealers under the Service Agreements may include, but shall not be limited to, the following: (i) distributing sales literature; (ii) answering routine Customer inquiries concerning the Fund and the Shares; (iii) assisting Customers in changing dividend options, account designations and addresses, and in enrolling into any of several retirement plans offered in connection with the purchase of Shares; (iv) assisting in the establishment and maintenance of customer accounts and records, and in the processing of purchase and redemption transactions; (v) investing dividends and capital gains distributions automatically in Shares; and (vi) providing such other information and services as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank Shareholder Service Agreements substantially in the form attached hereto as Exhibit B ("Bank Agreements") with selected banks acting in an agency capacity for their customers ("Banks"). Banks acting in such capacity will provide some or all of the shareholder services to their customers as set forth in the Bank Agreements from time to time.
(d) Distributors may also enter into Variable Group Annuity Contractholder Service Agreements substantially in the form attached hereto as Exhibit C ("Variable Contract Agreements") with selected insurance companies ("Companies") offering variable annuity contracts to employers as funding vehicles for retirement plans qualified under Section 401(a) of the Internal Revenue Code, where amounts contributed under such plans are invested pursuant to such variable annuity contracts in Shares of the Fund. The Companies receiving payments under such Variable Contract Agreements will provide specialized services to contractholders and plan participants, as set forth in the Variable Contract Agreements from time to time.
(e) Distributors may also enter into Agency Pricing Agreements substantially in the form attached hereto as Exhibit D ("Pricing Agreements") with selected retirement plan service providers acting in an agency capacity for their customers ("Retirement Plan Providers"). Retirement Plan Providers acting in such capacity will provide some or all of the shareholder services to their customers as set forth in the Pricing Agreements from time to time.
(f) Distributors may also enter into Shareholder Service Agreements substantially in the form attached hereto as Exhibit E ("Bank Trust Department Agreements and Brokers for Bank Trust Department Agreements") with selected bank trust departments and brokers for bank trust departments. Such bank trust departments and brokers for bank trust departments will provide some or all of the shareholder services to their customers as set forth in the Bank Trust Department Agreements and Brokers for Bank Trust Department Agreements from time to time.
(g) Distributors, as agent of the Portfolios may also enter into a Shareholder Service Agreement substantially in the form attached hereto as Exhibit F ("Agreement") with Distributors, acting as principal. Distributors, acting as principal, will provide some or all of the shareholder services to Portfolio shareholders for which Distributors is the broker of record, as set forth in such Agreement.
SECTION 5. Any amendment to this Plan that requires the approval of the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall become effective as to such Class upon the approval of such amendment by a "majority of the outstanding voting securities" (as defined in the 1940 Act) of such Class, provided that the Board of Trustees of the Fund has approved such amendment in accordance with the provisions of Section 6 of this Plan.
Section 6. This Plan, any amendment to this Plan and any agreements related to this Plan shall become effective immediately upon the receipt by the Fund of both (a) the affirmative vote of a majority of the Board of Trustees of the Fund, and (b) the affirmative vote of a majority of those trustees of the Fund who are not "interested persons" of the Fund (as defined in the 1940 Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Dis-interested Trustees"), cast in person at a meeting called for the purpose of voting on this Plan or such agreements. Notwithstanding the foregoing, no such amendment that requires the approval of the shareholders of a Class of a Fund shall become effective as to such Class until such amendment has been approved by the shareholders of such Class in accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan shall continue in effect until June 30, 2001 and thereafter shall continue in effect so long as such continuance is specifically approved, at least annually, in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Trustees and the Board of Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.
SECTION 9. This Plan may be terminated at any time by vote of a majority of the Dis-interested Trustees, or by vote of a majority of the outstanding voting securities of the Shares. If this Plan is terminated, the obligation of the Fund to make payments pursuant to this Plan will also cease and the Fund will not be required to make any payments beyond the termination date even with respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in writing, and shall provide:
(a) that such agreement may be terminated at any time, without payment of any penalty, by vote of a majority of the Dis-interested Trustees or by a vote of the outstanding voting securities of the Fund attributable to the Shares, on not more than sixty (60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the amount of distribution expenses provided for in Section 2 hereof unless such amendment is approved in the manner provided in Section 5 hereof, and no material amendment to the Plan shall be made unless approved in the manner provided for in Section 6 hereof.
AIM INVESTMENT SECURITIES FUNDS
(on behalf of its Class A Shares,
Class C Shares and AIM Cash
Reserve Shares)
Attest: /s/ JIM COPPEDGE By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Assistant Secretary President
|
Amended and restated for all Portfolios as of September 28, 1998, as amended June 1, 2000.
Amended and restated for all Portfolios as of July 1, 2000.
