1933 Act Registration No. 33-19338
1940 Act Registration No. 811-05426
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
-- ---
Post-Effective Amendment No. 59 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 60 X
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(Check appropriate box or boxes.)
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Robert H. Graham
11 Greenway Plaza, Suite 100
Houston, Texas 77046
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(Name and Address of Agent of Service)
Copy to:
Juan E. Cabrera, Jr., Esq. Arthur J. Brown, Esq.
A I M Advisors, Inc. R. Darrell Mounts, Esq.
11 Greenway Plaza, Suite 100 Kirkpatrick & Lockhart LLP
Houston, Texas 77046 1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
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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):
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
Certain Series of the AIM Investment Funds are "feeder funds" in a "master/feeder" fund arrangement. This Post-Effective Amendment No. 59 includes a manually executed signature page for a master trust, Global Investment Portfolio.
AIM DEVELOPING
MARKETS FUND
AIM Developing Markets Fund primarily seeks to provide long-term growth of capital with a secondary objective of income, to the extent consistent with seeking growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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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---------------------------
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INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 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 primary investment objective is long-term growth of capital and its secondary investment objective is income, to the extent consistent with seeking growth of capital.
The fund seeks to meet these objectives by investing substantially all of its assets in issuers in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund will invest a majority of its assets in equity securities, and may also invest in debt securities, of developing countries. The fund considers issuers in "developing countries" to be those (1) organized under the laws of a developing country or have a principal office in a developing country; (2) that derive 50% or more, alone or on a consolidated basis, of their total revenues from business in developing countries; or (3) whose securities are trading principally on a stock exchange, or in an over-the- counter market, in a developing country. The fund will normally invest in issuers in at least four countries, but it will invest no more than 25% of its assets in issuers in any one country. The fund also may hold no more than 40% of its assets in any one foreign currency and securities denominated in or indexed to such currency. The fund may invest in debt securities when economic and other factors appear to favor such investments. The fund may also invest up to 100% of its assets in lower-quality debt securities, i.e., "junk bonds."
The fund may invest up to 50% of its total assets in the following types of developing market debt securities: (1) debt securities issued or guaranteed by governments, their agencies, instrumentalities or political subdivisions, or by government owned, controlled or sponsored entities, including central banks (sovereign debt), and "Brady Bonds"; (2) interests in issuers organized and operated for the purpose of restructuring the investment characteristics of sovereign debt; (3) debt securities issued by banks and other business entities; and (4) debt securities denominated in or indexed to the currencies of emerging markets. Brady Bonds are debt restructurings that provide for the exchange of cash and loans for newly issued bonds. There is no requirement with respect to the maturity or duration of debt securities in which the fund may invest.
The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund is non-diversified. With respect to 50% of its assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer.
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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality debt securities. As a result, the fund may not achieve its investment objectives.
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. 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. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases may cause the price of a debt security to decrease. The longer a bond's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Sovereign debt securities of developing country governments are generally lower-quality debt securities. Sovereign debt securities are subject to the additional risk that, under some political, diplomatic, social or economic circumstances, some developing countries that issue lower-quality debt securities may be unable or unwilling to make principal or interest payments as they come due.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of 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.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
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
----------- -------
1995 ....................................... -0.95%
1996 ....................................... 23.59%
1997 ....................................... -8.49%
1998 ....................................... -35.32%
1999 ....................................... 61.50%
2000 ....................................... -33.45%
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During the periods shown in the bar chart, the highest quarterly return was 30.56% (quarter ended December 31, 1999) and the lowest quarterly return was -27.81% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------ Class A (36.63)% (5.62)% (6.26)% 1/11/94 Class B (37.21) -- (13.07) 11/3/97 Class C (34.64) -- 4.65 03/01/99 MSCI Emerging Markets Free Index(1) (30.61) (4.17) (4.77)(2) 12/31/93(2) ------------------------------------------------------------------------ |
(1) The Morgan Stanley Capital International Emerging Markets Free Index
measures the performance of securities listed on the exchanges of 26
countries. The index excludes shares that are not readily purchased by
non-local investors.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
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 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.39 1.00 1.00 Other Expenses Other 0.57 0.56 0.56 Interest 0.01 0.01 0.01 Total Other Expenses 0.58 0.57 0.57 Total Annual Fund Operating Expenses 1.95 2.55 2.55 Fee Waivers(2) 0.20 0.20 0.20 Net Expenses 1.75 2.35 2.35 --------------------------------------------------------- |
(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) Waiver has been restated to reflect the current agreement. The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 1.75%, 2.40% and 2.40%, 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 costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class A $664 $1,058 $1,477 $2,642
Class B 758 1,094 1,555 2,739
Class C 358 794 1,355 2,885
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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
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Class A $664 $1,058 $1,477 $2,642
Class B 258 794 1,355 2,739
Class C 258 794 1,355 2,885
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THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. INVESCO Asset Management Limited (the subadvisor), an affiliate of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The subadvisor is located at 11 Devonshire Square, London, EC2M 4YR, England. The advisors supervise all aspects of the fund's operations and provide investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment advisor since 1967. Today, the advisor, together with its subsidiaries, advises or manages over 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.89% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use 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
- William Barron, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1995.
- John Cleary, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1998. From 1997 to 1998, he was Manager of a global emerging markets fixed income fund for West Merchant Bank Ltd. From 1993 to 1996, he was a portfolio manager for Fischer Francis Trees and Watts. Mr. Cleary completed the investment management program at the London Business School in 1996.
- Christine Rowley, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1991.
SALES CHARGES
Purchases of Class A shares of AIM Developing Markets Fund are subject to the maximum of 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 income.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers 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
-----------------------------------------------------------------
TEN
MONTHS YEAR ENDED
YEAR ENDED OCTOBER 31, ENDED DECEMBER 31,
----------------------------- OCTOBER 31, -------------------
2000(a) 1999(a) 1998(a) 1997(b) 1996 1995
-------- -------- ------- ----------- -------- --------
Net asset value, beginning of period $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60 $ 12.44
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Income from investment operations:
Net investment income 0.01 0.06 0.39(c) 0.25 0.53 0.72
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Net gains (losses) on securities (both realized and
unrealized) (0.95) 2.36 (5.10) (1.53) 2.19 (0.84)
===========================================================================================================================
Total from investment operations (0.94) 2.42 (4.71) (1.28) 2.72 (0.12)
===========================================================================================================================
Redemptions fees retained 0.01 0.03 0.28 -- -- --
===========================================================================================================================
Less distributions from net investment income (0.04) (0.12) (0.60) -- (0.48) (0.72)
===========================================================================================================================
Net asset value, end of period $ 8.89 $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(d) (9.52)% 33.11% (37.09)% (9.25)% 23.59% (0.95)%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $136,160 $157,198 $87,517 $457,379 $504,012 $422,348
___________________________________________________________________________________________________________________________
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Ratio of expenses to average net assets (including
interest expense):
With fee waivers 1.87%(e) 1.91% 1.93% 1.75%(f) 1.82% 1.77%
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Without fee waivers 1.95%(e) 2.38% 2.34% 1.83%(f) 1.85% 1.80%
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Ratio of net investment income to average net assets 0.05%(e) 0.68% 3.84% 2.03%(f) 4.07% 6.33%
===========================================================================================================================
Ratio of interest expense to average net assets 0.01%(e) 0.01% 0.20% -- -- --
___________________________________________________________________________________________________________________________
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Portfolio turnover rate 192% 125% 111% 184% 138% 75%
___________________________________________________________________________________________________________________________
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(a)Calculated using average shares outstanding.
(b)Prior to November 1, 1997 the Fund was known as G.T. Developing Markets Fund, Inc. All Capital shares issued and outstanding on October 31, 1997 were reclassified as Class A shares.
(c)Net investment income per share reflects an interest payment received from the conversion of Vnesheconombank loan agreements of $0.14 per share.
(d)Does not include sales charges and is not annualized for period less than one year.
(e)Ratios are based on average daily net assets of $165,415,131.
(f)Annualized.
CLASS B
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NOVEMBER 3, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED)
---------------------- TO OCTOBER 31,
2000(a) 1999(a) 1998(a)
------- ------- ----------------
Net asset value, beginning of period $ 9.79 $ 7.49 $ 12.56
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Income from investment operations:
Net investment income (loss) (0.06) 0.01 0.31(b)
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.37 (5.07)
========================================================================================================
Total from investment operations (1.00) 2.38 (4.76)
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Redemptions fees retained -- -- 0.28
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Less distributions from net investment income -- (0.08) (0.59)
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Net asset value, end of period $ 8.79 $ 9.79 $ 7.49
________________________________________________________________________________________________________
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Total return(c) (10.21)% 32.14% (39.76)%
________________________________________________________________________________________________________
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Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,754 $49,723 $ 154
________________________________________________________________________________________________________
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Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(d) 2.51% 2.68%(e)
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Without fee waivers 2.55%(d) 2.98% 3.09%(e)
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Ratio of net investment income (loss) to average net assets (0.56)%(d) 0.08% 3.09%(e)
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Ratio of interest expense to average net assets 0.01%(d) 0.01% 0.20%(e)
________________________________________________________________________________________________________
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Portfolio turnover rate 192% 125% 111%
________________________________________________________________________________________________________
========================================================================================================
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(a)Calculated using average shares outstanding.
(b)Net investment income per share reflects an interest payment received from the conversion of Vnesheconombank loan agreements of $0.14 per share.
(c)Does not include contingent deferred sales charges and is not annualized for period less than one year.
(d)Ratios are based on average daily net assets of $71,295,269.
(e)Annualized.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999(a)
----------- --------------
Net asset value, beginning of period $ 9.79 $ 7.47
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
-------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.32
===========================================================================================
Total from investment operations (1.00) 2.32
===========================================================================================
Net asset value, end of period $ 8.79 $ 9.79
___________________________________________________________________________________________
===========================================================================================
Total return(b) (10.21)% 31.06%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,618 $ 412
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(c) 2.51%(d)
-------------------------------------------------------------------------------------------
Without fee waivers 2.55%(c) 2.98%(d)
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(c) 0.08%(d)
===========================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.01%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 192% 125%
___________________________________________________________________________________________
===========================================================================================
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(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for period less than one year.
(c)Ratios are based on average daily net assets of $1,324,425.
(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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(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
---------------------------------------------------------------------------------------------------------
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 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
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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.
SEC 1940 Act file number: 811-05426 ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com DVM-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM LATIN AMERICAN
GROWTH FUND
|
AIM Latin American Growth Fund seeks to provide growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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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------------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 5 Advisor Compensation 5 Portfolio Manager 5 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 growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of its total assets in equity and debt securities of Latin American issuers. The fund considers securities of "Latin American issuers" to include (1) securities of companies organized under the laws of, or having a principal office located in, a Latin American country; (2) securities of companies that derive 50% or more of their total revenues from business in Latin America, provided that, in the view of the portfolio manager, the value of such issuers' securities reflect Latin American developments to a greater extent than developments elsewhere; (3) securities issued or guaranteed by the government of a country in Latin America, its agencies or instrumentalities, or municipalities, or the central bank of such country; (4) U.S. dollar-denominated securities or securities denominated in a Latin American currency issued by companies to finance operations in Latin America; and (5) securities of Latin American issuers in the form of depositary shares. The fund considers Latin America to include Mexico and the countries within Central and South America and the Caribbean, many of which are considered developing countries, i.e., those that are in the initial stages of their industrial cycles.
The fund will normally invest a majority of its assets in equity securities.
The fund may invest up to 35% of its total assets in a combination of equity and
debt securities of U.S. issuers. The fund may also invest up to 50% of its total
assets in debt securities, which may consist of lower-quality debt securities,
i.e., "junk bonds," and "Brady Bonds." Brady Bonds are debt restructurings that
provide for the exchange of cash and loans for newly-issued bonds. The fund
currently expects to invest primarily in securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. The fund may invest more
than 25% of its total assets in any of these four countries but expects to
invest no more than 60% of its total assets in any one country.
In allocating investments among the various Latin American countries, the portfolio manager looks principally at the stage of industrialization, potential for productivity gains through economic deregulation, the impact of financial liberalization, and monetary conditions and the political outlook in each country. Further, the portfolio manager selects between debt and equity investments based on additional economic criteria such as fundamental economic strength, expected corporate profits, the condition of balance of payments, changes in terms of trade, and currency and interest rate trends. The portfolio manager considers whether to sell a particular security when any of those factors materially changes.
The fund is non-diversified. With respect to 50% of its assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer.
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 (U.S. dollars, foreign currencies and multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality 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. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. When interest rates rise, bond prices fall; the longer a bond's duration, the more sensitive it is to this risk.
Because the fund focuses its investments in Latin America, the value of your shares may rise and fall more than the value of shares of a fund that invests in a broader geographic region.
The Latin American economies can be significantly affected by currency devaluations. In addition, the Latin American economies can be particularly sensitive to fluctuations in commodity prices. A small number of companies and industries represent a large portion of the Latin American market. The markets in Latin America can be extremely volatile.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. Thus, the value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
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
----------- -------
1992 ........................................ -2.32%
1993 ........................................ 52.95%
1994 ........................................ -6.64%
1995 ........................................ -21.34%
1996 ........................................ 17.00%
1997 ........................................ 14.52%
1998 ........................................ -44.27%
1999 ........................................ 60.10%
2000 ........................................ -21.39%
|
During the periods shown in the bar chart, the highest quarterly return was 35.55% (quarter ended December 31, 1999) and the lowest quarterly return was -34.35% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of two broad-based securities market indices. The fund's performance reflects payments of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------- Class A (25.12)% (2.19)% 1.76% 08/13/91 Class B (25.66) (2.09) (0.48) 04/01/93 Class C (22.48) 20.63 03/01/99 MSCI EMF Latin America Index(1) (16.57) 6.71 10.55 07/31/91(2) MSCI EM Latin America Index(3) (14.00) 8.14 10.96(2) 07/31/91(2) ----------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International Emerging Markets Free Latin America Index measures the performance of companies listed in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. In Brazil and Mexico, only the performance of companies whose securities may be purchased by foreigners have been included. The fund has elected to use the Morgan Stanley Capital International Emerging Markets Free Latin America Index as its primary index rather than the MSCI Emerging Markets Latin America Index since the Morgan Stanley Capital International Emerging Markets Free Latin America Index more closely reflects the securities in which the fund invests.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history.
(3) The Morgan Stanley Capital International Emerging Markets Latin America Index measures the performance of companies listed in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
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 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses Other 0.71 0.71 0.71 Interest 0.01 0.01 0.01 Total Other Expenses 0.72 0.72 0.72 Total Annual Fund Operating Expenses 2.20 2.70 2.70 Fee Waivers(2) 0.18 0.18 0.18 Net Expenses 2.02 2.52 2.52 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%, 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 costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $687 $1,130 $1,599 $2,889
Class B 773 1,138 1,630 2,912
Class C 373 838 1,430 3,032
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $687 $1,130 $1,599 $2,889
Class B 273 838 1,430 2,912
Class C 273 838 1,430 3,032
----------------------------------------------
|
AIM LATIN AMERICAN GROWTH FUND
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. INVESCO Asset Management Limited (the subadvisor), an affiliate of the advisor, is the fund's subadvisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The subadvisor is located at 11 Devonshire Square, London EC2M 4YR, England. The advisors supervise all aspects of the fund's operations and provide investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976, and the subadvisor has acted as an investment adviser since 1967. Today, the advisor, together with its subsidiaries, advises or manages over 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.80% of average daily net assets.
PORTFOLIO MANAGER
The advisors use a team approach to investment management. The individual member of the team who is primarily responsible for the day-to-day management of the fund's portfolio are
- Frederique Carrier, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the subadvisor and/or its affiliates since 1998. From 1992 to 1998, she was a Senior Financial Analyst for BBV Latinvest.
- David Manuel, Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1997. From 1987 to 1997, he was an Investment Analyst and Portfolio Manager for Abbey Life Investment Services Ltd. (Bournemouth), and was Head of Latin American Equities from 1994 to 1997.
SALES CHARGES
Purchases of Class A shares of AIM Latin American Growth 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 income.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers 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 OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
------- ------- ------- -------- --------
Net asset value, beginning of period $13.97 $ 11.70 $19.50 $ 17.95 $ 15.38
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06 0.21 0.13 0.11 0.09
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.58 2.20 (7.90) 1.44 2.59
=====================================================================================================================
Total from investment operations 1.64 2.41 (7.77) 1.55 2.68
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.14) (0.03) -- (0.08)
---------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- -- (0.03)
=====================================================================================================================
Total distributions (0.17) (0.14) (0.03) -- (0.11)
=====================================================================================================================
Net asset value, end of period $15.44 $ 13.97 $11.70 $ 19.50 $ 17.95
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 11.61% 20.93% (39.86)% 8.52% 17.52%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $42,347 $49,789 $60,720 $159,496 $177,373
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.02%(c) 2.06% 2.17% 1.96% 2.03%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.20%(c) 2.65% 2.31% 2.06% 2.10%
=====================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.01%(c) 2.00% 2.00% 1.96% 2.03%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.19%(c) 2.59% 2.14% 2.06% 2.10%
=====================================================================================================================
Ratio of net investment income to average net assets 0.33%(c) 1.44% 0.78% 0.52% 0.46%
=====================================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06% 0.17% -- --
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 33% 30% 39% 130% 101%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $59,744,037.
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
------- ------- ------- -------- --------
Net asset value, beginning of period $13.79 $ 11.49 $19.23 $ 17.78 $ 15.21
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) 0.17 0.04 0.01 --
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.56 2.16 (7.78) 1.44 2.59
===================================================================================================================
Total from investment operations 1.53 2.33 (7.74) 1.45 2.59
===================================================================================================================
Less distributions:
From net investment income (0.09) (0.03) -- -- (0.01)
-------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- -- (0.01)
===================================================================================================================
Total distributions (0.09) (0.03) -- -- (0.02)
===================================================================================================================
Net asset value, end of period $15.23 $ 13.79 $11.49 $ 19.23 $ 17.78
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 11.03% 20.36% (40.19)% 8.04% 17.02%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $33,047 $38,456 $46,599 $133,448 $137,400
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.52%(c) 2.56% 2.67% 2.46% 2.53%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.70%(c) 3.15% 2.81% 2.56% 2.60%
===================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.51%(c) 2.50% 2.50% 2.46% 2.53%
===================================================================================================================
Without fee waivers 2.69%(c) 3.09% 2.64% 2.56% 2.60%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.17)%(c) 0.94% 0.28% 0.02% (0.04)%
===================================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06% 0.17% -- --
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 33% 30% 39% 130% 101%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $42,550,374.