APPENDIX A
TO
FOURTH AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS A SHARES, CLASS C SHARES
AND AIM CASH RESERVE SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or class thereof) as designated below, a Distribution Fee* determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio (or Class thereof).
MINIMUM
ASSET
PORTFOLIO BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS A SHARES CHARGE FEE FEE
-------------- ------- ------- ---------
AIM High Yield Fund 0.00% 0.25% 0.25%
AIM High Yield Fund II 0.00% 0.25% 0.25%
AIM Income Fund 0.00% 0.25% 0.25%
AIM Intermediate Government Fund 0.00% 0.25% 0.25%
AIM Limited Maturity Treasury Fund 0.00% 0.15% 0.15%
AIM Municipal Bond Fund 0.00% 0.25% 0.25%
|
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS C SHARES CHARGE FEE FEE
-------------- ------- ------- ---------
AIM High Yield Fund 0.75% 0.25% 1.00%
AIM High Yield Fund II 0.75% 0.25% 1.00%
AIM Income Fund 0.75% 0.25% 1.00%
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
AIM Money Market Fund 0.75% 0.25% 1.00%
AIM Municipal Bond Fund 0.75% 0.25% 1.00%
AIM CASH RESERVE SHARES
-----------------------
AIM Money Market Fund 0.00% 0.25% 0.25%
|
* The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Portfolio (or Class thereof).
EXHIBIT m(6)(b)
AMENDMENT NO. 1
TO
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS B SHARES)
(DISTRIBUTION FEE)
The Master Distribution Plan (the "Plan") dated September 28, 1998, pursuant to Rule 12b-1 of AIM Investment Securities Funds, a Delaware business trust, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT SECURITIES FUNDS
(CLASS B SHARES)
(DISTRIBUTION FEE)
MAXIMUM ASSET- MAXIMUM MAXIMUM
BASED SALES SERVICE AGGREGATE
FUND CHARGE FEE ANNUAL FEE
---- -------------- ------- ----------
AIM High Yield Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM High Yield Fund II 0.75% 0.25% 1.00%
(Class B Shares)
AIM Income Fund
(Class B Shares)
AIM Intermediate Government Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Money Market Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Municipal Bond Fund 0.75% 0.25% 1.00%"
(Class B Shares)
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
--------------------------------- ----------------------------
Assistant Secretary Senior Vice President
|
EXHIBIT m(12)
SHAREHOLDER SERVICE AGREEMENT FOR
[AIM LOGO APPEARS HERE] SHARES OF THE AIM MUTUAL FUNDS
(AIM Distributors as Principal)
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, by each of the AIM-managed mutual funds (or designated classes of such funds) listed in Schedule A to this Agreement (the "Funds"), which may be amended from time to time by the Funds acting through AIM Distributors, Inc. ("Distributors") as the Funds' agent under a Distribution Plan (the "Plan") adopted pursuant to said Rule. This Agreement, being made between Distributors as agent for such Funds on the one hand and Distributors acting as principal on the other hand, defines the services to be provided by Distributors acting as principal for which it is to receive shareholder service payments pursuant to the Plan adopted by each of the Funds. The Plan and the Agreement have been approved by a majority of the directors of each of the Funds, including a majority of the directors who are not interested persons of such Funds, and who have no direct or indirect financial interest in the operation of the Plan or related agreements (the "Dis-interested Directors"), by votes cast in person at a meeting called for the purpose of voting on the Plan. Such approval included a determination that in the exercise of their reasonable business judgement and in light of their fiduciary duties, there is a reasonable likelihood that the Plan will benefit such Fund and its shareholders.
1. To the extent that Distributors, acting as principal, provides continuing personal shareholder services to Fund shareholders for whom Distributors is the broker of record, including but not limited to, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Funds' shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares and providing such other services as the Funds or the customer may reasonably request, Distributors as agent for the Funds, shall pay Distributors as principal a service fee (as that term is defined in NASD Conduct Rule 28-30(b)(9)), periodically or arrange for such fee to be paid to you.
2. The service fee paid with respect to each Fund will be calculated at the end of each payment period (as indicated in Schedule A) for each business day of the Fund during such payment period at the annual rate set forth in Schedule A as applied to the average net asset value of the shares of such Fund for which Distributors is broker of record and which shares were purchased or acquired through exchange on or after the Plan Calculation Date shown for such Fund on Schedule A. Fees calculated in this manner shall be paid to Distributors as principal only if Distributors is the dealer of record at the close of business on the last business day of the applicable payment period, for the account in which such shares are held (the "Subject Shares").
3. The total of the fees calculated for all of the Funds listed on Schedule A for any period with respect to which calculations are made shall be paid within 45 days after the close of such period.
4. This Agreement and Schedule A does not require Distributors, as principal to provide transfer agency and recordkeeping related services.
5. Distributors, shall furnish the Funds with such information as shall reasonably be requested by the directors of the Funds with respect to the fees paid pursuant to this Agreement.
Shareholder Service Agreement 2
6. This Agreement may be terminated with respect to any Fund at any time without payment of any penalty by the vote of a majority of the directors of such Fund who are Dis-interested Directors or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Master Distribution Agreement between the Fund and Directors or the Fund's Distribution Plan, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act.
7. This Agreement shall become effective upon execution and delivery hereof and shall continue in full force and effect as long as the continuance of the Plan and this related Agreement are approved at least annually by a vote of the directors, including a majority of the Dis-interested Directors, cast in person at a meeting called for the purpose of voting thereon. All communications should be sent to the address of Distributors as shown at the bottom of this Agreement.
8. Distributors, acting as principal represents that it provides to shareholders for which it is broker of record personal services as such term is used from time to time in applicable regulations of the National Association of Securities Dealers, Inc., and that it will continue to accept payments under this Agreement only so long as it provides such services.
9. This Agreement shall be construed in accordance with the laws of the State of Texas.
AIM DISTRIBUTORS, INC.
(Acting as Agent for the Funds)
Date: By:
-------------------------- --------------------------------
07/00
|
Shareholder Service Agreement 3 |
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By:
-------------------------- --------------------------------
Signature
-----------------------------------
Print Name Title
-----------------------------------
Dealer's Name
AIM DISTRIBUTORS, INC.
-----------------------------------
Address
-----------------------------------
City State Zip
-----------------------------------
Telephone
Please sign both copies and return one copy of each to:
AIM Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
|
07/00
Shareholder Service Agreement 4
SCHEDULE "A" TO
SHAREHOLDER SERVICE AGREEMENT
Fund Fee Rate* Plan Calculation Date
----------------------------------------------------------------------------------------
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Aggressive Growth Fund B Shares 0.25 March 1, 1999
AIM Aggressive Growth Fund C Shares 1.00** March 1, 1999
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM Dent Demographic Trends Fund A Shares 0.25 June 7, 1999
AIM Dent Demographic Trends Fund B Shares 0.25 June 7, 1999
AIM Dent Demographic Trends Fund C Shares 1.00** June 7, 1999
AIM Emerging Growth Fund A Shares 0.25 March 31, 2000
AIM Emerging Growth Fund B Shares 0.25 March 31, 2000
AIM Emerging Growth Fund C Shares 1.00** March 31, 2000
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
AIM European Small Company Fund A Shares 0.25 August 31, 2000
AIM European Small Company Fund B Shares 0.25 August 31, 2000
AIM European Small Company Fund C Shares 1.00** August 31, 2000
08/31/00
|
Shareholder Service Agreement 5
Fund Fee Rate* Plan Calculation Date
------------------------------------------------------------------------------------------
AIM Global Aggressive Growth Fund A Shares 0.50** September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50** September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50** September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund II A Shares 0.25 October 1, 1998
AIM High Yield Fund II B Shares 0.25 November 20, 1998
AIM High Yield Fund II C Shares 1.00** November 20, 1998
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Emerging Growth Fund A Shares 0.25 August 31, 2000
AIM International Emerging Growth Fund B Shares 0.25 August 31, 2000
AIM International Emerging Growth Fund C Shares 1.00** August 31, 2000
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Large Cap Basic Value Fund A Shares 0.25 July 15, 1999
AIM Large Cap Basic Value Fund B Shares 0.25 August 1, 2000
AIM Large Cap Basic Value Fund C Shares 1.00** August 1, 2000
AIM Large Cap Growth Fund A Shares 0.25 March 1, 1999
AIM Large Cap Growth Fund B Shares 0.25 April 5, 1999
AIM Large Cap Growth Fund C Shares 1.00** April 5, 1999
AIM Large Cap Opportunities Fund A Shares(1) 0.25 December 30, 1999
AIM Large Cap Opportunities Fund B Shares(1) 0.25 March 31, 2000
AIM Large Cap Opportunities Fund C Shares(1) 1.00** March 31, 2000
AIM Limited Maturity Treasury Fund A Shares 0.15 December 2, 1987
|
(1) AIM Large Cap Opportunities Fund intends to close to new investors on the earlier of reaching $750 million in assets or September 29, 2000.