CLASS C
------------------------------------
MARCH 1, 1999
YEAR ENDED (DATE SALES COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
----------- ----------------------
Net asset value, beginning of period $13.79 $10.21
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) 0.12
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.57 3.46
==================================================================================================
Total from investment operations 1.54 3.58
==================================================================================================
Less distributions from net investment income (0.09) --
==================================================================================================
Net asset value, end of period $15.24 $13.79
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 11.10% 35.06%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 739 $ 147
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.52%(c) 2.56%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers 2.70%(c) 3.15%(d)
==================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.51%(c) 2.50%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers 2.69%(c) 3.09%(d)
__________________________________________________________________________________________________
==================================================================================================
Ratio of net investment income (loss) to average net assets (0.17)%(c) 0.94%(d)
==================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 33% 30%
__________________________________________________________________________________________________
==================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $777,298.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
ON THE INTERNET: You can send us a request by
e-mail or download prospectuses,
annual or semiannual reports via
our website:
http://www.aimfunds.com
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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 LAG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
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CLASS A, CLASS B AND CLASS C SHARES OF
AIM DEVELOPING MARKETS FUND
AIM LATIN AMERICAN GROWTH FUND
(SERIES PORTFOLIOS OF
AIM INVESTMENT FUNDS)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
AIM DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 2001,
RELATING TO THE AIM DEVELOPING MARKETS FUND PROSPECTUS DATED MARCH 1, 2001,
AND THE AIM LATIN AMERICAN GROWTH FUND PROSPECTUS DATED MARCH 1, 2001
TABLE OF CONTENTS
PAGE
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................1
The Trust and Its Shares.................................................................................1
INVESTMENT STRATEGIES AND RISKS...................................................................................3
Investment Objectives....................................................................................3
Selection of Investments and Asset Allocation............................................................5
Equity-Linked Derivatives................................................................................6
Investments in Other Investment Companies................................................................7
Privatizations...........................................................................................7
When-Issued and Forward Commitment Securities............................................................7
Depositary Receipts......................................................................................8
Warrants or Rights.......................................................................................8
Lending of Portfolio Securities..........................................................................8
Commercial Bank Obligations..............................................................................9
Repurchase Agreements....................................................................................9
Borrowing and Reverse Repurchase Agreements.............................................................10
Short Sales.............................................................................................10
Temporary Defensive Strategies..........................................................................11
Samurai and Yankee Bonds................................................................................12
Debt Conversions........................................................................................12
Debt Securities.........................................................................................12
Premium Securities......................................................................................13
Indexed Debt Securities.................................................................................13
Structured Investments..................................................................................13
Stripped Income Securities..............................................................................14
Floating and Variable Rate Income Securities............................................................14
Zero Coupon Securities..................................................................................14
Indexed Commercial Paper................................................................................15
Other Indexed Securities................................................................................15
Swaps, Caps, Floors and Collars.........................................................................15
Loan Participations and Assignments.....................................................................16
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................16
Special Risks of Options, Futures and Currency Strategies...............................................16
Writing Call Options....................................................................................18
Writing Put Options.....................................................................................19
Purchasing Put Options..................................................................................20
Purchasing Call Options.................................................................................20
Index Options...........................................................................................21
Interest Rate, Currency and Stock Index Futures.........................................................22
Options on Futures Contracts............................................................................24
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................25
Forward Contracts.......................................................................................25
Foreign Currency Strategies--Special Considerations.....................................................26
Cover...................................................................................................27
RISK FACTORS.....................................................................................................28
General.................................................................................................28
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Non-Diversified Classification..........................................................................28
Illiquid Securities.....................................................................................28
Debt Securities.........................................................................................29
Loan Participations and Assignments.....................................................................31
Foreign Securities......................................................................................31
INVESTMENT LIMITATIONS...........................................................................................39
Developing Markets Fund.................................................................................39
Latin American Fund.....................................................................................41
EXECUTION OF PORTFOLIO TRANSACTIONS..............................................................................42
Portfolio Trading and Turnover..........................................................................44
MANAGEMENT.......................................................................................................45
Trustees and Executive Officers.........................................................................45
Investment Management and Administration Services.......................................................47
THE DISTRIBUTION PLANS...........................................................................................49
The Class A and C Plan..................................................................................49
The Class B Plan........................................................................................50
Both Plans..............................................................................................50
THE DISTRIBUTOR..................................................................................................54
Expenses of the Funds...................................................................................56
SALES CHARGES AND DEALER CONCESSIONS.............................................................................56
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................59
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................62
HOW TO PURCHASE AND REDEEM SHARES................................................................................64
Backup Withholding......................................................................................65
NET ASSET VALUE DETERMINATION....................................................................................66
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................67
Reinvestment of Dividends and Distributions.............................................................67
Tax Matters.............................................................................................67
General.................................................................................................68
Exchange and Reinstatement Privileges and Wash Sales....................................................68
Foreign Taxes...........................................................................................69
Passive Foreign Investment Companies....................................................................69
Non-U.S. Shareholders...................................................................................70
Options, Futures and Foreign Currency Transactions......................................................70
SHAREHOLDER INFORMATION..........................................................................................71
MISCELLANEOUS INFORMATION........................................................................................73
Charges for Certain Account Information.................................................................73
Custodian and Transfer Agent............................................................................73
Independent Accountants.................................................................................74
Legal Matters...........................................................................................74
Shareholder Liability...................................................................................74
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Control Persons and Principal Holders of Securities.....................................................74
INVESTMENT RESULTS...............................................................................................76
Total Return Quotations.................................................................................76
Performance Information.................................................................................79
APPENDIX.........................................................................................................82
Description of Bond Ratings.............................................................................82
Description of Commercial Paper Ratings.................................................................83
Absence of Rating.......................................................................................83
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
This Statement of Additional Information relates to the Class A, Class B and Class C shares of AIM Developing Markets Fund ("Developing Markets Fund") and AIM Latin American Growth Fund ("Latin American Fund") (each, a "Fund," and collectively, the "Funds"). Developing Markets Fund and Latin American Fund each is a non-diversified series of AIM Investment Funds (the "Trust"), a registered open-end management investment company organized as a Delaware business trust. On October 31, 1997, the Developing Markets Fund, which had no prior operating history, acquired the assets and assumed the liabilities of G.T. Global Developing Markets Fund, Inc. (the "Predecessor Fund"), a closed-end investment company.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and administrator for, and INVESCO Asset Management Limited (the "Sub-advisor") serves as the investment sub-advisor for the Funds.
The Trust is a series mutual fund. The rules and regulations of the Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information for Developing Markets Fund is included in a separate Prospectus dated March 1, 2001, and for Latin American Fund is included in a separate Prospectus dated March 1, 2001. Additional copies of the Prospectuses and this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Funds' shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Funds. Some of the information required to be in this Statement of Additional Information is also included in the 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 FUNDS
THE TRUST AND ITS SHARES
The Trust was organized as a Delaware business trust on May 7, 1998 and previously operated under the name G.T. Investment Funds, Inc., which was organized as a Maryland corporation on October 29, 1987 and later renamed AIM Investment Funds, Inc. On September 8, 1998, the Trust acquired the assets of and assumed the liabilities of AIM Investment Funds, Inc. The Trust is registered with the SEC as a diversified open-end series management investment company. The Trust currently consists of the following portfolios: AIM Developing Markets Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial Services Fund, AIM Global Health Care Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM Global Telecommunications and Technology Fund (formerly AIM Global Telecommunications Fund), AIM Latin American Growth Fund and AIM Strategic Income Fund. Each of these funds has three separate classes: Class A, Class B and Class C shares. The Board is authorized to establish additional series of shares, or additional classes of shares of any fund, at any time. All historical financial and other information contained in this Statement of Additional Information for periods prior to September 8, 1998, is that of the series of AIM Investment Funds, Inc.
The term "majority of the Funds' outstanding shares" of the Trust, of a particular Fund or of a particular class of a Fund means, respectively, the vote of the lesser of (a) 67% or more of the shares of the Trust, such Fund or such class present at a meeting of the Trust's shareholders, if the holders of more than
50% of the outstanding shares of the Trust, such Fund or such class are present or represented by proxy, or (b) more than 50% of the outstanding shares of the Trust, such Fund or such class.
Class A, Class B and Class C shares of Developing Markets Fund and Latin American Fund have equal rights and privileges. Each share of a particular class is entitled to one vote, to participate equally in dividends and distributions declared by the Trust's Board of Trustees with respect to the class of such Fund and, upon liquidation of the Fund, to participate proportionately in the net assets of the Fund allocable to such class remaining after satisfaction of outstanding liabilities of the Fund allocable to such class. Fund shares are fully paid, non-assessable and fully transferable when issued and have no preemptive rights and have such conversion and exchange rights as set forth in the Prospectus and this Statement of Additional Information. Fractional shares have proportionately the same rights, including voting rights, as are provided for a full share. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights.
Shareholders of the Funds do not have cumulative voting rights, and therefore the holders of more than 50% of the outstanding shares of all Funds voting together for election of trustees may elect all of the members of the Board of Trustees of the Trust. In such event, the remaining holders cannot elect any trustees of the Trust.
Class A shares, Class B shares and Class C shares of the same Fund represent interests in that Fund's assets and have identical voting, dividend, liquidation and other rights on the same terms and conditions, except that each class of shares bears differing class-specific expenses, is subject to differing sales loads, conversion features and exchange privileges, and has exclusive voting rights on matters pertaining to that class' distribution plan (although Class A shareholders and Class B shareholders of a given Fund must approve any material increase in fees payable with respect to the Class A shares of such Fund under the Class A and C Plan). On any matter submitted to a vote of shareholders, shares of each Fund will be voted by each Fund's shareholders individually when the matter affects the specific interest of a Fund only, such as approval of its investment management arrangements. In addition, shares of a particular class of a Fund may vote on matters affecting only that class. The shares of each Fund will be voted in the aggregate on other matters, such as the election of Trustees and ratification of the selection of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders for any of the Funds in any year, except as required under the Investment Company Act of 1940, as amended (the "1940 Act"). A Trustee may be removed at any meeting of the shareholders of the Trust by a vote of the shareholders owning at least two-thirds of the outstanding shares. Any Trustee may call a special meeting of shareholders for any purpose. Furthermore, Trustees shall promptly call a meeting of shareholders solely for the purpose of removing one or more Trustees when requested in writing to do so by shareholders holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue an unlimited number of shares of each Fund. Each share of a Fund represents an interest in the Fund only, has a par value of $0.01 per share, represents an equal proportionate interest in the Fund with other shares of the Fund and is entitled to such dividends and distributions out of the income earned and gain realized on the assets belonging to the Fund as may be declared by the Board of Trustees. Each share of a Fund is equal in earnings, assets and voting privileges except that each class normally has exclusive voting rights with respect to its distribution plan and bears the expenses, if any, related to the distribution of its shares.
INVESTMENT STRATEGIES AND RISKS
The following discussion of investment strategies and risks supplements the discussion of investment objectives and risks set forth in the Prospectus under the headings "Investment Objectives and Strategies" and "Principal Risks of Investing in the Fund."
INVESTMENT OBJECTIVES
The Funds' investment objectives may not be changed without the approval of a majority of the Funds' outstanding voting securities. If a percentage restriction on investment or utilization of assets in an investment policy or restriction is adhered to at the time an investment is made, a later change in percentage ownership of a security or kind of securities resulting from changing market values or a similar type of event will not be considered a violation of the Fund's investment policies or restrictions.
DEVELOPING MARKETS FUND. The primary investment objective of Developing Markets Fund is long-term growth of capital. Its secondary investment objective is income, to the extent consistent with seeking capital appreciation. The Fund normally invests substantially all of its assets in issuers in the developing (or "emerging") markets of Asia, Europe, Latin America and elsewhere. A majority of Developing Markets Fund's assets normally are invested in emerging market equity securities. The Developing Markets Fund may invest in the following types of equity securities: common stock, preferred stock, securities convertible into common stock, American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs"), rights and warrants to acquire such securities and substantially similar forms of equity with comparable risk characteristics. Developing Markets Fund may also invest in emerging market debt securities that will be selected based on their potential to provide a combination of capital appreciation and current income. There can be no assurance Developing Markets Fund will achieve its investment objectives.
For purposes of Developing Markets Fund's operations, emerging markets consist of all countries determined by the Sub-advisor to have developing or emerging economies and markets. These countries generally include every country in the world except the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe.
In determining what countries constitute emerging markets with respect to Developing Markets Fund, the Sub-advisor will consider, among other things, data, analysis, and classification of countries published or disseminated by the International Bank for Reconstruction and Development (commonly known as the World Bank) and the International Finance Corporation ("IFC").
Developing Markets Fund will consider investments in the following emerging markets:
Algeria Finland Mauritius
Argentina Ghana Mexico
Bolivia Greece Morocco
Botswana Hong Kong Nicaragua
Brazil Nigeria
Bulgaria Hungary Oman
Chile India Pakistan
China Indonesia Panama
Colombia Israel Paraguay
Costa Rica
Cyprus Ivory Coast Peru
Czech Republic Jamaica Philippines
Dominican Republic Jordan Poland
Ecuador Kazakhstan Portugal
Egypt Kenya
El Salvador Lebanon Republic of Slovakia
Malaysia Russia
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Singapore Swaziland Uruguay Slovenia Taiwan Venezuela South Africa Thailand Zambia South Korea Turkey Zimbabwe Sri Lanka Ukraine |
Although Developing Markets Fund considers each of the above-listed countries eligible for investment, it will not be invested in all such markets at all times. Moreover, investing in some of those markets currently may not be desirable or feasible, due to the lack of adequate custody arrangements for the Fund's assets, overly burdensome repatriation and similar restrictions, the lack of organized and liquid securities markets, unacceptable political risks or for other reasons.
As used in the Prospectus and this Statement of Additional Information, an issuer in an emerging market is an entity (1) for which the principal securities trading market is an emerging market, as defined above, (2) that (alone or on a consolidated basis) derives 50% or more of its total revenues from business in emerging markets, provided that, in the Sub-advisor's view, the value of such issuer's securities will tend to reflect emerging market developments to a greater extent than developments elsewhere, or (3) organized under the laws of, or with a principal office in, an emerging market.
LATIN AMERICAN FUND. The investment objective of Latin American Fund is growth of capital. Latin American Fund will normally invest at least 65% of its total assets in securities of a broad range of Latin American issuers. The Fund may invest in common stock, preferred stock, rights, warrants and securities convertible into common stock, and other substantially similar forms of equity securities with comparable risk characteristics, as well as bonds, notes, debentures or other forms of indebtedness that may be developed in the future. The receipt of income from debt securities owned by the fund is incidental to its objective of capital appreciation. Though Latin American Fund can normally invest up to 35% of its total assets in U.S. securities, Latin American Fund reserves the right to be primarily invested in U.S. securities for temporary defensive purposes or pending investment of the proceeds of the offering made hereby.
Unless otherwise indicated, Latin American Fund defines Latin America to include the following countries: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under current market conditions, Latin American Fund expects to invest primarily in securities issued by companies and governments in Mexico, Chile, Brazil and Argentina. Latin American Fund may invest more than 25% of its total assets in any of these four countries but does not expect to invest more than 60% of its total assets in any one country.
Latin American Fund defines securities of Latin American issuers to include: (a) securities of companies organized under the laws of, or having a principal office located in, a Latin American country; (b) securities of companies that derive 50% or more of their total revenues from business in Latin America, provided that, in the Sub-advisor's view, the value of such issuers' securities reflect Latin American developments to a greater extent than developments elsewhere; (c) securities issued or guaranteed by the government of a country in Latin America, its agencies or instrumentalities, or municipalities, or the central bank of such country; (d) U.S. dollar-denominated securities or securities denominated in a Latin American currency issued by companies to finance operations in Latin America; and (e) securities of Latin American issuers, as defined herein, in the form of depositary shares. For purposes of the foregoing definition, Latin American Fund's purchases of securities issued by companies outside of Latin America to finance their Latin American operations will be limited to securities the performance of which is materially related to such company's Latin American activities.
Certain sectors of the economies of certain Latin American countries are closed to equity investments by foreigners. Further, due to the absence of securities markets and publicly owned corporations and due to restrictions on direct investment by foreign entities in certain Latin American countries, the Fund may be able to invest in such countries solely or primarily through governmentally approved investment vehicles or companies. In addition, the portion of Latin American Fund's assets invested directly in Chile may be less than the portion invested in other Latin American countries because, at present, capital directly invested in Chile normally cannot be repatriated for at least one year. As a result, Latin American Fund currently intends to limit most of its Chilean investments to indirect investments through ADRs and established Chilean investment companies, the shares of which are not subject to repatriation restrictions.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION
In determining the appropriate distribution of investments among various countries and geographic regions for the Funds, the Sub-advisor ordinarily considers the following factors: prospects for relative economic growth among the different countries in which a Fund may invest; expected levels of inflation; government policies influencing business conditions; the outlook for currency relationships; and the range of the individual investment opportunities available to international investors.
In analyzing companies for investment by each Fund, the Sub-advisor ordinarily looks for one or more of the following characteristics: an above-average earnings growth per share; high return on invested capital; healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; efficient service; pricing flexibility; strength of management; and general operating characteristics which will enable the companies to compete successfully in their respective marketplaces. In allocating Latin American Fund's assets between debt and equity securities, the Sub-advisor considers, in addition to the factors listed in the Prospectus, changes in Latin American governmental policy including regulation governing industry, trade, financial markets, and foreign and domestic investment, as well as the substance and likely development of government finances. In certain countries, governmental restrictions and other limitations on investment may affect the maximum percentage of equity ownership in any one company by the Funds. In addition, in some instances only special classes of securities may be purchased by foreigners and the market prices, liquidity and rights with respect to those securities may vary from shares owned by nationals.
Although the Funds value their assets daily in terms of U.S. dollars, the Funds do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. The Funds will do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference ("spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Funds at one rate, while offering a lesser rate of exchange should a Fund desire to sell that currency to the dealer.
There may be times when, in the opinion of the Sub-advisor, prevailing market, economic or political conditions warrant reducing the proportion of each Fund's assets invested in equity securities and increasing the proportion held in cash or short-term obligations denominated in U.S. dollars or other currencies. A portion of each Fund's assets may be held in U.S. dollars or short-term interest-bearing dollar-denominated securities to provide for ongoing expenses and redemptions. Latin American Fund may invest up to 35% of its total assets in a combination of equity and debt securities of U.S. issuers. In evaluating investments in securities of U.S. issues, the Sub-Advisor will consider, among other factors, the issuer's Latin American business activities and the impact that development in Latin America may have on the issuer's operations and financial condition.
The Funds may be prohibited under the 1940 Act, from purchasing the securities of any foreign company that, in its most recent fiscal year, derived more than 15% of its gross revenues from securities-related activities ("securities-related companies"). In a number of countries, including those in Latin America, commercial banks act as securities broker/dealers, investment advisors and underwriters or
otherwise engage in securities-related activities, which may limit the Fund's ability to hold securities issued by such banks. The Fund has obtained an exemption from the SEC to permit it to invest in certain of these securities subject to certain restrictions.
For investment purposes, an issuer is typically considered as located in a particular country if it (a) is incorporated under the laws of or has its principal office in that country, or (b) it normally derives 50% or more of its total revenue from business in that country. However, these are not absolute requirements, and certain companies incorporated in a particular country and considered by the Sub-advisor to be located in that country may have substantial offshore operations or subsidiaries and/or export sales exceeding in size the assets or sales in that country.
In selecting investments for Developing Markets Fund, the Sub-advisor seeks to identify those countries and industries where economic and political factors, including currency movements, are likely to produce above-average growth rates over the long term. The Sub-advisor seeks those emerging markets that have strongly developing economies and in which the markets are becoming more sophisticated. The Sub-advisor then invests in those companies in such countries and industries that it believes are best positioned and managed to take advantage of these economic and political factors. The Sub-advisor believes that the issuers of securities in emerging markets often have sales and earnings growth rates that exceed those in developed countries and that such growth rates may in turn be reflected in more rapid share price appreciation.
As opportunities to invest in securities in other emerging markets develop, Developing Markets Fund expects to expand and further broaden the group of emerging markets in which it invests. In some cases, investments in debt securities could provide Developing Markets Fund with access to emerging markets in the early stages of their economic development, when equity securities are not yet generally available or, in the Sub-advisor's view, do not yet present an acceptable investment alternative. While Developing Markets Fund generally is not restricted in the portion of its assets that may be invested in a single region, under normal conditions its assets will be invested in issuers in at least four countries, and it will not invest more than 25% of its assets in issuers in one country. Developing Markets Fund's holdings of any one foreign currency together with securities denominated in or indexed to such currency will not exceed 40% of its assets.
In allocating investments among the various Latin American countries for Latin American Fund, the Sub-advisor looks principally at the stage of industrialization, potential for productivity gains through economic deregulation, the impact of financial liberalization and monetary conditions and the political outlook in each country. In allocating assets between equity and debt securities, the Sub-advisor will consider, among other factors: the level and anticipated direction of interest rates; expected rates of economic growth and corporate profits growth; changes in Latin American government policy including regulation governing industry, trade, financial markets, and foreign and domestic investment; substance and likely development of government finances; and the condition of the balance of payments and changes in the terms of trade. In evaluating investments in securities of U.S. issuers, the Sub-advisor will consider, among other factors, the issuer's Latin American business activities and the impact that development in Latin America may have on the issuer's operations and financial condition.
EQUITY-LINKED DERIVATIVES
The Funds may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-
linked derivatives may constitute investments in other investment companies. See "Investments in Other Investment Companies."
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund presently may be made only by acquiring shares of other investment companies (including investment vehicles or companies advised by AIM or its affiliates) with local governmental approval to invest in those countries. At such time as direct investment in these countries is allowed, the Funds anticipate investing directly in these markets.
Each Fund may invest in other investment companies to the extent permitted by the 1940 Act, and the 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 in money market funds that have AIM or an affiliate of AIM as an investment adviser (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
PRIVATIZATIONS
The governments in some Latin American countries and emerging markets have been engaged in programs of selling part or all of their stakes in government owned or controlled enterprises ("privatizations"). The Sub-advisor believes that privatizations may offer opportunities for significant capital appreciation and intends to invest assets of each Fund in privatizations in appropriate circumstances. In certain Latin American and emerging markets, the ability of foreign entities such as the Fund to participate in privatizations may be limited by local law or the terms on which the Funds may be permitted to participate may be less advantageous than those afforded local investors. There can be no assurance that governments in Latin American emerging markets will continue to sell companies currently owned or controlled by them or that privatization programs will be successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
Each Fund may purchase debt securities on a "when-issued" basis and may purchase or sell such securities on a "forward commitment" basis in order to hedge against anticipated changes in interest rates and prices. The price, which is generally expressed in yield terms, is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. When-issued securities and forward commitments may be sold prior to the settlement date, but the Funds will purchase or sell when-issued securities and forward commitments only with the intention of actually receiving or delivering the securities, as the case may be. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery to the Fund. If a Fund disposes of the right to acquire a when-issued security prior to its acquisition or disposes of its right to deliver or receive against a forward commitment, it may incur a gain or loss. At the time a Fund enters into a transaction on a when-issued or forward commitment basis, the Fund will segregate cash or liquid securities equal to the value of the when-issued or forward commitment securities with its custodian bank and will mark to market daily such assets. There is a risk that the securities may not be delivered and that the Fund may incur a loss.