08/31/00
Shareholder Service Agreement 6
Fund Fee Rate* Plan Calculation Date
------------------------------------------------------------------------------------------
AIM Mid Cap Growth Fund A Shares 0.25 November 1, 1999
AIM Mid Cap Growth Fund B Shares 0.25 November 1, 1999
AIM Mid Cap Growth Fund C Shares 1.00** November 1, 1999
AIM Mid Cap Opportunities Fund A Shares(2) 0.25 December 30, 1998
AIM Mid Cap Opportunities Fund B Shares(2) 0.25 November 12, 1999
AIM Mid Cap Opportunities Fund C Shares(2) 1.00** November 12, 1999
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Money Market Fund Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM New Technology Fund A Shares 0.25 August 31, 2000
AIM New Technology Fund B Shares 0.25 August 31, 2000
AIM New Technology Fund C Shares 1.00** August 31, 2000
AIM Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1,1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Equity Fund A Shares 0.25 August 31, 2000
AIM Small Cap Equity Fund B Shares 0.25 August 31, 2000
AIM Small Cap Equity Fund C Shares 1.00** August 31, 2000
AIM Small Cap Opportunities Fund A Shares(2) 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares(2) 0.25 July 13, 1998
AIM Small Cap Opportunities Fund C Shares(2) 1.00** December 30, 1998
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
AIM Value II Fund A Shares 0.25 August 31, 2000
AIM Value II Fund B Shares 0.25 August 31, 2000
AIM Value II Fund C Shares 1.00** August 31, 2000
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
|
*Frequency of Payments: Quarterly, B and C share payments begin after an initial 12 month holding period. Where the broker dealer or financial institution waives, pursuant to the terms of the prospectus, the 1% up-front commission on Class C shares, payments commence immediately.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the remainder is paid as an asset-based sales charge, as those terms are defined under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other service provider for the first year with respect to sales of $1 million or more, at no load, in cases where A I M Distributors, Inc. has advanced the service fee to the dealer, bank or other service provider.
08/31/00
Shareholder Service Agreement 7
Fund Fee Rate* Plan Calculation Date
----------------------------------------------------------------------------------------
AIM Basic Value Fund A Shares 0.25 May 29, 1998
AIM Basic Value Fund B Shares 0.25 May 29, 1998
AIM Basic Value Fund C Shares 1.00** May 3, 1999
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund C Shares 1.00** March 1, 1999
AIM Euroland Growth Fund A Shares 0.25 May 29, 1998
AIM Euroland Growth Fund B Shares 0.25 May 29, 1998
AIM Euroland Growth Fund C Shares 1.00** May 3, 1999
AIM Floating Rate Fund B Shares 0.25** March 31, 2000
AIM Floating Rate Fund C Shares 0.50* March 31, 2000
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund C Shares 1.00** March 1, 1999
AIM Global Financial Services Fund A Shares 0.40** May 29, 1998
AIM Global Financial Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund C Shares 1.00** March 1, 1999
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund C Shares 1.00** March 1, 1999
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund C Shares 1.00** March 1, 1999
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund C Shares 1.00** March 1, 1999
AIM Global Telecommunications and
Technology Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications and
Technology Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications and
Technology Fund C Shares 1.00** March 1, 1999
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund C Shares 1.00** May 3, 1999
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund C Shares 1.00** March 1, 1999
|
08/31/00
Shareholder Service Agreement 8
Fund Fee Rate* Plan Calculation Date
----------------------------------------------------------------------------------------
AIM Mid Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund C Shares 1.00** May 3, 1999
AIM Global Trends Fund A Shares 0.40** May 29, 1998
AIM Global Trends Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund C Shares 1.00** May 29, 1998
AIM Small Cap Growth Fund A Shares(3) 0.25 May 29, 1998
AIM Small Cap Growth Fund B Shares(3) 0.25 May 29, 1998
AIM Small Cap Growth Fund C Shares(3) 1.00** May 3, 1999
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund C Shares 1.00** March 1, 1999
|
*Frequency of Payments:
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will begin after an initial 12 month holding period and are paid quarterly. Where the broker dealer or financial institution, waives pursuant to the terms of the prospectus, the 1% up-front commission on Class C shares, payments commence immediately.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the remainder is paid as an asset-based sales charge, as those terms are defined under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other service provider for the first year with respect to sales of $1 million or more, at no load, in cases where A I M Distributors, Inc. has advanced the service fee to the dealer, bank or other service provider.
*** Based on number of years outstanding. First year -- 0.00%; Second year -- 0.10%; Third year -- 0.15%; Fourth year -- 0.20%; Fifth and following years -- 0.25%
08/31/00
EXHIBIT p(4)
AIM FUNDS
CODE OF ETHICS
OF
AIM INVESTMENT SECURITIES FUNDS
WHEREAS, AIM INVESTMENT SECURITIES FUNDS (the "Company") is a registered investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code, effective as of June 14, 2000.
I. DEFINITIONS
For the purpose of the Code the following terms shall have the meanings set forth below:
A. "ACCESS PERSON" means any director, trustee, or officer of the Company. This Code shall not be applicable to access persons who are subject to Code of Ethics adopted by the Company's investment advisor or principal underwriter. Accordingly, access persons who are independent directors/trustees, as defined in Section I.H. below, are covered under this Code.