DEPOSITARY RECEIPTS
Each Fund may hold equity securities of foreign issuers in the form of ADRs, American Depositary Shares ("ADSs"), GDRs and European Depositary Receipts ("EDRs"), or other securities convertible into securities of eligible issuers. These securities may not necessarily be denominated in the same currency as the securities for which they may be exchanged. ADRs and ADSs typically are issued by an American bank or trust company and evidence ownership of underlying securities issued by a foreign corporation. EDRs, which are sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust companies and evidence ownership of either foreign or domestic securities. GDRs are similar to EDRs and are designed for use in several international financial markets. Generally, ADRs and ADSs in registered form are designed for use in United States securities markets and EDRs in bearer form are designed for use in European securities markets. For purposes of each Fund's investment policies, a Fund's investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the equity securities representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While ADRs issued under these two types of facilities are in some respects similar, there are distinctions between them relating to the rights and obligations of ADR holders and the practices of market participants. A depository may establish an unsponsored facility without participation by (or even necessarily the acquiescence of) the issuer of the deposited securities, although typically the depository requests a letter of non-objection from such issuer prior to the establishment of the facility. Holders of unsponsored ADRs generally bear all the costs of such facilities. The depository usually charges fees upon the deposit and withdrawal of the deposited securities, the conversion of dividends into U.S. dollars, the disposition of non-cash distributions, and the performance of other services. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass-through voting rights to ADR holders in respect of the deposited securities. Sponsored ADR facilities are created in generally the same manner as unsponsored facilities, except that the issuer of the deposited securities enters into a deposit agreement with the depositary. The deposit agreement sets out the rights and responsibilities of the issuer, the depository and the ADR holders. With sponsored facilities, the issuer of the deposited securities generally will bear some of the costs relating to the facility (such as dividend payment fees of the depository), although ADR holders continue to bear certain other costs (such as deposit and withdrawal fees). Under the terms of most sponsored arrangements, depositories agree to distribute notices of shareholder meetings and voting instructions, and to provide shareholder communications and other information to the ADR holders at the request of the issuer of the deposited securities. Each Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by each Fund in connection with other securities or separately and provide a Fund with the right to purchase at a later date other securities of the issuer. Warrants are securities permitting, but not obligating, their holder to subscribe for other securities or commodities. Warrants do not carry with them the right to dividends or voting rights with respect to the securities that they entitle their holder to purchase, and they do not represent any rights in the assets of the issuer. As a result, warrants may be considered more speculative than certain other types of investments. In addition, the value of a warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund may make secured loans of portfolio securities amounting to not more than 30% of its total assets, measured at the time any such loan is made. Securities loans are made to broker/dealers or institutional investors pursuant to agreements requiring that the loans continuously be secured by collateral consisting of cash, U.S. government securities or certain irrevocable letters of credit (or such other collateral as permitted by a Fund's investment program and
regulatory agencies and as approved by the Board) at least equal at all times to the value of the securities lent plus any accrued interest, "marked to market" on a daily basis. The collateral for such loans, if received in cash, may be held in investment vehicles with investment objectives and policies similar to those of money market funds or limited duration income funds (longer maturities than may be held by money market funds), advised by the Advisor or its affiliates or by unaffiliated advisers. The Funds may pay a fee to the Advisor of such investment vehicles for its services. The collateral for such loans, if received in cash, may be held in investment vehicles with investment objectives and policies similar to those of money market funds or limited duration income funds (longer maturities than may be held by money market funds), advised by the Advisor or its affiliates or by unaffiliated advisers. The Funds may pay a fee to the Advisor of such investment vehicles for its services. The Funds may pay reasonable administrative and custodial fees in connection with loans of its securities. While the securities loan is outstanding with respect to a Fund, the Fund will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. The Fund will have a right to call each loan and obtain the securities within the stated settlement period. The Fund will not have the right to vote equity securities while they are lent, but it may call in a loan in anticipation of any important vote. Loans will be made only to firms deemed by the Sub-advisor to be of good standing and will not be made unless, in the judgment of the Sub-advisor, the consideration to be earned from such loans would justify the risk. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delays in receiving additional collateral or in recovery of the securities and possible loss of rights in the collateral if the borrower fails financially.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations, however, may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject a Fund to investment risks that are different in some respects from those of investments in obligations of domestic issuers. Although a Fund typically will acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase in excess of $1 billion, this $1 billion figure is not an investment policy or restriction of any Fund. For the purposes of calculation with respect to the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security from a bank or recognized securities dealer and simultaneously commits to resell that security to the bank or dealer at an agreed upon price, date, and market rate of interest unrelated to the coupon rate or maturity of the purchased security. Although repurchase agreements carry certain risks not associated with direct investments in securities, including possible decline in the market value of the underlying securities and delays and costs to a Fund if the other party to the repurchase agreement becomes bankrupt, the Funds intend to enter into repurchase agreements only with banks and dealers believed by the Sub-advisor to present minimum credit risks in accordance with guidelines established by the Trust's Board of Trustees. The Sub-advisor will review and monitor the creditworthiness of such institutions under the Board's general supervision.
The Funds will invest only in repurchase agreements collateralized at all times in an amount at least equal to the repurchase price plus accrued interest. To the extent that the proceeds from any sale of such collateral upon a default in the obligation to repurchase were less than the repurchase price, a Fund would suffer a loss. If the financial institution which is party to the repurchase agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or other liquidation proceedings, there may be restrictions on a Fund's ability to sell the collateral and the Fund could suffer a loss. However, with respect to financial institutions whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy Code, each Fund intends to comply with provisions under the U.S. Bankruptcy Code that would allow it immediately to resell
the collateral. There is no limitation on the amount of a Fund's assets that may be subject to repurchase agreements at any given time. The Funds will not enter into a repurchase agreement with a maturity of more than seven days if, as a result, more than 15% (for Developing Markets Fund) or 10% (for Latin American Fund) of the value of its net assets would be invested in such repurchase agreements and other illiquid investments.
BORROWING AND REVERSE REPURCHASE AGREEMENTS
Neither Fund's borrowings will exceed 33 1/3% of the Fund's total assets, i.e., each Fund's total assets at all times will equal at least 300% of the amount of outstanding borrowings. If market fluctuations in the value of a Fund's portfolio holdings or other factors cause the ratio of the Fund's total assets to outstanding borrowings to fall below 300%, within three days (excluding Sundays and holidays) of such event the Fund may be required to sell portfolio securities to restore the 300% asset coverage, even though from an investment standpoint such sales might be disadvantageous. Each Fund also may borrow up to 5% of its total assets for temporary or emergency purposes other than to meet redemptions. Any borrowing by a Fund may cause greater fluctuation in the value of its shares than would be the case if the Fund did not borrow.
The Funds' fundamental investment limitations permit them to borrow money for leveraging purposes. Developing Markets Fund, however, currently is prohibited, pursuant to a non-fundamental investment policy, from borrowing money in order to purchase securities. In addition, each Fund currently is prohibited, pursuant to a non-fundamental investment policy, from purchasing securities during times when outstanding borrowings represent more than 5% of its assets. Nevertheless, this policy may be changed in the future by a vote of a majority of the Trust's Board of Trustees. If a Fund employs leverage in the future, it would be subject to certain additional risks. Use of leverage creates an opportunity for greater growth of capital but would exaggerate any increases or decreases in the Fund's net asset value. When the income and gains on securities purchased with the proceeds of borrowings exceed the costs of such borrowings, the Fund's earnings or net asset value will increase faster than otherwise would be the case; conversely, if such income and gains fail to exceed such costs, the Fund's earnings or net asset value would decline faster than would otherwise be the case.
Each Fund may enter into reverse repurchase agreements. A reverse repurchase agreement is a borrowing transaction in which a Fund transfers possession of a security to another party, such as a bank or broker/dealer in return for cash, and agrees to repurchase the security in the future at an agreed upon price, which includes an interest component. Each Fund will segregate liquid assets in an amount sufficient to cover its obligations and reverse repurchase agreements with broker/dealers. No segregation is required for reverse repurchase agreements with banks.
SHORT SALES
Each Fund may make short sales of securities, although it has no current intention of doing so. A short sale is a transaction in which the Fund sells a security in anticipation that the market price of that security will decline. Each Fund may make short sales (i) as a form of hedging to offset potential declines in long positions in securities it owns, or anticipates acquiring, and (ii) in order to maintain portfolio flexibility.
When a Fund makes a short sale of a security it does not own, it must borrow the security sold short and deliver it to the broker-dealer or other intermediary through which it made the short sale. The Fund may have to pay a fee to borrow particular securities and will often be obligated to pay over any payments received on such borrowed securities.
A Fund's obligation to replace the borrowed security when the borrowing is called or expires will be secured by collateral deposited with the intermediary. The Fund will also be required to deposit collateral with its custodian to the extent, if any, necessary so that the value of both collateral deposits in the aggregate is at all times equal to at least 100% of the current market value of the security sold short. Depending on
arrangements made with the intermediary from which it borrowed the security regarding payment of any amounts received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a gain. Any gain will be decreased, and any loss increased, by the transaction costs associated with the transaction. Although the Fund's gain is limited by the price at which it sold the security short, its potential loss is theoretically unlimited.
Latin American Fund will not make a short sale if, after giving effect to such sale, the market value of the securities sold short exceeds 25% of the value of its total assets or the Fund's aggregate short sales of the securities of any one issuer exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any class of the issuer. Moreover, Latin American Fund may engage in short sales only with respect to securities listed on a national securities exchange. Latin American Fund may make short sales "against the box" without respect to such limitations. In this type of short sale, at the time of the sale the Fund owns the security it has sold short or has the immediate and unconditional right to acquire at no additional cost the identical security.
Developing Markets Fund may only make short sales "against the box." The Fund might make a short sale "against the box" in order to hedge against market risks when the Sub-advisor 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. In such case, any future losses in the 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 in the long position are reduced will depend upon the amount of the securities sold short relative to the amount of the securities the Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the investment values or conversion premiums of such securities. There will be certain additional transaction costs associated with short sales "against the box," but the Fund will endeavor to offset these costs with income from the investment of the cash proceeds of short sales.
TEMPORARY DEFENSIVE STRATEGIES
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 (U.S. dollars, foreign currencies or multinational currency units such as Euros), money market instruments, or high-quality debt securities. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes. In addition, for temporary defensive purposes, most or all of each Fund's investments may be made in the United States and denominated in U.S. dollars. To the extent a Fund employs a temporary defensive strategy, it will not be invested so as to achieve directly its investment objectives.
In addition, Latin American Fund may be primarily invested in U.S. securities for temporary defensive purposes or pending investment of the proceeds of sales of new Fund shares. Latin American Fund may assume a temporary defensive position when, due to political, market or other factors broadly affecting Latin American markets, the Sub-advisor determines that opportunities for capital appreciation in those markets would be significantly limited over an extended period or that investing in those markets presents undue risk of loss.
The Funds may invest in the following types of money market instruments
(i.e., debt instruments with less than 12 months remaining until maturity)
denominated in U.S. dollars or other currencies (in the case of Latin American
Fund, the currency of any Latin American country): (a) obligations issued or
guaranteed by the U.S. or foreign governments (in the case of Latin American
Fund, the government of any Latin American country), their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations
designed or supported by multiple foreign governmental entities to promote economic reconstruction or development; (c) finance company obligations, corporate commercial paper and other short-term commercial obligations; (d) bank obligations (including certificates of deposit, time deposits, demand deposits and bankers' acceptances); (e) repurchase agreements with respect to the foregoing; and (f) other substantially similar short-term debt securities with comparable characteristics.
The Funds may invest in commercial paper rated as low as A-3 by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or P-3 by Moody's Investors Service, Inc. ("Moody's") or, if not rated, determined by the Manager to be of comparable quality. Obligations rated A-3 and P-3 are considered by S&P and Moody's, respectively, to have an acceptable capacity for timely repayment. However, these securities may be more vulnerable to adverse effects of changes in circumstances than obligations carrying higher designations.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, Developing Markets Fund may invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"), and may invest in dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee bonds"). As compared with bonds issued in their countries of domicile, such bond issues normally carry a higher interest rate but are less actively traded. It is the policy of Developing Markets Fund to invest in Samurai or Yankee bond issues only after taking into account considerations of quality and liquidity, as well as yield.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant to which investors may use external debt of a country, directly or indirectly, to make investments in local companies. The terms of the various programs vary from country to country, although each program includes significant restrictions on the application of the proceeds received in the conversion and on the remittance of profits on the investment and of the invested capital. Latin American Fund intends to acquire Sovereign Debt, as defined in the Prospectus, to hold and trade in appropriate circumstances as described in the Prospectus, as well as to participate in Latin American debt conversion programs. The Sub-advisor will evaluate opportunities to enter into debt conversion transactions as they arise but does not currently intend to invest more than 5% of the Fund's assets in such programs.
DEBT SECURITIES
Developing Markets Fund may invest up to 50% of its total assets in the
following types of emerging market debt securities: (1) debt securities issued
or guaranteed by governments, their agencies, instrumentalities or political
subdivisions, or by government owned, controlled or sponsored entities,
including central banks (collectively, "Sovereign Debt"), including Brady Bonds;
(2) interests in issuers organized and operated for the purpose of restructuring
the investment characteristics of Sovereign Debt; (3) debt securities issued by
banks and other business entities; and (4) debt securities denominated in or
indexed to the currencies of emerging markets. Debt securities held by those
Funds may take the form of bonds, notes, bills, debentures, bank debt
obligations, short-term paper, loan participations, assignments and interests
issued by entities organized and operated for the purpose of restructuring the
investment characteristics of any of the foregoing. There is no requirement with
respect to the maturity or duration of debt securities in which either Fund may
invest.
Under normal circumstances, the Latin American Fund may invest up to 50% of its total assets in debt securities. There is no limitation on the percentage of its assets that may be invested in debt securities that are rated below investment grade. Investment in below investment grade debt securities involves a high degree of risk and can be speculative. These debt securities are the equivalent of high yield, high risk bonds, commonly known as "junk bonds." Most debt securities in which the fund will invest are not rated; if rated,
it is expected that such ratings would be below investment grade. However, the Fund will not invest in debt securities that are in default in payment as to principal or interest.
Developing Markets Fund and Latin American Fund may invest in "Brady Bonds," which are debt restructurings that provide for the exchange of cash and loans for newly issued bonds. Brady Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be issued by other emerging market countries. As of the date of this Prospectus, the Fund is not aware of the occurrence of any payment defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a long payment history. In addition, Brady Bonds are often rated below investment grade.
Developing Markets Fund and Latin American Fund may invest in either collateralized or uncollateralized Brady Bonds. U.S. dollar-denominated collateralized Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the bonds. Interest payments on such bonds generally are collateralized by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of rolling interest payments or, in the case of floating rate bonds, initially is equal to at least one year's rolling interest payments based on the applicable interest rate at the time of issuance and is adjusted at regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable change in relative foreign exchange rates, relative interest rate levels and/or the creditworthiness of issuers. The receipt of income from debt securities owned by Latin American Fund is incidental to its objective of growth of capital.
PREMIUM SECURITIES
Developing Markets Fund may invest in income securities bearing coupon rates higher than prevailing market rates. Such "premium" securities are typically purchased at prices greater than the principal amounts payable on maturity. The Fund will not amortize the premium paid for such securities in calculating its net investment income. As a result, in such cases the purchase of such securities provides the Fund a higher level of investment income distributable to shareholders on a current basis than if the Fund purchased securities bearing current market rates of interest. If securities purchased by the Fund at a premium are called or sold prior to maturity, the Fund will realize a loss to the extent the call or sale price is less than the purchase price. Additionally, the Fund will realize a loss if it holds such securities to maturity.
INDEXED DEBT SECURITIES
Developing Markets Fund may invest in debt securities issued by banks and other business entities not located in developing market countries that are indexed to certain specific foreign currency exchange rates, interest rates or other reference rates. The terms of such securities provide that their principal amount is adjusted upwards or downwards (but ordinarily not below zero) at maturity to reflect changes in the exchange rate between two currencies (or other rates) while the obligations are outstanding. While such securities offer the potential for an attractive rate of return, they also entail the risk of loss of principal. New forms of such securities continue to be developed. The Fund may invest in such securities to the extent consistent with its investment objectives.
STRUCTURED INVESTMENTS
Developing Markets Fund may invest a portion of its assets in interests in entities organized and operated solely for the purpose of restructuring the investment characteristics of Sovereign Debt. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, of specified instruments (such as commercial bank loans or Brady Bonds) and the issuance by that entity of one or more classes of securities ("Structured Investments") backed by, or representing interests in, the underlying instruments. The cash flow on the underlying
instruments may be apportioned among the newly issued Structured Investments to create securities with different investment characteristics such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to Structured Investments is dependent on the extent of the cash flow on the underlying instruments. Because Structured Investments of the type in which the Fund anticipates it will invest typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments.
Developing Markets Fund is permitted to invest in a class of Structured Investments that is either subordinated or not subordinated to the right of payment of another class. Subordinated Structured Investments typically have higher yields and present greater risks than unsubordinated Structured Investments.
Certain issuers of Structured Investments may be deemed to be "investment companies" as defined in the 1940 Act. As a result, Developing Markets Fund's investment in these Structured Investments may be limited by the restrictions contained in the 1940 Act described above under "Investment Strategies and Risks--Investments in Other Investment Companies." Structured Investments are typically sold in private placement transactions, and there currently is no active trading market for Structured Investments.
STRIPPED INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in stripped income securities, which are obligations representing an interest in all or a portion of the income or principal components of an underlying or related security, a pool of securities or other assets. In the most extreme case, one class will receive all of the interest (the "interest only class" or the "IO class"), while the other class will receive all of the principal (the "principal-only class" or the "PO class"). The market values of stripped income securities tend to be more volatile in response to changes in interest rates than are conventional income securities.
FLOATING AND VARIABLE RATE INCOME SECURITIES
Developing Markets Fund may invest a portion of its assets in floating or variable rate income securities. Income securities may provide for floating or variable rate interest or dividend payments. The floating or variable rate may be determined by reference to a known lending rate, such as a bank's prime rate, a certificate of deposit rate or the London Inter Bank Offered Rate (LIBOR). Alternatively, the rate may be determined through an auction or remarketing process. The rate also may be indexed to changes in the values of interest rate or securities indexes, currency exchange rates or other commodities. The amount by which the rate paid on an income security may increase or decrease may be subject to periodic or lifetime caps. Floating and variable rate income securities include securities whose rates vary inversely with changes in market rates of interest. Such securities may also pay a rate of interest determined by applying a multiple to the variable rate. The extent of increases and decreases in the value of securities whose rates vary inversely with changes in market rates of interest generally will be larger than comparable changes in the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity.
ZERO COUPON SECURITIES
Developing Markets Fund may invest in certain zero coupon securities that are "stripped" U.S. Treasury notes and bonds. Developing Markets Fund also may invest in zero coupon and other deep discount securities issued by foreign governments and domestic and foreign corporations, including certain Brady Bonds and other foreign debt, and in payment-in-kind securities. Zero coupon securities pay no interest to holders prior to maturity, and payment-in-kind securities pay "interest" in the form of additional securities. However, a portion of the original issue discount on zero coupon securities and the interest on payment-in-kind securities will be included in Developing Markets Fund's income. Accordingly, for Developing Markets Fund to continue to qualify for tax treatment as a regulated investment company and to avoid a certain excise tax (see "Dividends, Distributions and Tax Matters"), it may be required to distribute an amount
that is greater than the total amount of cash it actually receives. These distributions may be made from Developing Markets Fund's cash assets or, if necessary, from the proceeds of sales of portfolio securities. Developing Markets Fund will not be able to purchase additional income-producing securities with cash used to make such distributions, and its current income ultimately may be reduced as a result. Zero coupon and payment-in-kind securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities that make current distributions of interest in cash.
INDEXED COMMERCIAL PAPER
Developing Markets Fund may invest without limitation in commercial paper that is indexed to certain specific foreign currency exchange rates. The terms of such commercial paper provide that its principal amount is adjusted upwards or downwards (but not below zero) at maturity to reflect changes in the exchange rate between two currencies while the obligation is outstanding. Developing Markets Fund will purchase such commercial paper with the currency in which it is denominated and, at maturity, will receive interest and principal payments thereon in that currency, but the amount of principal payable by the issuer at maturity will change in proportion to the change (if any) in the exchange rate between the two specified currencies between the date the instrument is issued and the date the instrument matures. While such commercial paper entails the risk of loss of principal, the potential for realizing gains as a result of changes in foreign currency exchange rates enables Developing Markets Fund to hedge against a decline in the U.S. dollar value of investments denominated in foreign currencies while seeking to provide an attractive money market rate of return. Developing Markets Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES
Developing Markets Fund may invest in certain other indexed securities, which are securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. The performance of indexed securities depends to a great extent on the performance of the security, currency or other instrument to which they are indexed and also may be influenced by interest rate changes in the United States and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer's creditworthiness deteriorates. Indexed securities may be more volatile than the underlying instruments. New forms of indexed securities continue to be developed. Developing Markets Fund may invest in such securities to the extent consistent with its investment objectives.