B. "AFFILIATED PERSONS" or "AFFILIATES" means
1. any employee or access person of the Company, and any member of the immediate family (defined as spouse, child, mother, father, brother, sister, in-law or any other relative) of any such person who lives in the same household as such person or who is financially dependent upon such person;
2. any account for which any of the persons described in
Section I.B.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which any
such person either has the authority to make investment
decisions or from time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other entity in which any employee of the Company or access person of the Company directly or indirectly, in the aggregate, has a 10% or more beneficial interest or for which any such person is a general partner or an executive officer.
C. "CONTROL" means the power to exercise a controlling influence over the management or policies of a corporation. Any person who owns beneficially, either directly or through one or more controlled corporations, more than 25% of the voting securities of a corporation shall be presumed to control such corporation.
D. "SECURITY" is defined in the same manner as set forth in Section 2(a)(36) of the 1940 Act.
E. "PURCHASE OR SALE OF A SECURITY" includes the writing of an option to purchase or sell a security.
F. "SECURITY HELD OR TO BE ACQUIRED" by the Company means any security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase by the Company.
G. "BENEFICIAL OWNERSHIP OF A SECURITY" is defined in the same manner as set forth in Rule 16a-1(a)(2) promulgated under the Securities Exchange Act of 1934.
H. "INDEPENDENT DIRECTOR/TRUSTEE" means directors and/or trustees who are not "interested persons" as defined in Section 2(a)(19) of the 1940 Act.
II. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each access person shall comply strictly with all applicable federal and state laws and all rules and regulations of any governmental agency or self-regulatory organization governing his or her activities.
B. Each access person shall comply strictly with procedures established by the Company to ensure compliance with applicable federal and state laws and regulations of governmental agencies and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or condone any acts in violation of any statute or regulation governing securities matters, nor any act that would violate any provision of this Code or any rules adopted thereunder.
III. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the Company's portfolio and research and studies activities is confidential until publicly available. Whenever statistical information or research is supplied to or requested by the Company, such information must not be disclosed to any persons other than as duly authorized by the President or the Board of Directors/Trustees of the Company. If the Company is considering a particular purchase or sale of a security, this must not be disclosed except to such duly authorized persons.
IV. ETHICAL STANDARDS
A. Access persons shall conduct themselves in a manner consistent with the highest ethical standards. They shall avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest, or the appearance of a conflict of interest, with the Company or which may be otherwise detrimental to the interests of the Company.
B. Conflicts of interest generally result from a situation in which an individual has personal interests in a matter that is or may be competitive with his responsibilities to another person or entity (such as the Company) or where an individual has or may have competing obligations or responsibilities to two or more persons or entities. In the case of the relationship between the Company on the one hand, and access persons and their respective affiliates on the other hand, such conflicts may result from the purchase or sale of securities for the account of the Company and for the personal account of the individual involved or the account of any affiliate of such person. Such conflict may also arise from the purchase or sale for the account of the Company of securities in which an access person or employee of the Company (or an affiliate of such person) has an interest. In any such case, potential or actual conflicts must be disclosed to the Company, and the first preference and priority must be to avoid such conflicts of interest wherever possible and, where they unavoidably occur, to resolve them in a manner not disadvantageous to the Company.
V. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No access person shall recommend to, or cause or attempt to cause, the Company to acquire, dispose of, or hold any security (including, any option, warrant or other right or interest relating to such security) which such access person or an affiliate of such access person has direct or indirect beneficial ownership, unless the access person shall first disclose to the Board of Directors/Trustees all facts reasonably necessary to identify the nature of the ownership of such access person or his or her affiliate in such security.
B. No access person or affiliate of such access person shall engage in a purchase or sale of a security (including, any option, warrant or other right or interest relating to such security), other than on behalf of the Company, with respect to any security, which, to the actual knowledge of such access person at the time of such purchase or sale, is (i) being considered for purchase or sale by the Company; or (ii) being purchased or sold by the Company.
C. The prohibitions of Section V.B. above shall not apply to:
purchases or sales effected in any account over which the access
person has no direct or indirect influence or control; purchases
or sales which are
non-volitional on the part of either the access person or the Company; purchases that are part of an automatic dividend reinvestment plan; purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired; and, purchases or sales which receive the prior approval of the President of the Company because they are only remotely potentially harmful to the Company because they would be very unlikely to affect trading in or the market value of the security, or because they clearly are not related economically to the securities to be purchased, sold or held by the Company.