SWAPS, CAPS, FLOORS AND COLLARS
Developing Markets Fund may enter into interest rate, currency and index swaps and may purchase or sell related caps, floors and collars and other derivative instruments. The Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio, to protect against currency fluctuations, as a technique for managing the portfolio's duration (i.e., the price sensitivity to changes in interest rates) or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. The Fund intends to use these transactions as hedges and will not sell interest rate caps, floors or collars if it does not own securities or other instruments providing an income stream roughly equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by Developing Markets Fund
with another party of their respective commitments to pay or receive interest
(for example, an exchange of floating rate payments for fixed rate payments)
with respect to a notional amount of principal. A currency swap is an agreement
to exchange cash flows on a notional amount based on changes in the values of
the reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional principal amount from the party selling the cap to the extent that a specified index exceeds a predetermined interest rate. The purchase of an interest rate floor entitles the purchaser to receive payments on a notional principal amount from the party selling the floor to the extent that a specified index falls below a predetermined interest rate or amount. A collar is a combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates or values.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Developing Markets Fund may invest in fixed and floating rate loans ("Loans") arranged through private negotiations between a foreign entity and one or more financial institutions ("Lenders"). The majority of Developing Markets Fund's investments in Loans in emerging markets is expected to be in the form of participations in Loans ("Participations") and assignments of portions of Loans from third parties ("Assignments"). Participations typically will result in Developing Markets Fund having a contractual relationship only with the Lender, not with the borrower. Developing Markets Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, Developing Markets Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and Developing Markets Fund may not directly benefit from any collateral supporting the Loan in which it has purchased the Participation. As a result, Developing Markets Fund will assume the credit risk of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, Developing Markets Fund may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. Developing Markets Fund will acquire Participations only if the Lender interpositioned between Developing Markets Fund and the borrower is determined by the Sub-advisor to be creditworthy. When the Fund purchases Assignments from Lenders, the Developing Markets Fund will acquire direct rights against the borrower on the Loan. However, because Assignments are arranged through private negotiations between potential assignees and assignors, the rights and obligations acquired by Developing Markets Fund as the purchaser of an Assignment may differ from, and be more limited than, those held by the assigning Lender.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
To attempt to increase return, Developing Markets Fund may write call options on securities. This strategy will be employed only when, in the opinion of the Sub-advisor, the size of the premium Developing Markets Fund receives for writing the option is adequate to compensate it against the risk that appreciation in the underlying security may not be fully realized if the option is exercised. Developing Markets Fund also is authorized to write put options to attempt to enhance return, although it does not currently intend to do so.
Each Fund may use forward currency contracts, futures contracts, options on securities, options on currencies, options on indices and options on futures contracts to attempt to hedge against the overall level of investment and currency risk (i.e. fluctuations in exchange rates) normally associated with its 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). Each Fund may enter into such instruments up to the full value of its portfolio assets.
To attempt to hedge against adverse movements in exchange rates between currencies, each Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future
date. Such contracts may involve the purchase or sale of a foreign currency against the U.S. dollar or may involve two foreign currencies. Each Fund may enter into forward currency contracts either with respect to specific transactions or with respect to its portfolio positions. Each Fund also may purchase and sell put and call options on currencies, futures contracts on currencies and options on such futures contracts to hedge its portfolio against movements in exchange rates.
Only a limited market, if any, currently exists for options and futures transactions relating to currencies of most emerging markets including Latin American markets, to securities denominated in such currencies or to securities of issuers domiciled or principally engaged in business in such emerging markets. To the extent that such a market does not exist, the Sub-advisor may not be able to effectively hedge its investment in such markets.
Each Fund may also purchase and sell put and call options on equity and debt securities to hedge against the risk of fluctuations in the prices of securities held by a Fund or that the Sub-advisor intends to include in a Fund's portfolio. Each Fund may also purchase and sell put and call options on stock indices to hedge against overall fluctuations in the securities markets or in a specific market sector.
Further, each Fund may sell stock index futures contracts and may purchase put options or write call options on such futures contracts to protect against a general stock market decline or a decline in a specific market sector that could adversely affect a Fund's portfolio. Each Fund may also purchase stock index futures contracts and purchase call options or write put options on such contracts to hedge against a general stock market or market sector advance and thereby attempt to lessen the cost of future securities acquisitions. A Fund may use interest rate futures contracts and options thereon to hedge the debt portion of its portfolios against changes in the general level of interest rates.
The use of options, futures contracts and forward currency contracts ("Forward Contracts") involves special considerations and risks, as described below. Risks pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the Sub-advisor's ability to predict movements of the overall securities and currency markets, which requires different skills than predicting changes in the prices of individual securities. While the Sub-advisor is experienced in the use of these instruments, there can be no assurance that any particular strategy adopted will succeed since the skills and techniques needed to trade Forward Contracts are different from those needed to select securities in which a Fund invests.
(2) There might be imperfect correlation, or even no correlation, between price movements of an instrument and price movements of the currency or the investments being hedged. For example, if the value of an instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which the hedging instrument is traded. The effectiveness of hedges using hedging instruments on indices will depend on the degree of correlation between price movements in the index and price movements in the investments being hedged.
(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. For example, if a Fund entered into a short hedge because the Sub-advisor projected a decline in the price of a security in the Fund's portfolio, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the hedging instrument. Moreover, if the price of the hedging instrument declined by more than the increase in the price of the security, the Fund could suffer a loss including
the possible loss of principal under certain conditions. In either such case, the Fund would have been in a better position had it not hedged at all.
(4) 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 (i.e., instruments other than purchased options). If the 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. A Fund's ability to close out a position in an instrument prior to expiration or maturity depends on the existence of a liquid secondary market of which there is no assurance of any particular time or, in the absence of such a market, the ability and willingness of the other party to the transaction ("contra party") to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Funds. In addition, a Fund may be unable to purchase or sell a portfolio security at a time when it would otherwise be favorable for it to do so. A Fund may also need to sell a security at a disadvantageous time, due to the need for the Fund to maintain "cover" or to set aside securities in connection with hedging transactions.
Although each Fund is authorized to enter into options, futures and forward currency transactions, it might not enter into any such transactions.
WRITING CALL OPTIONS
Each Fund may write (sell) call options on securities, indices and currencies. This strategy will be employed only when, in the opinion of the Sub-advisor, the size of the premium a Fund receives for writing the option is adequate to compensate it against the risk that appreciation in the underlying security may not be fully realized if the option is exercised. Call options generally will be written on securities and currencies that, in the opinion of the Sub-advisor are not expected to make any major price moves in the near future but that, over the long term, are deemed to be attractive investments for a Fund.
A call option gives the holder (buyer) the right to purchase a security or currency 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 the writer of a call option continues, he may be assigned an exercise notice, requiring him to deliver the underlying security or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which the writer effects a closing purchase transaction by purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with each Fund's investment objective. 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 or currency above the exercise price, and retains the risk of loss should the price of the security or currency decline. Unlike one who owns securities or currencies not subject to an option, a Fund has no control over when it may be required to sell the underlying securities 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, the Fund 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 or currency during the option period. If the call option is exercised, the Fund will realize a gain or loss from the sale of the underlying security or currency, which will be increased or offset by the premium received. The Funds do not consider a security or currency covered by a call option to be "pledged" as that term is used in the Funds' policies that limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the
security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and a Fund will be obligated to sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to constitute the market value of an option. The premium a Fund will receive from writing a call option will reflect, among other things, the current market price of the underlying investment, the relationship of the exercise price to such market price, the historical price volatility of the underlying investment, and the length of the option period. In determining whether a particular call option should be written, the Sub-advisor will consider the reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security or currency with either a different exercise price, expiration date or both.
Each Fund will pay transaction costs in connection with the writing of options and in entering into closing purchase contracts. Transaction costs relating to options activity normally are higher than those applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current market values of the underlying securities or currencies at the time the options are written. From time to time, a Fund may purchase an underlying security or currency for delivery in accordance with the exercise of an option, rather than delivering such security or currency from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more, respectively, than the premium received from writing the option. Because increases in the market price of a call option generally will reflect increases in the market price of the underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
Each Fund may write put options on securities, indices and currencies. A put option gives the purchaser of the option the right to sell, and the writer (seller) the obligation to buy, the underlying security or currency at the exercise price at any time until (American style) or on (European style) the expiration date. The operation of put options in other respects, including their related risks and rewards, is identical substantially to that of call options.
A Fund generally would write put options in circumstances where the Sub-advisor wishes to purchase the underlying security or currency for the Fund's portfolio at a price lower than the current market price of the security or currency. In such event, the 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. Since the Fund would also receive interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be used to enhance current return during periods of market uncertainty. The risk in such a transaction would be that the market price of the underlying security or currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Fund will be obligated to sell the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As the holder of a put option, a Fund would have the right to sell the underlying security 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 them or permit them to expire.
A Fund may purchase a put option on an underlying security or currency ("protective put") owned by the Fund to protect against an anticipated decline in the value of the security or currency. Such protection is provided only during the life of the put option when the Fund, as the holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security's market price or currency's exchange value. The premium paid for the put option and any transaction costs would reduce any profit otherwise available for distribution when the security or currency is eventually sold.
A Fund also may purchase put options at a time when the Fund does not own the underlying security or currency. By purchasing put options on a security or currency it does not own, the Fund seeks to benefit from a decline in the market price of the underlying security or currency. If the put option is not sold when it has remaining value, and if the market price of the underlying security or currency remains equal to or greater than the exercise price during the life of the put option, the Fund will lose its entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of the underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As the holder of a call option, a Fund would have the right to purchase the underlying security 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 them or permit them to expire.
Call options may be purchased by a Fund for the purpose of acquiring the underlying security or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable the Fund to acquire the security or currency at the exercise price of the call option plus the premium paid. At times, the net cost of acquiring the security or currency in this manner may be less than the cost of acquiring the security or currency directly. This technique also may be useful to a Fund in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. 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 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.
A Fund also may purchase call options on underlying securities or currencies it owns to avoid realizing losses that would result in a reduction of its current return. For example, where a Fund has written a call option on an underlying security or currency having a current market value below the price at which it purchased the security or currency, an increase in the market price could result in the exercise of the call option written by the Fund and the realization of a loss on the underlying security or currency. Accordingly, the Fund could purchase a call option on the same underlying security or currency, which could be exercised to fulfill the Fund's delivery obligations under its written call (if it is exercised). This strategy could allow the Fund to avoid selling the portfolio security or currency at a time when it has an unrealized loss; however, the Fund would have to pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in its use of Forward Contracts by purchasing put or call options on currencies. A put option gives a Fund as purchaser the right (but not the obligation) to sell a specified amount of currency at the exercise price at any time until (American style) or on (European style) the expiration date. A call option gives a Fund as purchaser the right (but not the obligation) to purchase a specified amount of currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund might purchase a currency put option, for example, to protect itself against a decline in the dollar value of a currency in which it holds or anticipates holding securities. If the currency's value should decline against the dollar, the loss in currency value should be offset, in whole or in part, by an increase in the value of the put. If the value of the currency instead should rise against the dollar, any gain to the Fund would be reduced by the premium it had paid for the put option. A currency call option might be purchased, for example, in anticipation of, or to protect against, a rise in the value against the dollar of a currency in which a Fund anticipates purchasing securities.
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.
The staff of the SEC considers purchased OTC options 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 the Fund. 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.
A Fund's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. Each Fund intends to purchase or write only those exchange-traded options for which there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the contra party or by a transaction in the secondary market if any such market exists. Although each Fund will enter into OTC options only with contra parties that are expected to be capable of entering into closing transactions with the Fund, there is no assurance that the Funds 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 contra party, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
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 sector generally) rather than on price movements in individual securities or futures contracts. When a Fund writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Fund an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference. When a Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When a Fund buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Fund's exercise of the put, to deliver to the Fund an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When a Fund writes a put on an index, it receives a premium and the purchaser has the right, prior to the expiration date, to require the Fund to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier, if the closing level is less than the exercise price.
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 option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, a 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 vary from the value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the "timing risk" inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, a Fund, as the call writer, will not know that it has been assigned until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as common stock, because there the writer's obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date; and by the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its securities portfolio. This "timing risk" is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.
If a Fund purchases an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Fund will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES
Each Fund may enter into interest rate or currency futures contracts, and may enter into 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 prices in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by the Fund. A Fund's transactions 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 and stock prices.
A Fund will only enter into Futures Contracts that are traded 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 by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be used to reduce a Fund's exposure to interest rate, currency exchange rate and stock market fluctuations, a Fund may be able to hedge its exposure more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (security or currency) for a specified price at a designated date, time and place. An index Futures Contract 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 index value at the close of trading on the contract and the price at which the Futures Contract is originally struck; no physical delivery of the securities 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for financial instruments or currencies, Futures Contracts are usually closed out before the delivery date. Closing out an open Futures Contract sale or purchase is effected by entering into an offsetting Futures Contract purchase or sale, respectively, for the same aggregate amount of the identical financial instrument or currency and the same delivery date. If the offsetting purchase price is less than the original sale price, a Fund realizes a gain; if it is more, a Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, a Fund realizes a gain; if it is less, the Fund realizes a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Fund is not able to enter into an offsetting transaction, the Fund will continue to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising from the sale of one Futures Contract of September Deutschemarks on an exchange may be fulfilled at any time before delivery under the Futures Contract is required (i.e., on a specified date in September, the "delivery month") by the purchase of another Futures Contract of September Deutschemarks on the same exchange. In such instance the difference between the price at which the Futures Contract was sold and the price paid for the offsetting purchase, after allowance for transaction costs, represents the profit or loss to the Fund.
Each Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts 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 Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures trading and to maintain the Fund's open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered into ("initial margin") is intended to assure a Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be modified significantly 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 Contract more or less valuable, a process known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile and are influenced by, among other things, actual and anticipated changes in interest rates and currency exchange rates, and
in stock market movements, which in turn are affected by fiscal and monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures Contracts and prices of the securities or currencies in a Fund's portfolio being hedged. The degree of imperfection of correlation depends upon circumstances such as: variations in speculative market demand for Futures and for securities or currencies, including technical influences in Futures trading; and differences between the financial instruments being hedged and the instruments underlying the standard Futures Contracts available for trading. A decision of whether, when, and how to hedge involves skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an extremely high degree of leverage. As a result, a relatively small price movement in a Futures Contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the Futures Contract is deposited as margin, a subsequent 10% decrease in the value of the Futures Contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the Futures Contract were closed out. Thus, a purchase or sale of a Futures Contract may result in losses in excess of the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures Contract and options on Futures Contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a Futures Contract or option may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of Futures Contract or option, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures Contract and option prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on 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.
Certain characteristics of the Futures market might increase the risk that movements in the prices of Futures Contracts or options on Futures might not correlate perfectly with movements in the prices of the investments being hedged. For example, all participants in the Futures and options on Futures markets are subject to daily variation margin calls and might be compelled to liquidate Futures or options on Futures positions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase price volatility of the instruments and distort the normal price relationship between the Futures or options and the investments being hedged. Also, because initial margin deposit requirements in the Futures market are less onerous than margin requirements in the securities markets, there might be increased participation by speculators in the Futures markets. This participation also might cause temporary price distortions. In addition, activities of large traders in both the Futures and securities markets involving arbitrage, "program trading" and other investment strategies might result in temporary price distortions.
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, which represents the amount by which the market price of the Futures Contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the Futures Contract. If an option is exercised on the last trading day prior to the expiration date of the option, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the securities, currencies or index upon which the Futures Contract is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the purchase of put options on Futures can serve as a short hedge. Writing call options on Futures can serve as a limited short hedge, and writing put options on Futures can serve as a limited long hedge, using a strategy similar to that used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit initial and variation margin pursuant to requirements similar to those applicable to Futures Contracts. Premiums received from the writing of an option on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering the same Futures Contract and having the same exercise price and expiration date. The ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market.
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 by which options are "in-the-money") will not exceed 5% of the total assets of the Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into. In general, a call option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract exceeds the strike, i.e., exercise, price of the call; a put option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract is exceeded by the strike price of the put. This guideline may be modified by the Trust's Board of Trustees without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
To attempt to hedge against adverse movements in exchange rates between currencies, each Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date. Such contracts may involve the purchase or sale of a foreign currency against the U.S. dollar or may involve two foreign currencies. A Fund may enter into forward currency contracts either with respect to specific transactions or with respect to its portfolio positions. Each Fund may also purchase and sell put and call options on equity and debt securities to hedge against the risk of fluctuations in the prices of securities held by a Fund or that the Sub-advisor intends to include in a Fund's portfolio. Each Fund may also purchase and sell put and call options on stock indices to hedge against overall fluctuations in the securities markets or in a specific market sector.
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. The 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.
A Fund engages in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund might sell a particular foreign currency forward, for example, when it holds bonds denominated in a foreign currency but anticipates, and seeks to be protected against, a decline in the currency against the U.S. dollar. Similarly, the Fund might sell the U.S. dollar forward when it holds bonds denominated in U.S. dollars but anticipates, and seeks to be protected against, a decline in the U.S. dollar relative to other currencies. Further, the Fund might purchase a currency forward to "lock in" the price of securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A Forward Contract generally has no deposit requirement and no commissions are charged at any stage for trades. Each Fund will enter into such Forward Contracts with major U.S. or foreign banks and securities or currency dealers in accordance with the guidelines approved by the Trust's Board of Trustees.
Each Fund may enter into Forward Contracts either with respect to specific transactions or with respect to the Fund's portfolio positions. The precise matching of the Forward Contract amounts and the value of specific securities generally will not be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the Forward Contract is entered into and the date it matures. Accordingly, it may be necessary for a Fund to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency the Fund is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward Contracts involve the risk that anticipated currency movements will not be predicted accurately, causing a Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a currency, the Fund either may sell a portfolio security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Fund will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, a Fund may close out a Forward Contract requiring it to purchase a specified currency by entering into a second contract, if its contra party agrees, entitling it to sell the same amount of the same currency on the maturity date of the first contract. The Fund would realize a gain or loss as a result of entering into such an offsetting Forward Contract under either circumstance to the extent the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and the offsetting contract.
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 usually are 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.
FOREIGN CURRENCY STRATEGIES--SPECIAL CONSIDERATIONS
Each Fund may use options on foreign currencies, Futures on foreign currencies, options on Futures on foreign currencies and Forward Contracts to hedge against movements in the values of the foreign currencies in which the Fund's securities are denominated. Such currency hedges can protect against price movements in a security that a Fund owns or intends to acquire that are attributable to changes in the value
of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.
A Fund might seek to hedge against changes in the value of a particular currency when no Futures Contract, Forward Contract or option involving that currency is available or one of such contracts is more expensive than certain other contracts. In such cases, a Fund may hedge against price movements in that currency by entering into a contract on another currency or basket of currencies, the values of which the Sub-advisor believes will have a positive correlation to the value of the currency being hedged. The risk that movements in the price of the contract will not correlate perfectly with movements in the price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts, and options on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of Futures Contracts, Forward Contracts or options, a Fund could be disadvantaged by dealing in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies or any regulatory requirements that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or Futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Futures contracts or options until they reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, a Fund might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than options purchased by a Fund) expose the Fund to an obligation to another party. No Fund will 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, receivables and short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. The Funds will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account 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 are 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.
RISK FACTORS
GENERAL
There is no assurance that either Fund will achieve its investment objectives. Investing in a Fund entails a substantial degree of risk, and an investment in each Fund should be considered speculative. Investors are strongly advised to consider carefully the special risks involved in investing in emerging markets, and specifically Latin America, which are in addition to the usual risks of investing in developed markets around the world.
Each Fund's net asset value will fluctuate, reflecting fluctuations in the market value of its portfolio positions and its net currency exposure. Equity securities, particularly common stocks, generally represent the most junior position in an issuer's capital structure and entitle holders to an interest in the assets of an issuer, if any, remaining after all more senior claims have been satisfied. The value of equity securities held by a Fund will fluctuate in response to general market and economic developments, as well as developments affecting the particular issuers of such securities.
In addition, the value of debt securities held by each Fund generally will fluctuate with the perceived creditworthiness of the issuers of such securities and interest rates.
NON-DIVERSIFIED CLASSIFICATION
Developing Markets Fund and Latin American Fund are classified under the 1940 Act as "non-diversified" funds. As a result, these Funds will be able to invest in a smaller number of issuers than if they were classified under the 1940 Act as "diversified" funds. To the extent that a Fund invests in a smaller number of issuers, the net asset value of its shares may fluctuate more widely and it may be subject to greater investment and credit risk with respect to its portfolio.
ILLIQUID SECURITIES
Developing Markets Fund may invest up to 15% of its net assets, and Latin American Fund may invest up to 10% of its net assets, in illiquid securities. Securities may be considered illiquid if a Fund cannot reasonably expect within seven days to sell the security for approximately the amount at which the Fund values such securities. Illiquid securities may be harder to value than liquid securities. The sale of illiquid securities, if they can be sold at all, generally will require more time and result in higher brokerage charges or dealer discounts and other selling expenses than the sale of liquid securities, such as securities eligible for trading on U.S. securities exchanges or in the over-the-counter markets. Moreover, restricted securities which may be illiquid for purposes of this limitation, often sell, if at all, at a price lower than similar securities that are not subject to restrictions on resale.