D. If, in compliance with the limitations and procedures set forth in this Section V, any access person or an affiliate of such person shall engage in a purchase or sale of a security held or to be acquired by the Company, first preference and priority must be given to any transactions that involve the Company, and the Company must have the benefit of the best price obtainable on acquisition and the best price obtainable on disposition of such securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Directors/Trustees in writing, setting forth with
reasonable specificity the nature of such fiduciary obligations
and the reasons why such access person believes such person is
unable to comply with any such provisions. The Board of
Directors/Trustees may, in its discretion, exempt such access
person or an affiliate of such person from any such provisions, if
the Board of Directors/Trustees shall determine that the services
of such access person are valuable to the Company and the failure
to grant such exemption is likely to cause such access person to
be unable to render services to the Company. Any access person
granted an exemption (including, an exception for an affiliate of
such person) pursuant to this Section V.E. shall, within three
business days after engaging in a purchase or sale of a security
held or to be acquired by a client, furnish the Board of
Directors/Trustees with a written report concerning such
transaction, setting forth the information specified in Section
VI.B. hereof.
VI. REPORTING PROCEDURES
A. Except as provided by Sections VI.C., VI.D., VI.F. hereof, every access person shall report to the Board of Directors/Trustees and to the Code of Ethics Officer of A I M Advisors, Inc. ("AIM") the information described in Section VI.B. hereof with respect to transactions in any security in which such access person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security (whether or not such security is a security held or to be acquired by a client); provided, however, that any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect beneficial ownership in the security to which the report relates.
B. Every report required to be made pursuant to Section VI.A. hereof shall be made not later than ten days after the end of the calendar quarter in which the transaction to which the report relates was effected and shall contain the following information:
1. The date of the transaction, the title, and the number of shares or the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom the transaction was effected.
C. Notwithstanding the provisions of Section VI.A. and VI.B. hereof, no person shall be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VI.A., VI.B., and VI.F. hereof, an access person who is not an "interested person" of the Company within the meaning of Section 2(a)(19) of the 1940 Act, and who would be required to make a report solely by reason of being a director/trustee of the Company, need
only report a transaction in a security if such director/trustee, at the time of the transaction, knew or, in the ordinary course of fulfilling his official duties as a director/trustee of the Company, should have known, that, during the 15-day period immediately preceding or after the date of the transaction by the director/trustee, such security is or was purchased or sold, or considered by the Company or its investment advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly, 1/2% or more of the stock of any company the securities of which are eligible for purchase by the Company shall report such holdings to the Company.
F. Every transaction by an access person, including independent directors/trustees, in securities of AMVESCAP PLC shall be reported no later than ten days after the transaction was effected in the manner described in Sections VI.B. 1 through 4 above.
G. Transactions in the following types of securities are exempt from the reporting provisions herein: open-end management companies as defined in Sections 5(a)(1) and 4(2) of the 1940 Act; variable annuities, variable life products and other similar unit-based insurance products issued by insurance companies and insurance company separate accounts; securities issued by the United States government, its agencies or instrumentalities; and money market instruments, as defined by AIM's Code of Ethics Officer.
VII. REVIEW PROCEDURES
A. The reports submitted by access persons pursuant to Section VI.B. hereof shall be reviewed at least quarterly by the AIM's Code of Ethics Officer as well as the Board of Directors/Trustees or such other persons or committees as shall be designated by the Board of Directors/Trustees, in order to monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees or AIM's Code of Ethics Officer that a matter has arisen contrary to the provisions of this Code, such matter shall be reported immediately to the independent counsel for the independent directors/trustees of the Company and, if not previously reported by or to AIM, to AIM's Code of Ethics Officer within 30 days of submission of reports to the outside counsel.
VIII. AMENDMENTS TO THE CODE
A. The Board of Directors/Trustees of the Company, including a majority of the independent directors/trustees, must approve any material changes or amendments to the Code no less than six months following the date such changes or amendments are made. The Company's Board of Directors/Trustees must base its approval upon a determination that the Code contains provisions reasonably necessary to prevent "access persons" from violating the anti-fraud provisions of the rule.
IX. RECORDS RETENTION
A. The following records must be retained for the Company: copies of the Code and any amendment thereto; records of any violation of the Code and any action taken as of result of the violation; any report made pursuant to the Code by any access person; records of all persons who are or were subject to the Code and of persons responsible for reviewing reports made by persons subject to the Code; and a copy of each report made to the Board of Directors/Trustees pursuant to Rule 17j-1(c)(2)(ii) of the 1940 Act. These records must be maintained in an easily accessible place in a manner consistent with Rule 17j-1(f), but generally for not less than five years after the end of the fiscal year after amendments were approved; reports were made; information provided; or violations occurred pursuant to the provisions of the Code.
EXHIBIT p(5)
AIM FUNDS
CODE OF ETHICS
OF
AIM INVESTMENT SECURITIES FUND
WHEREAS, AIM INVESTMENT SECURITIES FUNDS (the "Company") is a registered investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code, effective as of September 23, 2000.