Latin American Fund may invest in joint ventures, cooperatives, partnerships and state enterprises and other similar vehicles which are illiquid (collectively, "Special Situations"). The Sub-advisor believes that carefully selected investments in Special Situations could enable Latin American Fund to achieve capital appreciation substantially exceeding the appreciation Latin American Fund would realize if it did not make such investments. However, in order to limit investment risk, Latin American Fund will invest no more than 5% of its total assets in Special Situations.
Illiquid securities include those that are subject to restrictions contained in the securities laws of other countries. However, securities that are freely marketable in the country where they are principally traded, but would not be freely marketable in the United States, will not be considered illiquid. Where registration is required, a Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large institutional market has developed for certain securities that are not registered under the Securities Act of 1933, as amended ("1933 Act"), including private placements, repurchase agreements, commercial paper, foreign securities and corporate bonds and notes. These instruments are often restricted securities because the securities are sold in transactions not requiring registration. Institutional investors generally will not seek to sell these instruments to the general public, but instead will often depend either on an efficient institutional market in which such unregistered securities can be readily resold or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are contractual or legal restrictions on resale to the general public or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration requirements of the 1933 Act for resales of certain securities to qualified institutional buyers. Institutional markets for restricted securities have developed as a result of Rule 144A, providing both readily ascertainable values for restricted securities and the ability to liquidate an investment to satisfy share redemption orders. Such markets include automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the National Association of Securities Dealers, Inc. An insufficient number of qualified institutional buyers interested in purchasing Rule 144A-eligible restricted securities held by a Fund, however, could affect adversely the marketability of such portfolio securities and the Fund might be unable to dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board
of Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Sub-advisor in accordance with
procedures approved by the Board. The Sub-advisor takes into account a number of
factors in reaching liquidity decisions, including (i) the frequency of trading
in the security, (ii) the number of dealers who make quotes for the security,
(iii) the number of dealers who have undertaken to make a market in the
security, (iv) the number of other potential purchasers and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The
Sub-advisor monitors the liquidity of securities in each Fund's portfolio and
periodically reports such determinations to the Board. If the liquidity
percentage restriction of a Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting
from a change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by a Fund increases above the applicable
limit, the Sub-advisor will take appropriate steps to bring the aggregate amount
of illiquid assets back within the prescribed limitations as soon as reasonably
practicable, taking into account the effect of any disposition on the Fund.
DEBT SECURITIES
The value of the debt securities held by a Fund generally will vary inversely with market interest rates. If interest rates in a market fall, a Fund's debt securities issued by governments or companies in that market ordinarily will increase in value. If market interest rates increase, however, the debt securities owned by a Fund in that market will likely decrease in value. Latin American Fund may invest up to 50% of its total assets in debt securities of any rating. Developing Markets Fund may invest up to 50% of its total assets in debt securities rated below investment grade. All such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by S&P, and debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. While such lower quality debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not in default as to principal or interest and such issues so rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Lower quality debt securities are also generally considered to be subject to greater risk than securities with higher ratings with regard to a deterioration of general economic conditions. These foreign debt securities are the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their quality and are not a guarantee of quality. Rating agencies attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Also, rating agencies may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer's current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual developments of the issuer to a greater extent than do higher quality securities, which react primarily to fluctuations in the general level of interest rates. In addition, lower quality debt securities tend to be more sensitive to economic conditions and generally have more volatile prices than higher quality securities. Issuers of lower quality securities are often highly leveraged and may not have available to them more traditional methods of financing. For example, during an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of lower quality securities may experience financial stress. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations may also be adversely affected by specific developments affecting the issuer, such as the issuer's inability to meet specific projected business forecasts or the unavailability of additional financing. Similarly, certain emerging market governments that issue lower quality debt securities are among the largest debtors to commercial banks, foreign governments and supranational organizations such as the World Bank, and may not be able or willing to make principal and/or interest repayments as they come due. The risk of loss due to default by the issuer is significantly greater for the holders of lower quality securities because such securities are generally unsecured and may be subordinated to the claims of other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which would permit an issuer to call or repurchase the security from a Fund. In addition, a Fund may have difficulty disposing of lower quality securities because they may have a thin trading market. There may be no established retail secondary market for many of these securities, and the Funds anticipate that such securities could be sold only to a limited number of dealers or institutional investors. The lack of a liquid secondary market also may have an adverse impact on market prices of such instruments and may make it more difficult for a Fund to obtain accurate market quotations for purposes of valuing a Fund's portfolio. Each Fund may also acquire lower quality debt securities during an initial underwriting or which are sold without registration under applicable securities laws. Such securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the market value of lower quality debt securities in which a Fund may invest include: (i) potential adverse publicity; (ii) heightened sensitivity to general economic or political conditions; and (iii) the likely adverse impact of a major economic recession.
Each Fund may invest in debt securities, including Brady Bonds, issued as part of debt restructurings and such debt is to be considered speculative. There is a history of defaults with respect to commercial bank loans by public and private entities issuing Brady Bonds.
Each Fund may also incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings, and a Fund may have limited legal recourse in the event of a default. Debt securities issued by governments in emerging markets (including those in Latin American markets) can differ from debt obligations issued by private entities in that remedies from defaults generally must be pursued in the courts of the defaulting government, and legal recourse is therefore somewhat diminished. Political conditions, in terms of a government's willingness to meet the terms of its debt obligations, also are of considerable significance. There can be no assurance that the holders of commercial bank debt may not contest payments to the holders of debt securities issued by governments in emerging markets in the event of default by the governments under commercial bank loan agreements.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Developing Markets Fund may have difficulty disposing of Assignments and Participations. The liquidity of such securities is limited, and the Fund anticipates that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market could have an adverse impact on the value of such securities and on a Fund's ability to dispose of particular Assignments or Participations when necessary to meet its liquidity needs or in response to a specific economic event, such as a deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for Assignments and Participations also may make it more difficult for a Fund to assign a value to those securities for purposes of valuing its portfolio and calculating its net asset value.
FOREIGN SECURITIES
Political, Social and Economic Risks. Investing in securities of non-U.S. companies may entail additional risks due to the potential political, social and economic instability of certain countries and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment, convertibility of currencies into U.S. dollars and on repatriation of capital invested. In the event of such expropriation, nationalization or other confiscation by any country, a Fund could lose its entire investment in any such country.
In addition, even though opportunities for investment may exist in emerging markets, any change in the leadership or policies of the governments of those countries or in the leadership or policies of any other government which exercises a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes, the governments of a number of Latin American countries previously expropriated large quantities of real and personal property similar to the property which will be represented by the securities purchased by the Funds. The claims of property owners against those governments were never finally settled. There can be no assurance that any property represented by securities purchased by the Funds will not also be expropriated, nationalized, or otherwise confiscated. If such confiscation were to occur, the Funds could lose their entire investment in such countries. The Funds' investments would similarly be adversely affected by exchange control regulation in any of those countries.
Economies in individual emerging markets may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, currency depreciation, capital reinvestment, resource self-sufficiency and balance of payments positions. Many emerging market countries have experienced high rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain countries with emerging markets.
Emerging markets generally are dependent heavily upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, rate of savings and capital reinvestment, currency depreciation, resource self-sufficiency and balance of payments positions. Investments in foreign government securities involve special risks, including the risk that the government issuers may be unable or unwilling to repay principal or interest when due.
Religious and Ethnic Stability. Certain countries in which the Funds may invest may have groups that advocate radical religious or revolutionary philosophies or support ethnic independence. Any disturbance on the part of such individuals could carry the potential for widespread destruction or confiscation of property owned by individuals and entities foreign to such country and could cause the loss of a Fund's investment in those countries. Instability may also result from, among other things, (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means, (ii) popular unrest associated with demands for improved political, economic and social conditions and (iii) hostile relations with neighboring or other countries. Such political, social and economic instability could disrupt the principal financial markets in which the Funds invest and adversely affect the value of the Funds' assets.
Foreign Investment Restrictions. Certain countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as the Funds. These restrictions or controls may at times limit or preclude investment in certain securities and may increase the cost and expenses of the Funds. For example, certain countries require prior governmental approval before investments by foreign persons may be made or may limit the amount of investment by foreign persons in a particular company, or limit the investment by foreign persons to only a specific class of securities of a company that may have less advantageous terms than securities of the company available for purchase by nationals. Moreover, the national policies of certain countries may restrict investment opportunities in issuers or industries deemed sensitive to national interests. In addition, some countries require governmental approval for the repatriation of investment income, capital or the proceeds of securities sales by foreign investors. If there is a deterioration in a country's balance of payments or for other reasons, a country may impose restrictions on foreign capital remittances abroad. The Funds could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental Regulation. Disclosure and regulatory standards in many respects are less stringent than in the U.S. and other major markets. There also may be a lower level of monitoring and regulation of emerging markets and the activities of investors in such markets, and enforcement of existing regulations has been extremely limited. Foreign companies are subject to accounting, auditing and financial standards and requirements that differ in some cases significantly from those applicable to U.S. companies. In particular, the assets, liabilities and profits appearing on the financial statements of such a company may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. generally accepted accounting principles. Most of the securities held by the Funds will not be registered with the SEC or regulators of any foreign country, nor will the issuers thereof be subject to the SEC's reporting requirements. Thus, there will be less available information concerning most foreign issuers of securities held by the Funds than is available concerning U.S. issuers. In instances where the financial statements of an issuer are not deemed to reflect accurately the financial situation of the issuer, the Sub-advisor will take appropriate steps to evaluate the proposed investment, which may include on-site inspection of the issuer, interviews with its management and consultations with accountants, bankers and other specialists. There is substantially less publicly available information about foreign companies than there are reports and ratings published about U.S. companies and the U.S. government. In addition, where public information is available, it may be less reliable than such information regarding U.S. issuers. Issuers of securities on foreign jurisdictions are generally not subject to the same degree of regulation as are U.S. issuers with respect to such matters as restrictions on market manipulation, insider trading rules, shareholder proxy requirements and timely disclosure of information. In addition, for companies that keep accounting records in local currency, inflation accounting rules in some Latin American countries require, for both tax and accounting purposes, that certain assets and liabilities be restated on the company's balance sheet in order to express items in terms of currency of constant purchasing power. Inflation accounting may indirectly generate losses or profits.
Currency Fluctuations. Because the Funds, under normal circumstances, each will invest a substantial portion of its total assets in the securities of foreign issuers which are denominated in foreign currencies, the strength or weakness of the U.S. dollar against such foreign currencies will account for part
of each Fund's investment performance. Changes in currency exchange rates will influence the value of a Fund's shares, and also may affect the value of dividends and interest earned by a Fund and gains and losses realized by a Fund. A decline in the value of any particular currency against the U.S. dollar will cause a decline in the U.S. dollar value of a Fund's holdings of securities and cash denominated in such currency and, therefore, will cause an overall decline in the Fund's net asset value and any net investment income and capital gains derived from such securities to be distributed in U.S. dollars to shareholders of that Fund. Moreover, if the value of the foreign currencies in which a Fund receives its income falls relative to the U.S. dollar between receipt of the income and the making of Fund distributions, the Fund may be required to liquidate securities in order to make distributions if the Fund has insufficient cash in U.S. dollars to meet distribution requirements.
Currencies generally are evaluated on the basis of fundamental economic criteria (e.g., relative inflation and interest rate levels and trends, growth rate forecasts, balance of payments status and economic policies) as well as technical and political data. The rate of exchange between the U.S. dollar and other currencies is determined by several factors including the supply and demand for particular currencies, central bank efforts to support particular currencies, the movement of interest rates, the pace of business activity in certain other countries and the United States, the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors affecting the world economy. If the currency in which a security is denominated appreciates against the U.S. dollar, the dollar value of the security will increase. Conversely, a decline in the exchange rate of the currency would adversely affect the value of the security expressed in dollars.
Some countries also may have fixed currencies where values against the U.S. dollar are not independently determined. In addition, there is a risk that certain countries may restrict the free conversion of their currencies into other currencies. Further, certain currencies may not be internationally traded.
Although the Funds value their assets daily in terms of U.S. dollars, they do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. The Funds will do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference ("spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one rate, while offering a lesser rate of exchange should a Fund desire to sell that currency to the dealer.
Many of the currencies of emerging market countries including Latin American countries, have experienced steady devaluations relative to the U.S. dollar, and major devaluations have historically occurred in certain countries. Any devaluations in the currencies in which a Fund's portfolio securities are denominated may have a detrimental impact on the Fund.
Certain Latin American countries may have managed currencies which are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. For example, in late 1994 the value of the Mexican peso lost more than one-third of its value relative to the dollar. Certain Latin American countries also may restrict the free conversion of their currency into foreign currencies, including the U.S. dollar. There is no significant foreign exchange market for certain currencies and it would, as a result, be difficult for the Funds to engage in foreign currency transactions designed to protect the value of the Funds' interests in securities denominated in such currencies.
Some countries also may have fixed currencies whose values against the U.S. dollar are not independently determined. In addition, there is a risk that certain countries may restrict the free conversion of their currencies into other currencies. Further, certain currencies may not be internationally traded.
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.
Adverse Market Characteristics. Securities of many foreign issuers may be less liquid and their prices more volatile than securities of comparable U.S. issuers. In addition, foreign securities markets and brokers generally are subject to less governmental supervision and regulation than in the United States and foreign securities transactions usually are subject to fixed commissions, which generally are higher than negotiated commissions on U.S. transactions. In addition, foreign securities transactions may be subject to difficulties associated with the settlement of such transactions. Delays in settlement could result in temporary periods when assets of the Funds are uninvested and no return is earned thereon. The inability of a Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive opportunities. Inability to dispose of a portfolio security due to settlement problems either could result in losses to a Fund due to subsequent declines in value of the portfolio security or, if the Fund has entered into a contract to sell the security, could result in possible liability to the purchaser. The Sub-advisor will consider such difficulties when determining the allocation of the Funds' assets, although the Sub-advisor does not believe that such difficulties will have a material adverse effect on the Funds' portfolio trading activities.
Each Fund may use foreign custodians, which are generally more expensive than those in the U.S. and may involve risks in addition to those related to the use of U.S. custodians. Such risks include uncertainties relating to (i) determining and monitoring the financial strength, reputation and standing of the foreign custodian, (ii) maintaining appropriate safeguards to protect a Fund's investments, (iii) possible difficulties in obtaining and enforcing judgments against such custodians and (iv) different settlement and clearance procedures which may be unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a Fund to make intended securities purchases due to settlement problems could cause a Fund to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to a Fund due to subsequent declines in value of the portfolio security or, if a Fund has entered into a contract to sell the security, could result in possible liability to the purchaser.
A high proportion of the shares of many Latin American companies may be held by a limited number of persons, which may further limit the number of shares available for investment by the Funds, particularly Latin American Fund. A limited number of issuers in most, if not all, Latin American securities markets may represent a disproportionately large percentage of market capitalization and trading value. The limited liquidity of Latin American securities markets also may affect a Fund's ability to acquire or dispose of securities at the price and time it wishes to do so. In addition, certain Latin American securities markets, including those of Argentina, Brazil, Chile and Mexico, are susceptible to being influenced by large investors trading significant blocks of securities or by large dispositions of securities resulting from the failure to meet margin calls when due.
The high volatility of certain Latin American securities markets is evidenced by dramatic movements in the Brazilian and Mexican markets in recent years. This market volatility may result in greater volatility in a Fund's net asset value than would be the case for companies investing in domestic securities. If a Fund were to experience unexpected net redemptions, it could be forced to sell securities in its portfolio without regard to investment merit, thereby decreasing the asset base over which Fund expenses can be spread and possibly reducing the Fund's rate of return.
Withholding Taxes. Each Fund's net investment income from securities of foreign issuers may be subject to withholding taxes by the foreign issuer's country, thereby reducing that income or delaying the receipt of income where those taxes may be recaptured. See "Dividends, Distributions and Tax Matters."
Concentration. To the extent a Fund invests a significant portion of its assets in securities of issuers located in a particular country or region of the world, it may be subject to greater risks and may experience greater volatility than a fund that is more broadly diversified geographically.
Special Considerations Affecting Emerging Markets. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict a Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property.
Investing in the securities of companies in emerging markets, including the markets of Latin America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may entail special risks relating to potential political and economic instability and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment, convertibility into U.S. dollars and on repatriation of capital invested. In the event of such expropriation, nationalization or other confiscation by any country, a Fund could lose its entire investment in any such country.
Emerging securities markets such as the markets of Latin America are substantially smaller, less developed, less liquid and more volatile than the major securities markets. The limited size of emerging securities markets and limited trading value in issuers compared to the volume of trading in U.S. securities could cause prices to be erratic for reasons apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced by traders who control large positions. Adverse publicity and investors' perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. In addition, securities traded in certain emerging markets may be subject to risks due to the inexperience of financial intermediaries, a lack of modern technology, the lack of a sufficient capital base to expand business operations, and the possibility of permanent or temporary termination of trading.
In addition, brokerage commissions, custodial services and other costs relating to investment in foreign markets generally are more expensive than in the United States, particularly with respect to emerging markets. Such markets have different settlement and clearance procedures. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a Fund to make intended securities purchases due to settlement problems could cause it to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to the Fund due to subsequent declines in value of the portfolio security or, if the Fund has entered into a contract to sell the security, could result in possible liability to the purchaser.
The securities markets of emerging countries including Latin American countries are substantially smaller, less developed, less liquid and more volatile than the securities markets of the developed countries. The risk also exists that an emergency situation may arise in one or more emerging markets as a result of which trading of securities may cease or may be substantially curtailed and prices for a Fund's portfolio securities in such markets may not be readily available. Section 22(e) of the 1940 Act permits registered investment companies, such as the Funds, to suspend redemption of its shares for any period during which an emergency exists, as determined by the SEC. Accordingly, when a Fund believes that circumstances dictate, it will promptly apply to the SEC for a determination that such an emergency exists within the meaning of Section 22(e) of the 1940 Act. During the period commencing from a Fund's identification of such conditions until the date of any SEC action, a Fund's portfolio securities in the affected markets will be valued at fair value determined in good faith by or under the direction of the Trust's Board of Trustees.
Settlement mechanisms in emerging securities markets may be less efficient and reliable than in more developed markets. In such emerging securities there may be share registration and delivery delays or failures.
Many emerging market countries including countries in Latin America have experienced substantial, and in some periods extremely high, rates of inflation for many years. This has, in turn, led to high interest rates, extreme measures by governments to keep inflation in check and a generally debilitating effect on economic growth. Inflation and rapid fluctuations in inflation rates and corresponding currency devaluations have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries including countries in Latin America.
Special Considerations Affecting Russia and Eastern European Countries.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on the ability of Developing Markets Fund to exchange local
currencies for U.S. dollars; (7) political instability and social unrest and
violence; (8) the risk that the governments of Russia and Eastern European
countries may decide not to continue to support the economic reform programs
implemented recently and could follow radically different political and/or
economic policies to the detriment of investors, including non-market-oriented
policies such as the support of certain industries at the expense of other
sectors or investors, or a return to the centrally planned economy that existed
when such countries had a communist form of government; (9) the financial
condition of companies in these countries, including large amounts of
inter-company debt which may create a payments crisis on a national scale; (10)
dependency on exports and the corresponding importance of international trade;
(11) the risk that the tax system in these countries will not be reformed to
prevent inconsistent, retroactive and/or exorbitant taxation; and (12) the
underdeveloped nature of the securities markets.
Special Considerations Affecting European Union Countries. While economic and monetary convergence in the European Union may offer new opportunities for those investing in the region, investors should be aware that the success of the union is not wholly assured. Europe must grapple with a number of challenges, any one of which could threaten the survival of this monumental undertaking. Eleven disparate economies must adjust to a unified monetary system, the absence of exchange rate flexibility, and the loss of economic sovereignty. The Continent's economies are diverse, its governments decentralized, and its cultures differ widely. Unemployment is historically high and could pose political risk. One or more member countries might exit the union, placing the currency and banking system in jeopardy.
Special Considerations Affecting Pacific Region Countries. Certain of the risks associated with international investments are heightened for investments in Pacific region countries. For example, some of the currencies of Pacific region countries have experienced steady devaluations relative to the U.S. dollar, and major adjustments have been made periodically in certain of such currencies. Certain countries, such as India, face serious exchange constraints.
Many of the Asia Pacific region countries may be subject to a greater
degree of social, political and economic instability than is the case in the
United States. Such instability may result from, among other things, the
following: (i) authoritarian governments or military involvement in political
and economic decision making, and changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic, religious and
racial disaffection. Such social, political and economic instability could
significantly disrupt the principal financial markets in which Developing
Markets
Fund invests and adversely affect the value of such Fund's assets. In addition, asset expropriations or future confiscatory levels of taxation possibly may affect the Fund.
The economies of most of the Asia Pacific region countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners, principally the United States, Japan, China and the European Community. The enactment by the United States or other principal trading partners of protectionist trade legislation, reduction of foreign investment in the local economies and general declines in the international securities markets could have a significant adverse effect upon the securities markets of the Asia Pacific region countries. In addition, the economies of some of the Asia Pacific region countries, Australia and Indonesia, for example, are vulnerable to weakness in world prices for their commodity exports, including crude oil.
China assumed sovereignty over Hong Kong in July 1997. Although China has committed by treaty to preserve the economic and social freedoms enjoyed in Hong Kong for fifty years, the continuation of the current form of the economic system in Hong Kong will depend on the actions of the government of China. In addition, such assumption of sovereignty has increased sensitivity in Hong Kong to political developments and statements by public figures in China. Business confidence in Hong Kong, therefore, can be significantly affected by such developments and statements, which in turn can affect markets and business performance.
In addition, there is a continuing risk that the Hong Kong dollar will be devalued and a risk of possible loss of investor confidence in the Hong Kong markets and dollar. However, factors exist that are likely to mitigate this risk. First, China has stated its intention to implement a "one country, two systems" policy, which would preserve monetary sovereignty and leave control in the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to maintaining investors' confidence in the transition to Chinese rule, and, therefore, it is anticipated that, if international investors lose confidence in Hong Kong dollar assets, the HKMA would intervene to support the currency, though such intervention cannot be assured. Third, Hong Kong's and China's sizable combined foreign exchange reserve may be used to support the value of the Hong Kong dollar, provided that China does not appropriate such reserves for other uses, which is not anticipated but cannot be assured. Finally, China would be likely to experience significant adverse political and economic consequences if confidence in the Hong Kong dollar and the territory assets were to be endangered.
Special Considerations Affecting Latin American Countries. Most Latin American countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain Latin American countries. Certain Latin American countries are also among the largest debtors to commercial banks and foreign governments. At times certain Latin American countries have declared moratoria on the payment of principal and/or interest on external debt. The Funds, particularly Latin American Fund, may invest in debt securities, including Brady Bonds, issued as part of debt restructurings and such debt is to be considered speculative. There is a history of defaults with respect to commercial bank loans by public and private entities issuing Brady Bonds. In addition, certain Latin American securities markets have experienced high volatility in recent years.
The securities of Latin American countries are substantially smaller, less developed, less liquid and more volatile than the major securities markets in the United States. Latin American countries may also close certain sectors of their economies to equity investments by foreigners. The limited size of many Latin American securities markets and limited trading volume in issuers compared to volume of trading in U.S. securities could cause prices to be erratic for reasons apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced by traders who control large positions. Adverse publicity and investors' perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. Further due to the absence of securities markets and publicly owned corporations and due to restrictions on direct investment
by foreign entities, investments may only be made in certain Latin American countries solely or primarily through governmentally approved investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. For example, in late 1994, the value of the Mexican peso lost more than one-third of its value relative to the U.S. dollar.
It should be noted that some Latin American countries require governmental approval for the repatriation of investment income, capital or the proceeds of securities sales by foreign investors. For instance, at present, capital invested directly in Chile cannot under most circumstances be repatriated for at least one year. The Funds, particularly Latin American Fund, could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investments.
Sovereign Debt. Each Fund may invest in sovereign debt securities of emerging market governments. Investments in such securities involve special risks. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable to unwilling to repay principal or interest when due in accordance with the terms of such debt. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt obligations and in turn a Fund's net asset value, to a greater extent than the volatility inherent in domestic fixed income securities. Sovereign Debt generally offers high yields, reflecting not only perceived credit risk, but also the need to compete with other local investments in domestic financial markets. Certain Latin American countries are among the largest debtors to commercial banks and foreign governments. A sovereign debtor's willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy towards the International Monetary Fund and the political constraints to which a sovereign debtor may be subject. Sovereign debtors may default on their Sovereign Debt. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a sovereign debtor's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due, may result in the cancellation of such third parties' commitments to lend funds to the sovereign debtor, which may further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the emerging market and Latin American countries in which the Funds expect to invest have encountered difficulties in servicing their Sovereign Debt. Some of these countries have withheld payments of interest and/or principal of Sovereign Debt. These difficulties have also led to agreements to restructure external debt obligations--in particular, commercial bank loans, typically by rescheduling principal payments, reducing interest rates and extending new credits to finance interest payments on existing debt. In the future, holders of Sovereign Debt may be requested to participate in similar reschedulings of such debt. Certain emerging markets countries are among the largest debtors to commercial banks and foreign governments. Currently, Brazil, Mexico and Argentina are the largest debtors among developing countries. At times, certain emerging markets countries have declared a moratorium on the payment of principal and interest on external debt; such a moratorium is currently in effect for certain emerging market countries. There is no bankruptcy proceeding by which a creditor may collect in whole or in part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market and Latin American governments to make timely payments on their Sovereign Debt is likely to be influenced strongly by a country's balance of trade and its access to trade and other international credits. A country whose exports are concentrated in a few commodities could be
vulnerable to a decline in the international prices of one or more of such commodities. Increased protectionism on the part of a country's trading partners could also adversely affect its exports. Such events could diminish a country's trade account surplus, if any. To the extent that a country receives payment for its exports in currencies other than hard currencies, its ability to make hard currency payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the countries issuing Sovereign Debt could adversely affect a Fund's investments. The countries issuing such instruments are faced with social and political issues and some of them have experienced high rates of inflation in recent years and have extensive internal debt. Among other effects, high inflation and internal debt service requirements may adversely affect the cost and availability of future domestic sovereign borrowing to finance governmental programs, and may have other adverse social, political and economic consequences. Political changes or a deterioration of a country's domestic economy or balance of trade may affect the willingness of countries to service their Sovereign Debt. While the Sub-advisor intends to manage each Fund's portfolio in a manner that will minimize the exposure to such risks, there can be no assurance that adverse political changes will not cause the Funds to suffer losses of interest or principal on any of their holdings.
Sovereign debt obligations issued by emerging market governments generally are deemed to be the equivalent in terms of quality to securities rated below investment grade by Moody's and S&P. Such securities are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. Some of such securities, with respect to which the issuer currently may not be paying interest or may be in payment default, may be comparable to securities rated D by S&P or C by Moody's. The Funds may have difficulty disposing of and valuing certain sovereign debt obligations because there may be a limited trading market for such securities. Because there is no liquid secondary market for many of these securities, the Funds anticipate that such securities could be sold only to a limited number of dealers or institutional investors.
Periods of economic uncertainty may result in the volatility of market prices of Sovereign Debt and in turn, a Fund's net asset value, to a greater extent than the volatility inherent in domestic securities. The value of Sovereign Debt will likely vary inversely with changes in prevailing interest rates, which are subject to considerable variance in the international market. If a Fund were to experience unexpected net redemptions, it may be forced to sell Sovereign Debt in its portfolio without regard to investment merit, thereby decreasing its asset base over which Fund expenses can be spread and possibly reducing its rate of return.
INVESTMENT LIMITATIONS
DEVELOPING MARKETS FUND
Developing Markets Fund has adopted the following investment limitations as fundamental policies which may not be changed without approval of a majority of the Fund's outstanding shares.
Developing Markets Fund may not:
(1) issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of Developing Markets Fund's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes;
(2) purchase any security if, as a result of that purchase, 25% or more of Developing Markets Fund's total assets would be invested in securities of issuers having their principal business
activities in the same industry, except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities;
(3) engage in the business of underwriting securities of other issuers, except to the extent that Developing Markets Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(4) purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that Developing Markets Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(5) purchase or sell physical commodities, but Developing Markets Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments; or
(6) make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan.
Notwithstanding any other investment policy, Developing Markets Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
For purposes of the concentration policy of Developing Markets Fund contained in limitation (2) above, the Fund intends to comply with the SEC staff position that securities issued or guaranteed as to principal and interest by any one single foreign government, or by all supranational organizations in the aggregate, are considered to be securities of issuers in the same industry.
In addition, to comply with federal tax requirements for qualification as a "regulated investment company" ("RIC"), Developing Markets Fund's investments will be limited so that, at the close of each quarter of its taxable year, (a) not more than 25% of the value of its total assets is invested in the securities (other than U.S. government securities or the securities of other RICs) of any one issuer and (b) at least 50% of the value of its total assets is represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with these other securities limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of its total assets and that does not represent more than 10% of the issuer's outstanding voting securities ("Diversification Requirements"). These tax-related limitations may be changed by the Trust's Board of Trustees to the extent necessary to comply with changes to applicable tax requirements.
The following investment policy of Developing Markets Fund is not a fundamental policy and may be changed by vote of the Trust's Board of Trustees without shareholder approval: Developing Markets Fund will not purchase securities on margin, provided that the Fund may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.
Investors should refer to the Developing Markets Fund's Prospectus for further information with respect to the Developing Markets Fund's investment objective, which may not be changed without the
approval of its shareholders, and other investment policies, techniques and limitations, which may be changed without shareholder approval.
LATIN AMERICAN FUND
Latin American Fund has adopted the following investment limitations as fundamental policies which may not be changed without approval of a majority of the Fund's outstanding shares.
Latin American Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more of Latin American Fund's total assets would be invested in securities of issuers having their principal business activities in the same industry, except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that Latin American Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers, except to the extent that Latin American Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of Latin American Fund's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but Latin American Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.
Notwithstanding any other investment policy, Latin American Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
For purposes of Latin American Fund's concentration policy contained in limitation (1), above, the Fund intends to comply with the SEC staff position that securities issued or guaranteed as to principal and interest by any single foreign government are considered to be securities of issuers in the same industry.
The following operating policies of Latin American Fund are not fundamental policies and may be changed by vote of the Trust's Board of Trustees without shareholder approval. Latin American Fund may not:
(1) Invest in securities of an issuer if the investment would cause Latin American Fund to own more than 10% of any class of securities of any one issuer, except that the Fund may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 10% of its net assets in illiquid securities, including securities that are illiquid by virtue of the absence of a readily available market;
(4) Enter into a futures contract, an option on a futures contract, or an option on foreign currency traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), if the aggregate initial margin and premiums required to establish all of those positions (excluding the amount by which options are "in-the-money") exceeds 5% of the liquidation value of Latin American Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into;
(5) Make any additional investments while borrowings exceed 5% of Latin American Fund's total assets;
(6) Purchase securities on margin, provided that Latin American Fund may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities.
Latin American Fund has the authority to invest up to 10% of its total assets in shares of other investment companies pursuant to the 1940 Act. The Fund may not invest more than 5% of its total assets in any one investment company or acquire more than 3% of the outstanding voting securities of any one investment company, except that the Fund may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order.
Investors should refer to the Latin American Fund's Prospectus for further information with respect to the Latin American Fund's investment objective, which may not be changed without the approval of its shareholders, and other investment policies, techniques and limitations, which may be changed without shareholder approval.
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by the Trust's Board of Trustees, the Sub-advisor is responsible for the execution of each Fund's portfolio transactions and the selection of broker/dealers who execute such transactions on behalf of the Funds. In executing portfolio transactions, the Sub-advisor seeks the best net results for each Fund, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. Although the Sub-advisor generally seeks reasonably competitive commission rates and spreads, payment of the lowest commission or spread is not necessarily consistent with the best net results. While the Funds may engage in soft dollar arrangements for research services, as described below, the Funds have no obligation to deal with any broker/dealer or group of broker/dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as principal for its own account without a stated commission, although the price of the security usually includes a profit to the dealer. U.S. and foreign government securities and money market instruments generally are traded in the OTC markets. In underwritten offerings, securities usually are purchased at a fixed price which includes an amount of compensation to the underwriter. On occasion, securities may be purchased directly from an issuer, in which case no commissions or discounts are paid. Broker/dealers may receive commissions on futures, currency and options transactions.
Consistent with the interests of each Fund, the Sub-advisor may select brokers to execute a Fund's portfolio transactions, on the basis of the research and brokerage services they provide to the Sub-advisor for its use in managing the Fund and its other advisory accounts. Such services may include furnishing analyses, reports and information concerning issuers, industries, securities, geographic regions, economic factors and trends, portfolio strategy, and performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Broker/dealers may communicate such information electronically, orally, in written form or on computer software. Research and brokerage services received from such brokers are in addition to, and not in lieu of, the services required to be performed by the Sub-advisor under the investment management and administration contracts. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the Sub-advisor determines in good faith that such commission is reasonable in terms either of that particular transaction or the overall responsibility of the Sub-advisor to a Fund and its other clients and that the total commissions paid by the Fund will be reasonable in relation to the benefits it received over the long term. Research services may also be received from dealers who execute Fund transactions in OTC markets.
The Sub-advisor may allocate brokerage transactions to broker/dealers who have entered into arrangements under which the broker/dealer allocates a portion of the commissions paid by a Fund toward payment of the Fund's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and for other investment accounts managed by the Sub-advisor are made independently of each other in light of differing conditions. However, the same investment decision occasionally may be made for two or more of such accounts including the Funds. In such cases, simultaneous transactions may occur.
Purchases or sales are then allocated as to price or amount in a manner deemed fair and equitable to all accounts involved. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as a Fund is concerned, in other cases, the Sub-advisor believes that coordination and the ability to participate in volume transactions will be beneficial to that Fund.
Under a policy adopted by the Trust's Board of Trustees, and subject to the policy of obtaining the best net results, the Sub-advisor may consider a broker/dealer's sale of the shares of a Fund and the other funds for which AIM or the Sub-advisor serves as investment manager in selecting brokers and dealers for the execution of portfolio transactions. This policy does not imply a commitment to execute portfolio transactions through all broker/dealers that sell shares of the Funds and such other funds.
Each Fund contemplates purchasing most foreign equity securities in over-the-counter markets or stock exchanges located in the countries in which the respective principal offices of the issuers of the various securities are located, if that is the best available market. The fixed commissions paid in connection with most such foreign stock transactions generally are higher than negotiated commissions on U.S. transactions. There generally is less government supervision and regulation of foreign stock exchanges and brokers than in the United States. Foreign security settlements may in some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by each Fund in the form of ADRs, ADSs, EDRs, GDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs, EDRs, GDRs and CDRs may be listed
on stock exchanges, or traded in the OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates. The foreign and domestic debt securities and money market instruments in which a Fund may invest generally are traded in the OTC markets.
Each Fund contemplates that, consistent with the policy of obtaining the best net results, brokerage transactions may be conducted through certain companies affiliated with AIM or the Sub-advisor. The Trust's Board of Trustees has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such affiliates are reasonable and fair in the context of the market in which they are operating. Any such transactions will be effected and related compensation paid only in accordance with applicable SEC regulations.
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 a Fund, provided the conditions of an exemptive order received by the Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account 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.
For the fiscal years ended October 31, 2000, 1999 and 1998, Developing Markets Fund paid aggregate brokerage commissions of $1,647,898, $732,921 and $1,409,401, respectively. For the fiscal years ended October 31, 2000, 1999 and 1998, Latin American Fund paid aggregate brokerage commissions of $220,777, $252,182 and $700,006, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund engages in portfolio trading when the Sub-advisor has concluded that the sale of a security owned by the Fund and/or the purchase of another security of better value can enhance principal and/or increase income. A security may be sold to avoid any prospective decline in market value, or a security may be purchased in anticipation of a market rise. Consistent with each Fund's investment objective, a security also may be sold and a comparable security purchased coincidentally in order to take advantage of what is believed to be a disparity in the normal yield and price relationship between the two securities. Although none of the Funds generally intends to trade for short-term profits, the securities in a Fund's portfolio will be sold whenever management believes it is appropriate to do so, without regard to the length of time a particular security may have been held. Portfolio turnover rate is calculated by dividing the lesser of sales or purchases of portfolio securities by a Fund's average month-end portfolio values, excluding short-term investments. The portfolio turnover rate will not be a limiting factor when the Sub-advisor deems portfolio changes appropriate. Higher portfolio turnover involves correspondingly greater brokerage commissions and other transaction costs that a Fund will bear directly and may result in the realization of net capital gains that are taxable when distributed to that Fund's shareholders.
The portfolio turnover rates for Developing Markets Fund and Latin American Fund the last two fiscal years were as follows:
YEAR ENDED YEAR ENDED
OCT. 31, OCT. 31,
2000 1999
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Developing Markets Fund ........................ 192% 125%
Latin American Fund................................ 33% 30%
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High portfolio turnover (over 100%) involves correspondingly greater brokerage commissions and other transaction costs that the Fund will bear directly and could result in the realization of net capital gains which would be taxable when distributed to shareholders. See "Dividends, Distributions and Tax Matters."
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of the Funds. The Trust's Board of Trustees has approved all significant agreements between the Trust on the one side and persons or companies furnishing services to the Fund on the other, including the investment management and administration agreement with AIM, the investment sub-advisory agreement between AIM and the Sub-advisor, the agreements with AIM Distributors regarding distribution of the Fund's shares, the custody agreement and the transfer agency agreement. The day-to-day operations of the Fund are delegated to the officers of the Trust, subject always to the investment objectives and policies of the Fund and to the general supervision of the Trust's Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and AIM Management Group Inc. ("AIM Management"), the parent corporation of AIM.
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
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POSITIONS
HELD WITH PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
NAME, ADDRESS AND AGE REGISTRANT
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*ROBERT H. GRAHAM (54) Trustee, Director, President and Chief Executive Officer,
Chairman and A I M Management Group, Inc.; Director and
President 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
Vice Chairman, AMVESCAP PLC.
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C. DEREK ANDERSON (59) Trustee Senior Managing Partner, Plantagenet Capital
456 Montgomery Street Management, LLC (an investment partnership); Chief
Suite 200 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); and Director, Premium
Wear, Inc. (formerly Munsingwear, Inc.) (a casual
apparel company), "R" Homes, Inc. and various
other privately owned companies.
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FRANK S. BAYLEY (61) Trustee Partner, law firm of Baker & McKenzie; Director
Two Embarcadero Center and Chairman, Stimson Marina, Inc., a subsidiary
Suite 2400 of C.D. Stimson Company (a private investment
San Francisco, CA 94111 company); and Trustee, The Badgley Funds.
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RUTH H. QUIGLEY (66) Trustee Private investor; and President, Quigley Friedlander
1055 California Street & Co., Inc. (a financial advisory services firm) from
San Francisco, CA 94108 1984 to 1986.
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POSITIONS
HELD WITH PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
NAME, ADDRESS AND AGE REGISTRANT
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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.
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GARY T. CRUM (53) 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.
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CAROL F. RELIHAN (46) 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; Vice
President and General Counsel, A I M Fund
Services, Inc.; and Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.
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DANA R. SUTTON (42) Vice President Vice President and Fund Controller, A I M
and Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
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The Board of Trustees has a Nominating and Audit Committee, comprised of Miss Quigley (Chairman) and Messrs. Anderson and Bayley, which is responsible for nominating persons to serve as Trustees, reviewing audits of the Trust and its funds and recommending firms to serve as independent auditors for the Trust. All of the Trust's Trustees also serve as directors or trustees of some or all of the other investment companies managed, administered or advised by AIM. All of the Trust's executive officers hold similar offices with some or all of the other investment companies managed, administered or advised by AIM.
Each Trustee who is not a director, officer or employee of AIM and/or the Sub-advisor or any affiliated company is paid an annual retainer component plus a per-meeting fee component, and reimbursed travel and other expenses incurred in connection with attendance at such meetings. Other Trustees and Officers receive no compensation or expense reimbursement from the Trust. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not trustees, officers or employees of AIM, the Sub-advisor or any affiliated company, received total compensation of $64,278, $65,351 and $65,351, respectively, from the Trust for their services as Trustees. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not trustees, officers or employees of AIM, the Sub-Advisor or any other affiliated company, received total compensation of $105,000, $107,000, and $107,000, respectively, from the investment companies managed or administered by AIM and for which he or she serves as a Director or Trustee. Fees and expenses disbursed to the Trustees contained no accrued or payable pension or retirement benefits.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, was organized in 1976 and, together with its subsidiaries, manages or advises approximately 130 investment portfolios encompassing a broad range of investment objectives. INVESCO Asset Management Limited, 11 Devonshire Square, London, EC2M 4YR, England, has provided investment management and/or administrative services to pension funds, insurance funds, index funds, unit trusts, offshore funds and a variety of institutional accounts since 1967. AIM, the Sub-advisor and their world-wide asset management affiliates provide investment management and/or administrative services to institutional, corporate and individual clients around the world.
AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM is also the sole shareholder of the Funds' principal underwriter, AIM Distributors.
AIM Management, AIM and the Sub-Advisor are indirect wholly owned subsidiaries of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an independent management group that has a significant presence in the institutional and retail segment of the investment management industry in North America and Europe, and a growing presence in Asia. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management" herein.
In addition to the investment resources of their Houston and London offices, AIM and the Sub-advisor draw upon the expertise, personnel, data and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), Frankfurt, Hong Kong, Singapore, Sydney, Tokyo and Toronto. In managing the Funds and the Portfolio, AIM and the Sub-advisor employ a team approach, taking advantage of their investment resources around the world.
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 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 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 from purchasing securities in initial public offerings. 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.
AIM serves as each Fund's investment manager and administrator under an investment management and administration contract ("Management Contract") between the Trust and AIM. The Sub-advisor serves as the sub-advisor to each Fund under a sub-advisory contract between AIM and the Sub-advisor ("Sub-Management Contract," and together with the Management Contract, the "Management Contracts"). As investment managers and administrators, AIM and the Sub-advisor make all investment decisions for the Funds and administer each Fund's affairs. AIM and the Sub-advisor also determine the composition of each Fund's portfolio, places orders to buy, sell or hold particular securities and supervise all matters relating to each Fund's operation. Among other things, AIM and the Sub-advisor furnish the services and pay the compensation and travel expenses of persons who perform the executive, administrative, clerical and bookkeeping functions of the Trust and the Funds, and provide suitable office space, necessary small office equipment and utilities.