I. DEFINITIONS
For the purpose of the Code the following terms shall have the meanings set forth below:
A. "ACCESS PERSON" means any director, trustee, or officer of the Company. This Code shall not be applicable to access persons who are subject to Code of Ethics adopted by the Company's investment advisor or principal underwriter. Accordingly, access persons who are independent directors/trustees, as defined in Section I.H. below, are covered under this Code.
B. "AFFILIATED PERSONS" or "AFFILIATES" means
1. any employee or access person of the Company, and any member of the immediate family (defined as spouse, child, mother, father, brother, sister, in-law or any other relative) of any such person who lives in the same household as such person or who is financially dependent upon such person;
2. any account for which any of the persons described in
Section I.B.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which any
such person either has the authority to make investment
decisions or from time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other entity in which any employee of the Company or access person of the Company directly or indirectly, in the aggregate, has a 10% or more beneficial interest or for which any such person is a general partner or an executive officer.
C. "CONTROL" means the power to exercise a controlling influence over the management or policies of a corporation. Any person who owns beneficially, either directly or through one or more controlled corporations, more than 25% of the voting securities of a corporation shall be presumed to control such corporation.
D. "SECURITY" is defined in the same manner as set forth in Section 2(a)(36) of the 1940 Act.
E. "PURCHASE OR SALE OF A SECURITY" includes the writing of an option to purchase or sell a security.
F. "SECURITY HELD OR TO BE ACQUIRED" by the Company means any security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase by the Company.
G. "BENEFICIAL OWNERSHIP OF A SECURITY" is defined in the same manner as set forth in Rule 16a-1(a)(2) promulgated under the Securities Exchange Act of 1934.
H. "INDEPENDENT DIRECTOR/TRUSTEE" means directors and/or trustees who are not "interested persons" as defined in Section 2(a)(19) of the 1940 Act.
II. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each access person shall comply strictly with all applicable federal and state laws and all rules and regulations of any governmental agency or self-regulatory organization governing his or her activities.
B. Each access person shall comply strictly with procedures established by the Company to ensure compliance with applicable federal and state laws and regulations of governmental agencies and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or condone any acts in violation of any statute or regulation governing securities matters, nor any act that would violate any provision of this Code or any rules adopted thereunder.
III. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the Company's portfolio and research and studies activities is confidential until publicly available. Whenever statistical information or research is supplied to or requested by the Company, such information must not be disclosed to any persons other than as duly authorized by the President or the Board of Directors/Trustees of the Company. If the Company is considering a particular purchase or sale of a security, this must not be disclosed except to such duly authorized persons.
IV. ETHICAL STANDARDS
A. Access persons shall conduct themselves in a manner consistent with the highest ethical standards. They shall avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest, or the appearance of a conflict of interest, with the Company or which may be otherwise detrimental to the interests of the Company.
B. Conflicts of interest generally result from a situation in which an individual has personal interests in a matter that is or may be competitive with his responsibilities to another person or entity (such as the Company) or where an individual has or may have competing obligations or responsibilities to two or more persons or entities. In the case of the relationship between the Company on the one hand, and access persons and their respective affiliates on the other hand, such conflicts may result from the purchase or sale of securities for the account of the Company and for the personal account of the individual involved or the account of any affiliate of such person. Such conflict may also arise from the purchase or sale for the account of the Company of securities in which an access person or employee of the Company (or an affiliate of such person) has an interest. In any such case, potential or actual conflicts must be disclosed to the Company, and the first preference and priority must be to avoid such conflicts of interest wherever possible and, where they unavoidably occur, to resolve them in a manner not disadvantageous to the Company.
V. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No access person shall recommend to, or cause or attempt to cause, the Company to acquire, dispose of, or hold any security (including, any option, warrant or other right or interest relating to such security) which such access person or an affiliate of such access person has direct or indirect beneficial ownership, unless the access person shall first disclose to the Board of Directors/Trustees all facts reasonably necessary to identify the nature of the ownership of such access person or his or her affiliate in such security.
B. No access person or affiliate of such access person shall engage in a purchase or sale of a security (including, any option, warrant or other right or interest relating to such security), other than on behalf of the Company, with respect to any security, which, to the actual knowledge of such access person at the time of such purchase or sale, is (i) being considered for purchase or sale by the Company; or (ii) being purchased or sold by the Company.
C. The prohibitions of Section V.B. above shall not apply to:
purchases or sales effected in any account over which the access
person has no direct or indirect influence or control; purchases
or sales which are
non-volitional on the part of either the access person or the Company; purchases that are part of an automatic dividend reinvestment plan; purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired; and, purchases or sales which receive the prior approval of the President of the Company because they are only remotely potentially harmful to the Company because they would be very unlikely to affect trading in or the market value of the security, or because they clearly are not related economically to the securities to be purchased, sold or held by the Company.