For these services, each Fund pays AIM investment management and administration fees, computed daily and paid monthly, based on its average daily net assets, at the annualized rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925% on the next $500 million and 0.90% on the amounts thereafter. AIM pays the Sub-advisor sub-advisory fees computed weekly and paid monthly, based on each Fund's average daily net assets, at the annualized rate of 0.39% of the first $500 million, 0.38% on the next $500 million, 0.37% on the next $500 million, and 0.36% on the amounts thereafter. The investment management and administration fees paid by the Funds are higher than those paid by most mutual funds. The Funds pay all expenses not assumed by AIM, the Sub-advisor, AIM Distributors or other agents. AIM has undertaken to limit each Fund's expenses (exclusive of brokerage commissions, taxes, interest and extraordinary expenses) to the annual rate of 2.00%, 2.50% and 2.50% of the average daily net assets of each Fund's Class A, Class B and Class C shares, respectively, until June 30, 2001.
The Management Contracts for each Fund may be renewed for one-year terms, provided that any such renewal has been specifically approved at least annually by (i) the Trust's Board of Trustees, or by the vote of a majority of a Fund's outstanding voting securities (as defined in the 1940 Act) and (ii) a majority of Trustees who are not parties to the Management Contracts or "interested persons" of any such party (as defined in the 1940 Act), cast in person at a meeting called for the specific purpose of voting on such approval. The Management Contracts provide that with respect to each Fund, the Trust or each of AIM or the Sub-advisor may terminate the Management Contracts without penalty upon sixty days' written notice. The Management Contracts terminate automatically in the event of their assignment (as defined in the 1940 Act).
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 placing securities for a Fund's portfolio transactions, the Sub-advisor seeks to obtain the best net results. Consistent with its obligation to obtain the best net results, the Sub-advisor may consider a broker/dealer's sale of shares of the AIM Funds as a factor in considering through whom portfolio transactions will be effected. Brokerage transactions may be executed through affiliates of AIM or the Sub-advisor.
AIM became investment manager and administrator to the Funds effective June 1, 1998. Prior to that date, Chancellor LGT Asset Management, Inc. served as investment manager and administrator.
For the fiscal years ended October 31, 2000, 1999 and 1998, each Fund paid AIM and the prior manager and administrator the following net investment management and administration fees:
2000 1999 1998
---- ---- ----
Developing Markets Fund ................ $2,125,703 $813,308 $1,049,576
Latin American Fund .................... 818,212 379,902 1,738,497
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For the fiscal year ended October 31, 2000, 1999 and 1998, AIM waived management fees for Developing Markets Fund in the amounts of $195,861, $747,433 and $691,157, respectively, and Latin American Fund in the amounts of $188,076, $572,144 and $297,829, respectively.
INVESCO Asset Management Limited became sub-advisor to the Funds effective June 1, 1998. Prior to that date, INVESCO Asset Management Limited's predecessor served as sub-advisor.
For the fiscal years ended October 31, 2000, 1999 and 1998, AIM and the prior investment manager and administrator paid, with respect to the Funds, the following sub-advisory fees:
2000 1999 1998
---- ---- ----
Developing Markets Fund ................ $850,281 $325,323 $419,830
Latin American Fund .................... 327,285 151,961 695,399
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AIM also serves as the Funds' pricing and accounting agent pursuant to the Master Accounting Services Agreement. For these services, the Funds' pay AIM such fees as are determined in accordance with methodologies established, from time to time, by the Trust's Board of Trustees.
For the fiscal years ended October 31, 2000, 1999 and 1998, each Fund paid the current and former advisers the following accounting services fees:
2000 1999 1998
---- ---- ----
Developing Markets Fund ................ $50,000 $42,462 $53,782
Latin American Fund .................... 50,000 38,349 55,950
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THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to the Class A and Class C shares of the Funds (the
"Class A and C Plan"). The Class A and C Plan provides that the Class A shares
of each Fund pays 0.50% per annum of the average daily net assets attributable
to Class A shares as compensation to AIM Distributors for the purpose of
financing any activity which is primarily intended to result in the sale of
Class A shares. Under the Class A and C Plan, Class C shares of each Fund pay
compensation to AIM Distributors at an annual rate of 1.00% of the average daily
net assets attributable to Class C shares. The Class A and C Plan is designed to
compensate AIM Distributors, on a quarterly basis, for certain promotional and
other sales-related costs, and to implement a dealer incentive program which
provides for periodic payments to selected dealers who furnish continuing
personal shareholder services to their customers who purchase and own Class A or
Class C shares of a Fund. Payments can also be directed by AIM Distributors to
selected institutions who have entered into service agreements with respect to
Class A and Class C shares of each Fund and who provide continuing personal
services to their customers who own Class A and Class C shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan. Activities appropriate for financing
under the Class A and C Plan include, but are not limited to, the following:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders; overhead; preparation and distribution of
advertising material and sales literature; expenses of organizing and conducting
sales seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions including AIM Distributors, acting as principal, for providing continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 0.25% of the average 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 and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Class A and C Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Fund 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 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 (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class B shares. Any amounts not paid as a service fee would constitute an asset-based sales charge. Amounts paid in accordance with the Class B Plan may be used to finance any activity primarily intended to result in the sale of Class B shares, including but not limited to printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class B Plan.
BOTH PLANS
Pursuant to an incentive program, AIM Distributors may enter into agreements ("Shareholder Service Agreements") with investment dealers selected from time to time by AIM Distributors for the provision of distribution assistance in connection with the sale of the Funds' shares to such dealers' customers, and for the provision of continuing personal shareholder services to customers who may from time to time directly or beneficially own shares of the Funds. The distribution assistance and continuing personal shareholder services to be rendered by dealers under the Shareholder Service Agreements may include, but shall not be limited to, the following: distributing sales literature; answering routine customer inquiries concerning the Funds; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of the 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 the Funds; 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 the Funds reasonably may request, to the extent permitted by applicable statute, rule or regulation.
The Trust may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Funds
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 the Funds 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 the Funds 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, each Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement generally will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate of 0.25% of the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees calculated in this manner shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which each Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Funds to no more than 0.25% per annum of the average daily net assets of the Funds attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Funds and their respective classes.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A 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 Fund.
Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Fund on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the 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. Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one class over another.
Prior to June 1, 1998, GT Global Inc. was the distributor of the Funds.
For the fiscal year ended October 31, 2000, the various classes of the Funds paid to AIM Distributors the following amounts pursuant to the Plans:
% OF CLASS
AVERAGE DAILY
NET ASSETS
-------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Developing Markets Fund $646,612 $712,953 $13,244 .50% 1.00% 1.00%
Latin American Fund 298,720 425,504 7,773 .50% 1.00% 1.00%
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An estimate by category of actual fees paid by each Fund under the Class A and C Plan during the fiscal year ended October 31, 2000, were allocated as follows:
DEVELOPING LATIN
MARKETS AMERICAN
FUND FUND
---------- --------
CLASS A
Advertising............................................ $145,376 $31,296
Printing and Mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)....................................... 17,055 3,232
Seminars............................................... 47,376 8,287
Compensation to Underwriters to partially
offset other marketing expenses..................... 0 0
Compensation to Dealers including Finder's Fees........ 436,805 255,905
Compensation to Sales Personnel........................ 0 0
Annual Report Total.................................... $646,612 $298,720
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An estimate by category of actual fees paid by each Fund under the Class B Plan during the year ended October 31, 2000, were allocated as follows:
DEVELOPING LATIN
MARKETS AMERICAN
FUND FUND
---------- --------
CLASS B
Advertising............................................ $ 7,252 $ 2,948
Printing and Mailing prospectuses,
semi-annual reports and annual reports
(other than to current shareholders)................ 904 357
Seminars............................................... 2,510 661
Compensation to Underwriters to partially
offset other marketing expenses..................... 534,715 319,128
Compensation to Dealers................................ 167,572 102,410
Compensation to Sales Personnel........................ 0 0
Annual Report Total.................................... $712,953 $425,504
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An estimate by category of actual fees paid by each Fund under the Class A and C Plan during the year ended October 31, 2000, were allocated as follows:
DEVELOPING LATIN
MARKETS AMERICAN
FUND FUND
---------- --------
CLASS C
Advertising............................................ $ 0 $ 0
Printing and Mailing prospectuses,
semi-annual reports and annual reports
(other than to current shareholders)................ 0 0
Seminars............................................... 0 0
Compensation to Underwriters to partially
offset other marketing expenses..................... 7,651 5,131
Compensation to Dealers................................ 5,593 2,642
Compensation to Sales Personnel........................ 0 0
Annual Report Total.................................... $13,244 $7,773
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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.
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 ("Qualified 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 class of each Fund and their respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans continue in effect from year to year, as long as such continuance is specifically approved at least annually by the Board of Trustees, including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified 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, it may be amended by the Trustees, including a majority of the Qualified 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 Qualified Trustees is committed to the discretion of the Qualified 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 under the Class A and C Plan, the Class B shares of the Funds will no longer convert into Class A shares of the same Funds unless the Class B shares, voting separately, approve such amendment. If the Class B shareholders do not approve such amendment, the Board of 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 Class B Plan are: (i) the Class A and C Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.50% of average daily net assets of the Class A shares of each Fund, as compared to 1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors or its predecessor, GT Global, Inc. unless there has been a complete termination of the Class B Plan (as defined in such Plan) and (iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement with AIM Distributors relating to the Class A shares and Class C shares of the Funds and a Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Funds. Such Master Distribution Agreements are hereinafter collectively referred to as the "Distribution Agreements."
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 Fund), 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 Fund's 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.
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 of the Funds 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.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B shares of the 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 anticipates that it will require a number of years to recoup from Class B Plan payments the sales commissions paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor.
The Trust (on behalf of any class of any Fund) 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 and its predecessor; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments by the Fund of asset based distribution fees and service fees to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of 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 Agreement relating to Class B shares in order to finance distribution expenditures in respect of Class B shares.
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by GT Global, Inc., the Trust's distributor prior to June 1, 1998, for the period November 1, 1997 through May 31, 1998.
NOVEMBER 1, 1997
TO MAY 31, 1998
------------------
SALES AMOUNT
CHARGES RETAINED
------- --------
Developing Markets Fund $ 0 $ 0
Latin American Fund $47,006 $16,513
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Developing Markets Fund and Latin American Fund pay AIM Distributors sales charges on sales of Class A shares of the Funds. AIM Distributors retains certain amounts of such charges and reallows other amounts of such charges to broker/dealers who sell 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 year or period ended October 31, 2000, 1999 and 1998:
JUNE 1, 1998 TO
2000 1999 OCTOBER 31, 1998
-------------------- ------------------- -------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
-------- -------- ------- -------- ------- --------
Developing Markets Fund .................. $135,795 $25,847 $69,225 $16,209 $ 819 $ 770
Latin American Fund ...................... $ 70,934 $12,961 $67,706 $12,934 $10,956 $10,703
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Developing Markets Fund and Latin American Fund pay AIM Distributors a contingent deferred sales charge with respect to redemptions or certain Class A, Class B and Class C shares.
The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C* shareholders and retained by the Trust's distributor for the fiscal years ended October 31, 2000, 1999 and 1998:
2000 1999 1998
------- ------ --------
Developing Markets Fund ............ $45,221 $6,877 $ 4,252
Latin American Fund ................ $ 5,658 $ 536 $791,308
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EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-advisor, AIM Distributors and other agents. These expenses include, in addition to the advisory, distribution, transfer agency, pricing and accounting agency and brokerage fees discussed above, legal and audit expenses, custodian fees, trustees' fees, organizational fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses and the expenses of reports and prospectuses sent to existing investors. The allocation of general Trust expenses and expenses shared among the Funds and other funds organized as series of the Trust are allocated on a basis deemed fair and equitable, which may be based on the relative net assets of the Funds or the nature of the services performed and relative applicability to the Funds. Expenditures, including costs incurred in connection with the purchase or sale of portfolio securities, which are capitalized in accordance with generally accepted accounting principles applicable to investment companies, are accounted for as capital items and not as expenses. The ratio of each Fund's expenses to its relative net assets can be expected to be higher than the expense ratios of funds investing solely in domestic securities, since the cost of maintaining the custody of foreign securities and the rate of investment management fees paid by each Fund generally are higher than the comparable expenses of such other funds.
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 Euroland Growth Fund, AIM European Development Fund, AIM European Small Company 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, AIM Weingarten Fund and AIM Worldwide Spectrum 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
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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
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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; or
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: (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 charge Categories I and II unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of each Fund may be purchased appears in the Prospectus under the heading "Purchasing Shares -- How to Purchase Shares."
The sales charge normally deducted on purchases of Class A shares of the Funds is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of such shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons, who because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., because of the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons be permitted to purchase Class A shares of the Funds through AIM Distributors without payment of a sales charge. The persons who may purchase Class A shares of the Funds without a sales charge are set forth under the caption "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 AIM Funds is set forth in the Prospectus under the heading "Exchanging Shares."
Information concerning redemption of each Fund's shares is set forth in the Prospectus under the caption "Redeeming Shares." Shares of the AIM Funds may be redeemed directly through AIM Distributors
or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Fund telephone: (800) 347-4246 and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value of the 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 CDSC) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction. AIM intends to redeem all shares of the Funds in cash.
The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will 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
The net asset value per share of each Fund or Portfolio is normally determined once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund or Portfolio. 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 or Portfolio share 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 equity securities, cash and
other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of each Fund's or Portfolio'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 last available bid. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. 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 mean between the closing bid and asked prices on that day. Debt securities 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, 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. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE.
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 Trust's Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gain distributions are automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in each Fund's Prospectus under the caption "Shareholder Information -- Purchasing Shares - Special Plans - Automatic Dividend Investment." If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
GENERAL
Each Fund is treated as a separate corporation for federal income tax purposes. To continue to qualify for treatment as a regulated investment company ("RIC") under the Code, each Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain and net gains from certain foreign currency transactions) ("Distribution Requirement") and must meet several additional requirements. These requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in securities or those currencies ("Income Requirement"); and (2) the Diversification Requirements.
By qualifying for treatment as a RIC, each Fund (but not its shareholders) will be relieved of federal income tax on the part of its investment company taxable income and net capital gain (the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. If a Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed as an ordinary corporation on the full amount of its taxable income for that year without being able to deduct the distributions it makes to its shareholders and (2) the shareholders would treat all those distributions, including distributions of net capital gain, as dividends (that is, ordinary income) to the extent of the Fund's earnings and profits. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for RIC treatment.
Dividends and other distributions declared by a Fund in, and payable to shareholders of record as of a date in, October, November or December of any year will be deemed to have been paid by the Fund and received by the shareholders on December 31 of that year if the distributions are paid by the Fund during the following January. Accordingly, those distributions will be taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Investors also should be aware that if shares are purchased shortly before the record date for any dividend or other distribution, the shareholder will pay full price for the shares and receive some portion of the price back as a taxable distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the extent it fails to distribute by the end of any calendar year substantially all of its ordinary income for that year and capital gain net income for the one-year period ending on October 31 of that year, plus certain other amounts.
EXCHANGE AND REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of a Fund's shares ("original shares") within
90 days after purchase thereof and subsequently reacquires shares of that Fund
or acquires shares of another AIM Fund on which a sales charge normally is
imposed ("replacement shares"), without paying the sales charge (or paying a
reduced charge) due to an exchange privilege or a reinstatement privilege, then
(1) any gain on the disposition of the original shares will be increased, or the
loss thereon decreased, by the amount of the sales charge paid when those shares
were acquired and (2) that amount will increase the adjusted basis of the
replacement shares that were subsequently acquired. In addition, if a
shareholder purchases shares of a Fund (whether pursuant to the reinstatement
privilege or otherwise) within 30 days before or after redeeming at a loss other
shares of that Fund (regardless of class), all or part of that loss will not be
deductible and instead will increase the basis of the newly purchased shares.
FOREIGN TAXES
Dividends and interest received by each Fund, and gains realized
thereby, may be subject to income, withholding or other taxes imposed by foreign
countries and U.S. possessions ("foreign taxes") that would reduce the yield
and/or total return on its securities. Tax conventions between certain countries
and the United States may reduce or eliminate foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors. If more than 50% of the value of a Fund's total assets at
the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it.
Pursuant to the election, the Fund would treat those taxes as dividends paid to
its shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's foreign
taxes and income from sources within, and taxes paid to, foreign countries and
U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act
of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the foreign tax credit limitation and will be able to
claim a foreign tax credit without having to file the Form 1116 that otherwise
is required.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund may invest in the stock of "passive foreign investment companies" ("PFICs"). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, a Fund will be subject to federal income tax on a portion of any "excess distribution" received on, or of any gain from the disposition of, stock of a PFIC (collectively "PFIC income"), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified electing fund" ("QEF"), then in lieu of the foregoing tax and interest obligation, the Fund would be required to include in income each year its pro rata share of the QEF's ordinary earnings and net capital gain which most likely would have to be distributed by the Fund to satisfy the Distribution Requirement and avoid imposition of the Excise Tax--even if those earnings and gain were not received by the Fund from the QEF. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.
Each Fund may elect to "mark to market" its stock in any PFIC. "Marking-to-market," in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of the stock over a Fund's adjusted basis therein as of the end of that year. Pursuant to the election, a Fund also will be allowed to deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock included in income by the Fund for prior taxable years. A Fund's adjusted basis in each PFIC's stock subject to the election will be adjusted to reflect the amounts of income included and deductions taken thereunder. Regulations proposed in 1992 provided a similar election with respect to the stock of certain PFICs.
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a nonresident alien individual, nonresident alien fiduciary of a trust or estate, foreign corporation or foreign partnership ("foreign shareholder") generally will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will not apply, however, to a dividend paid by a Fund to a foreign shareholder that is "effectively connected with the conduct of a U.S. trade or business," in which case the reporting and withholding requirements applicable to domestic shareholders will apply. A distribution of net capital gain by a Fund to a foreign shareholder generally will be subject to U.S. federal income tax (at the rates applicable to domestic persons) only if the distribution is "effectively connected" or the foreign shareholder is treated as a resident alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
Each Fund's use of hedging transactions, such as selling (writing) and purchasing options and futures and entering into forward contracts, involves complex rules that will determine, for federal income tax purposes, the amount, character and timing of recognition of the gains and losses a Fund realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures and forward contracts derived by a Fund with respect to its business of investing in securities or foreign currencies, will qualify as permissible income under the Income Requirement.
Futures and forward contracts that are subject to section 1256 of the Code (other than those that are part of a "mixed straddle") ("Section 1256 Contracts") and that are held by a Fund at the end of its taxable year generally will be deemed to have been sold at that time at market value for federal income tax purposes. Sixty percent of any net gain or loss recognized on these deemed sales, and 60% of any net gain or loss realized from any actual sales of Section 1256 Contracts, will be treated as long-term capital gain or loss, and the balance will be treated as short-term capital gain or loss. That 60% portion will qualify for the reduced maximum tax rates on noncorporate taxpayers' net capital gain--20% (10% for non-corporate taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets held for more than 12 months.
Section 988 of the Code also may apply to gains and losses from transactions in foreign currencies, foreign-currency-denominated debt securities and options, futures and forward contracts on foreign currencies ("Section 988" gains and losses). Each Section 988 gain or loss generally is computed separately and treated as ordinary income or loss. In the case of overlap between sections 1256 and 988, special provisions determine the character and timing of any income, gain or loss. The Funds attempt to monitor section 988 transactions to minimize any adverse tax impact.
If a Fund has an "appreciated financial position"--generally, an interest (including an interest through an option, futures or forward contract or short sale) with respect to any stock, debt instrument (other than "straight debt") or partnership interest the fair market value of which exceeds its adjusted basis--and enters into a "constructive sale" of the same or substantially identical property, the Fund will be treated as having made an actual sale thereof, with the result that gain will be recognized at that time unless the closed transaction exception applies. A constructive sale generally consists of a short sale, an offsetting notional principal contract or futures or forward contract entered into by a Fund or a related person with respect to the same or substantially identical property. In addition, if the appreciated financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property will be deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax considerations in effect at the date of this Statement of Additional Information and affecting each Fund and its shareholders. Investors are urged to consult their own tax advisors for more detailed information and for information regarding any foreign, state and local taxes applicable to distributions received from the Funds.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors.
SHARE CERTIFICATES. AIM Funds will issue share certificates upon written request to AFS. Otherwise, shares are held on the shareholder's behalf and recorded on the Fund books. AIM Funds will not issue certificates for shares held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. 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 NYSE Close. The Transfer Agent and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction.
By signing an account application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. 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 transaction. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone 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 mailing 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
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.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by the Funds and performs certain other ministerial duties. AIM Fund Services, Inc., a wholly owned subsidiary of AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, acts as transfer and dividend disbursing agent for the Funds.