D. If, in compliance with the limitations and procedures set forth in this Section V, any access person or an affiliate of such person shall engage in a purchase or sale of a security held or to be acquired by the Company, first preference and priority must be given to any transactions that involve the Company, and the Company must have the benefit of the best price obtainable on acquisition and the best price obtainable on disposition of such securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Directors/Trustees in writing, setting forth with
reasonable specificity the nature of such fiduciary obligations
and the reasons why such access person believes such person is
unable to comply with any such provisions. The Board of
Directors/Trustees may, in its discretion, exempt such access
person or an affiliate of such person from any such provisions, if
the Board of Directors/Trustees shall determine that the services
of such access person are valuable to the Company and the failure
to grant such exemption is likely to cause such access person to
be unable to render services to the Company. Any access person
granted an exemption (including, an exception for an affiliate of
such person) pursuant to this Section V.E. shall, within three
business days after engaging in a purchase or sale of a security
held or to be acquired by a client, furnish the Board of
Directors/Trustees with a written report concerning such
transaction, setting forth the information specified in Section
VI.B. hereof.
VI. REPORTING PROCEDURES
A. Except as provided by Sections VI.C., VI.D., VI.F. hereof, every access person shall report to the Board of Directors/Trustees and to the Code of Ethics Officer of A I M Advisors, Inc. ("AIM") the information described in Section VI.B. hereof with respect to transactions in any security in which such access person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security (whether or not such security is a security held or to be acquired by a client); provided, however, that any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect beneficial ownership in the security to which the report relates.
B. Every report required to be made pursuant to Section VI.A. hereof shall be made not later than ten days after the end of the calendar quarter in which the transaction to which the report relates was effected and shall contain the following information:
1. The date of the transaction, the title, and the number of shares or the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom the transaction was effected.
C. Notwithstanding the provisions of Section VI.A. and VI.B. hereof, no person shall be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VI.A., VI.B., and VI.F. hereof, an access person who is not an "interested person" of the Company within the meaning of Section 2(a)(19) of the 1940 Act, and who would be required to make a report solely by reason of being a director/trustee of the Company, need
only report a transaction in a security if such director/trustee, at the time of the transaction, knew or, in the ordinary course of fulfilling his official duties as a director/trustee of the Company, should have known, that, during the 15-day period immediately preceding or after the date of the transaction by the director/trustee, such security is or was purchased or sold, or considered by the Company or its investment advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly, 1/2% or more of the stock of any company the securities of which are eligible for purchase by the Company shall report such holdings to the Company.
F. Every transaction by an access person, including independent directors/trustees, in securities of AMVESCAP PLC shall be reported no later than ten days after the transaction was effected in the manner described in Sections VI.B. 1 through 4 above.
G. Transactions in the following types of securities are exempt from the reporting provisions herein: open-end management companies as defined in Sections 5(a)(1) and 4(2) of the 1940 Act; variable annuities, variable life products and other similar unit-based insurance products issued by insurance companies and insurance company separate accounts; securities issued by the United States government, its agencies or instrumentalities; and money market instruments, as defined by AIM's Code of Ethics Officer.
VII. REVIEW PROCEDURES
A. The reports submitted by access persons pursuant to Section VI.B. hereof shall be reviewed at least quarterly by the AIM's Code of Ethics Officer as well as the Board of Directors/Trustees or such other persons or committees as shall be designated by the Board of Directors/Trustees, in order to monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees or AIM's Code of Ethics Officer that a matter has arisen contrary to the provisions of this Code, such matter shall be reported immediately to the independent counsel for the independent directors/trustees of the Company and, if not previously reported by or to AIM, to AIM's Code of Ethics Officer within 30 days of submission of reports to the outside counsel.
VIII. AMENDMENTS TO THE CODE
A. The Board of Directors/Trustees of the Company, including a majority of the independent directors/trustees, must approve any material changes or amendments to the Code no less than six months following the date such changes or amendments are made. The Company's Board of Directors/Trustees must base its approval upon a determination that the Code contains provisions reasonably necessary to prevent "access persons" from violating the anti-fraud provisions of the rule.
IX. RECORDS RETENTION
A. The following records must be retained for the Company: copies of the Code and any amendment thereto; records of any violation of the Code and any action taken as of result of the violation; any report made pursuant to the Code by any access person; records of all persons who are or were subject to the Code and of persons responsible for reviewing reports made by persons subject to the Code; and a copy of each report made to the Board of Directors/Trustees pursuant to Rule 17j-1(c)(2)(ii) of the 1940 Act. These records must be maintained in an easily accessible place in a manner consistent with Rule 17j-1(f), but generally for not less than five years after the end of the fiscal year after amendments were approved; reports were made; information provided; or violations occurred pursuant to the provisions of the Code.