These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets. The Funds pay the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110, conducts an annual audit of each Fund, assists in the preparation of the Funds' federal and state income tax returns and consults with the Trust and the Funds as to matters of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Trust included in this Statement of Additional Information have been examined by PricewaterhouseCoopers LLP, as stated in their opinion appearing herein and are included in reliance upon such opinion given upon the authority of that firm as experts in accounting and auditing.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and the Funds.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations extended to shareholders of private, for-profit corporations. There is a remote possibility, however, that under certain circumstances shareholders of the Trust may be held personally liable for the Trust's 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 a trustee. If a shareholder is held personally liable for the obligations of the Trust, the Trust Agreement provides that the shareholder shall be entitled out of the assets belonging to the applicable Fund (or allocable to the applicable Class), to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring financial loss on account of such liability is limited to circumstances in which the Trust itself would be unable to meet its obligations and where the other party was held not to be bound by the disclaimer.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of each Fund as of February 5, 2001, and the percentage of the outstanding shares held by such holders are set forth below:
PERCENT
PERCENT OWNED OF
NAME AND ADDRESS OWNED OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
---- ---------------- ------------ ------------
AIM Developing Markets Fund -
Class A Merrill Lynch Pierce Fenner & Smith 8.88% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
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PERCENT
PERCENT OWNED OF
NAME AND ADDRESS OWNED OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
---- ---------------- ------------ ------------
AIM Developing Markets Fund -
Class B Merrill Lynch Pierce Fenner & Smith 5.92% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
AIM Developing Markets Fund -
Class C Merrill Lynch Pierce Fenner & Smith 13.22% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FO 32246
First Clearing Corporation -0- 5.30%
W L Burgess IRA R/O FCC as Custodian 7893
Vue Estates Road Meridian, ID 83642-5207
PaineWebber for the Benefit of -0- 5.21%
Adelle Morley
August Hill Farm
3073 Gass Road
Lexington, OH 44904-9553
AIM Latin American Growth Fund -
Class B Merrill Lynch Pierce Fenner & Smith 7.77% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
AIM Latin American Growth Fund -
Class C Prudential Securities Inc. FBO -0- 21.52%
Mr. Donald Ellis and Ms. Janice
Burrows Ellis, TEN COM
64 Walnut Circle
Basking Ridge, NJ 07920-1020
PaineWebber For The Benefit of -0- 10.60%
Philippe Astie
Frederique Bouty-Astie JT TEN
35 Church Street
Newton, MA 02458-2015
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As of February 5, 2001, the trustees and officers of the Trust as a group owned beneficially less than 1% of the outstanding shares of each class of Developing Markets Fund and Latin American Fund.
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum
sales load is deducted at the beginning of the 1, 5, or 10 year
periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
end of the 1, 5, or 10 year periods (or fractional portion of
such period).
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The standard total returns of Class A shares of Developing Markets Fund and Latin American Fund, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions) were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund............................. (13.80)% (3.06)% N/A (5.33)%
Latin American Fund................................. 6.28% (0.29)% N/A 2.47%
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* The inception dates for Class A shares for Developing Markets Fund and Latin American Fund are 01/11/94 and 08/13/91, respectively.
The standard total returns of Class B shares of Developing Markets Fund and Latin American Fund, stated as average annual total return for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and reinvestment of all dividends and distributions) were as follows:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund............................. (14.70)% N/A N/A (11.47)%
Latin American Fund................................. 6.10% (0.18)% N/A 0.32%
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* The inception dates for Developing Markets Fund and Latin American Fund Class B shares are 11/03/97 and 04/01/93, respectively.
The standard total returns of Class C shares of Developing Markets Fund and Latin American Fund, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and reinvestment of all dividends and distributions) were as follows:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund............................. (11.11)% N/A N/A 10.24%
Latin American Fund................................. 10.10% N/A N/A 27.54%
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* The inception date for Developing Markets Fund and Latin American Fund Class C shares is 03/01/99.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
|
The non-standard total returns of Class A, Class B and Class C shares of Developing Markets Fund and Latin American Fund (not taking sales charges into account and including reinvestment of dividends and distributions), stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were as follows:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund Class A..................... (9.52)% (2.11)% N/A (4.65)%
Developing Markets Fund Class B..................... (10.21)% N/A N/A (10.62)%
Developing Markets Fund Class C..................... (10.21)% N/A N/A 10.24%
|
* The inception dates for Developing Markets Fund Class A, Class B and Class C shares are 01/11/94, 11/03/97 and 03/01/99, respectively.
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Latin American Fund Class A......................... 11.61% 0.69% N/A 3.01%
Latin American Fund Class B......................... 11.10% 0.22% N/A 0.32%
Latin American Fund Class C......................... 11.10% N/A N/A 27.54%
|
* The inception dates for Class A, Class B and Class C shares of Latin American Fund are 08/13/91, 04/01/93 and 03/01/99, respectively.
Cumulative total return across a stated period may be calculated as follows:
n P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
|
The cumulative total returns of Class A, Class B and Class C shares of Developing Markets Fund and Latin American Fund (not taking sales charges into account and including reinvestment of dividends and distributions) for the one-year, five-year and ten-year periods ended October 31, 2000, were as follows:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund Class A..................... (9.52)% (10.12)% N/A (27.67)%
Developing Markets Fund Class B..................... (10.21)% N/A N/A (28.52)%
Developing Markets Fund Class C..................... (10.21)% N/A N/A 17.67%
|
* The inception dates for Developing Markets Fund Class A, Class B and Class C shares are 01/11/94, 11/03/97 and 03/01/99, respectively.
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Latin American Fund Class A......................... 11.61% 3.51% N/A 31.48%
Latin American Fund Class B......................... 11.10% 1.13% N/A 2.49%
Latin American Fund Class C......................... 11.10% N/A N/A 50.06%
|
* The inception dates for Class A, Class B and Class C shares of Latin American Fund are 08/31/91, 04/01/93 and 03/01/99, respectively.
The cumulative total returns (taking sales charges into account and including reinvestment of dividends and distributions) for the Class A, Class B and Class C shares of Developing Markets Fund and Latin American Fund, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, where:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Developing Markets Fund Class A..................... (13.80)% (14.38)% N/A (31.11)%
Developing Markets Fund Class B..................... (14.70)% N/A N/A (30.54)%
Developing Markets Fund Class C..................... (11.11)% N/A N/A 17.67%
|
* The inception dates for Developing Markets Fund Class A, Class B and Class C shares are 01/11/94, 11/03/97 and 03/01/99, respectively.
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Latin American Fund Class A......................... 6.28% (1.42)% N/A 25.26%
Latin American Fund Class B......................... 6.10% (0.87)% N/A 2.49%
Latin American Fund Class C......................... 10.10% N/A N/A 50.06%
|
*The inception dates for Class A, Class B and Class C shares of Latin American Fund are 08/13/91, 04/01/93 and 03/01/99, respectively.
PERFORMANCE INFORMATION
All advertisements of a Fund will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of the Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. See the Statement of Additional Information for further details concerning performance comparisons used in advertisements by the Fund. Further information regarding the Fund's performance is contained in the Fund's annual report to shareholders, which is available upon request and without charge.
A Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. 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 shares reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
From time to time AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any 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 results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund.
Total return and yield figures for the Funds are neither fixed nor guaranteed, and no Fund's principal is insured. Performance quotations reflect historical information and should not be considered representative
of a Fund's performance for any period in the future. Performance is a function of a number of factors which can be expected to fluctuate. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. Such publications or media entities may include the following, among others:
Advertising Age Fortune New York Times Barron's Global Finance Pension World Best's Review Hartford Courant Inc. Pensions & Investments Broker World Institutional Investor Personal Investor Business Week Insurance Forum Financial Services Week Changing Times Insurance Week Philadelphia Inquirer Christian Science Monitor Investor's Daily Smart Money Consumer Reports Journal of the American USA Today Economist Society of CLU & ChFC U.S. News & World Report EuroMoney Kiplinger Letter Wall Street Journal FACS of the Week Money Washington Post Financial Planning Mutual Fund Forecaster CNN Financial Product News Mutual Fund Magazine CNBC Financial World Nation's Business PBS Forbes |
The Funds and AIM Distributors may from time to time, in advertisements, sales literature and reports furnished to present or prospective shareholders, compare each Fund with the following, or compare each Fund's performance to performance data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index Micropal, Inc. (data and mutual fund rankings Bear Stearns Foreign Bond Index and comparisons) Bond Buyer Index Moody's Investors Service (publications) CDA/Wiesenberger Investment Company Services Morgan Stanley Capital International All (data and mutual fund rankings and Country (AC) World Index comparisons) Morgan Stanley Capital International Emerging CNBC/Financial News Composite Index Markets Free Latin America Index COFI Morgan Stanley Capital International World Consumer Price Index Indices Datastream Morningstar, Inc. (data and mutual fund rankings Donoghue's and comparisons) Dow Jones Industrial Average NASDAQ EAFE Index Organization for Economic Cooperation and First Boston High Yield Index Development (publications) Fitch IBCA, Inc. (publications) Salomon Brothers Global Telecommunications Ibbotson Associates International Bond Index Index International Bank for Reconstruction and Salomon Brothers World Government Bond Development (publications) Index --Non U.S. International Finance Corporation Emerging Salomon Brothers World Government Bond Markets Database Index International Financial Statistics Standard & Poor's (publications) Lehman Bond Indices Standard & Poor's 500 Composite Stock Price Lipper Inc. (data and Index mutual fund rankings and comparisons) Stangar |
Wilshire Associates The World Bank Publication of Trends in
World Bank (publications and reports) Developing Countries
Worldscope
|
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and diversification is based on sources believed to be reliable but may be subject to revision and has not been independently verified by the Funds or AIM Distributors. Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for the Funds may also include reference to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose (i) the largest holdings in the Fund's portfolio, (ii) certain selling group members and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued by various entities from "Aaa" to "C." Investment grade ratings are the first four categories: Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bond 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 some time 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 other 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.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), rates the securities debt of various entities in categories ranging from "AAA" to "D" according to quality. Investment grade ratings are the first four categories: AAA--An obligation rated "AAA" has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA--An obligation rated "AA" differs from the highest rated obligations only in a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A--An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. BBB--An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB, B, CCC, CC, C--Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB--An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. B--An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC--An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC--An obligation rated "CC" is currently highly vulnerable to nonpayment. C--The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued. D--An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
NR: Indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of senior short-term debt obligations. This normally will be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from "A-1" for the highest quality obligations to "D" for the lowest. Issues in the "A" category are delineated with numbers 1, 2, and 3 to indicate the relative degree of safety. 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 will be denoted with a plus sign (+) designation. A-2--Capacity for timely payments on issues with this designation is satisfactory; however, the relative degree of safety is not as high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the effects of which preclude satisfactory analysis; if there is no longer available reasonable up-to-date data to permit a judgment to be formed; if a bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa to Caa. 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.
FINANCIAL STATEMENTS
FS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Developing Markets Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Developing Markets Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-1
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-81.62%
BRAZIL-7.32%
Brasil Telecom Participacoes
S.A.-Pfd. (Telephone) 133,600,000 $ 1,446,196
--------------------------------------------------------------
Embratel Participacoes S.A.-Pfd.
(Telephone) 175,867,000 2,821,056
--------------------------------------------------------------
Itausa-Investimentos Itau
S.A.-Pfd. (Investment
Management) 1,882,400 1,587,151
--------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 109,200 2,894,266
--------------------------------------------------------------
Tele Centro Oeste Celular
Participacoes S.A.-Pfd.
(Telecommunications-
Cellular/Wireless)(a) 282,121,000 952,962
--------------------------------------------------------------
Tele Norte Leste Participacoes
S.A.-ADR (Telephone) 120,000 2,655,000
--------------------------------------------------------------
Telesp Celular Participacoes
S.A.-Pfd.
(Telecommunications-
Cellular/Wireless)(a) 1,000 7
--------------------------------------------------------------
Telesp Participacoes S.A.
(Telephone) 1,000 5
--------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-GDR
(Banks-Regional) 103,416 2,611,254
--------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-Units
(Banks-Regional)(b) 19,000,000 960,223
==============================================================
15,928,120
==============================================================
CHILE-0.43%
Compania Cervecerias Unidas
S.A.-ADR (Beverages-Alcoholic) 48,364 934,030
==============================================================
CHINA-2.19%
China Unicom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 2,378,000 4,771,855
==============================================================
GREECE-1.89%
Alpha Credit Bank (Banks-Regional) 42,900 1,584,204
--------------------------------------------------------------
Hellenic Telecommunication
Organization S.A.
(Telecommunication-Cellular/Wireless) 68,300 1,191,974
--------------------------------------------------------------
National Bank of Greece S.A.
(Banks-Money Center) 34,800 1,324,215
==============================================================
4,100,393
==============================================================
HONG KONG-8.90%
China Everbright Ltd. (Land
Development)(a) 2,490,000 2,218,938
--------------------------------------------------------------
China Mobile Ltd.
(Telecommunications-
Cellular/Wireless)(a) 886,000 5,679,699
--------------------------------------------------------------
Chinadotcom Corp.-Class A
(Computers-Software &
Services)(a) 144,467 1,462,728
--------------------------------------------------------------
Denway Motors Ltd. (Auto Parts &
Equipment)(a) 8,460,000 1,366,791
--------------------------------------------------------------
Hang Lung Development Co. Ltd.
(Land Development) 3,000,000 2,692,653
--------------------------------------------------------------
Hong Kong Exchanges & Clearing
Ltd. (Financial-Diversified) 2,494,000 4,349,070
--------------------------------------------------------------
|
MARKET
SHARES VALUE
HONG KONG-(CONTINUED)
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 1,750,000 $ 1,593,153
==============================================================
19,363,032
==============================================================
HUNGARY-0.83%
Magyar Tavkozlesi Rt-ADR
(Telecommunications-Long
Distance) 75,800 1,781,300
--------------------------------------------------------------
Pannonplast Rt. (Building
Materials) 2,270 32,461
--------------------------------------------------------------
Technoimpex (Services-Commercial &
Consumer)(a)(c) 1,400 0
==============================================================
1,813,761
==============================================================
INDIA-5.95%
Associated Cement Co. Ltd.
(Construction-Cement &
Aggregates)(c) 50 100
--------------------------------------------------------------
BSES Ltd. (Electric Companies) 100 378
--------------------------------------------------------------
Cinevista Communications
(Telecommunications-Long
Distance)(a) 3,700 10,800
--------------------------------------------------------------
Himachal Futuristic
Communications, Ltd.
(Telecommunications-Cellular/Wireless) 74,180 1,957,872
--------------------------------------------------------------
Hindustan Lever Ltd. (Aluminum)(c) 1,000 3,808
--------------------------------------------------------------
ICICI Bank Ltd.
(Banks-Regional)(c) 441,384 1,031,598
--------------------------------------------------------------
India Technology-Equity
Participation Ctfs., expiring
02/07/01 (Goldman Sachs Group,
Inc (The)) (Computers-Software &
Services)(d) 13,010 6,907,710
--------------------------------------------------------------
Indian Hotels Co. Ltd.
(Lodging-Hotels) 50 214
--------------------------------------------------------------
ITC Ltd. (Tobacco)(c) 1,499 24,462
--------------------------------------------------------------
Ranbaxy Laboratories Ltd. (Health
Care-Drugs-Generic & Other)(c) 200 2,988
--------------------------------------------------------------
State Bank of India (Banks-Major
Regional)(c) 2,200 7,729
--------------------------------------------------------------
Tata Engineering and Locomotive
Co. Ltd.-GDR
(Automobiles) 340,000 510,000
--------------------------------------------------------------
Tata Engineering and Locomotive
Co. Ltd.-(Automobiles) 100 150
--------------------------------------------------------------
Videsh Sanchar Nigam Ltd.-ADR
(Telephone) 261,100 1,925,613
--------------------------------------------------------------
Videsh Sanchar Nigam Ltd.-GDR
(Telephone) 77,350 570,456
==============================================================
12,953,878
==============================================================
INDONESIA-0.41%
PT Lippo Bank Tbk (Banks-Major
Regional)(a) 128,519,400 892,496
==============================================================
ISRAEL-3.51%
Bank Leumi Le-Israel (Banks-Money
Center) 842,913 1,655,686
--------------------------------------------------------------
Bezeq Israeli Telecommunications
Corp. Ltd. (Telephone) 342,700 1,714,742
--------------------------------------------------------------
Elron Electronic Industries Ltd.
(Computers-Networking) 55,000 1,440,445
--------------------------------------------------------------
Partner Communications Co.
Ltd.-ADR
(Telecommunications-
Cellular/Wireless)(a) 343,200 2,059,200
--------------------------------------------------------------
|
FS-2
MARKET
SHARES VALUE
ISRAEL-(CONTINUED)
RADVision Ltd. (Computers-Software
& Services)(a) 34,792 $ 769,773
==============================================================
7,639,846
==============================================================
MALAYSIA-0.26%
Public Finance Berhad
(Banks-Regional) 627,000 557,707
==============================================================
MEXICO-9.22%
Fomento Economico Mexicano, S.A.
de C.V.-ADR
(Beverages-Alcoholic) 139,474 5,326,163
--------------------------------------------------------------
Grupo Financiero Banamex Accival,
S.A. de C.V. (Banacci)
(Financial-Diversified)(a) 1,728,900 2,686,829
--------------------------------------------------------------
Grupo Financiero Bancomer, S.A. de
C.V.-Class O (Banks-Regional)(a) 2,914,490 1,804,411
--------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 80,628 4,363,991
--------------------------------------------------------------
Telefonos de Mexico S.A. de
C.V.-Class L-ADR (Telephone) 108,724 5,864,301
==============================================================
20,045,695
==============================================================
PAKISTAN-0.00%
Dewan Salman Fibre Ltd.
(Chemicals-Specialty) 6 3
--------------------------------------------------------------
Pakistan State Oil Co. Ltd.
(Oil-International Integrated) 93 254
==============================================================
257
==============================================================
RUSSIA-4.01%
Mobile Telesystems-ADR
(Telecommunications-
Cellular/Wireless)(a) 218,600 6,038,825
--------------------------------------------------------------
RAO Unified Energy Systems-GDR
(Electric Companies) 52,700 666,655
--------------------------------------------------------------
Surgutneftegaz-ADR
(Oil-International Integrated) 157,000 2,017,450
==============================================================
8,722,930
==============================================================
SINGAPORE-3.38%
DBS Group Holdings Ltd.
(Banks-Money Center) 97,000 1,143,256
--------------------------------------------------------------
Total Access Communication PLC
(Telephone) 391,600 1,245,288
--------------------------------------------------------------
United Overseas Bank Ltd.
(Banks-Major Regional) 670,000 4,959,289
==============================================================
7,347,833
==============================================================
SOUTH AFRICA-5.62%
Anglo American Platinum Corp. Ltd.
(Metals Mining) 103,300 4,029,980
--------------------------------------------------------------
Barloworld Ltd.
(Manufacturing-Diversified) 327,200 1,709,192
--------------------------------------------------------------
Hosken Consolidated Investments
Ltd. (Investment Management)(a) 2,186,500 1,546,977
--------------------------------------------------------------
Impala Platinum Holdings Ltd.
(Metals Mining) 35,700 1,529,656
--------------------------------------------------------------
Johnnic Holdings Ltd.
(Entertainment) 168,243 1,913,445
--------------------------------------------------------------
Sappi Ltd. (Paper & Forest
Products) 218,200 1,494,738
==============================================================
12,223,988
==============================================================
|
MARKET
SHARES VALUE
SOUTH KOREA-10.77%
H & CB-GDR (Banks-Major Regional)
(Acquired 09/05/00-09/06/00;
Cost $1,307,349)(a)(e) 59,200 $ 1,435,600
--------------------------------------------------------------
Hyundai Electronics Industries Co.
(Electronics-Component
Distributors)(a) 330,600 2,031,555
--------------------------------------------------------------
Kookmin Bank-GDR (Banks-Major
Regional) (Acquired
09/06/00-09/20/00; Cost
$2,426,465)(e) 206,602 2,453,399
--------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone) 181,016 6,674,965
--------------------------------------------------------------
Korea Telecom Freetel
(Telecommunications-
Cellular/Wireless)(a) 64,028 2,257,163
--------------------------------------------------------------
LG Home Shopping Inc. (Retail-Home
Shopping) 41,507 2,495,893
--------------------------------------------------------------
Samsung Electronics N.V.-Pfd.
(Electronics-Component
Distributors) 30,000 1,537,582
--------------------------------------------------------------
Shinhan Bank-GDR (Banks-Major
Regional) 105,600 2,151,600
--------------------------------------------------------------
SK Telecom Co., Ltd.-ADR
(Telecommunications-Cellular/Wireless) 95,492 2,393,268
==============================================================
23,431,025
==============================================================
TAIWAN-11.19%
Asustek Computer, Inc.-Equity
Linked Notes, expiring 03/16/01
(UBS Warburg)
(Computers-Hardware) 142,596 710,128
--------------------------------------------------------------
Bank Sinopac-Equity Participation
Ctfs., expiring 10/09/01
(Goldman Sachs Group, Inc.
(The)) (Investment Banking/
Brokerage)(d) 6,920,000 2,906,400
--------------------------------------------------------------
Compeq Manufacturing Co., Ltd.
(Computers-Hardware) 698,400 2,635,879
--------------------------------------------------------------
Hon Hai Precision Industry Co.,
Ltd. (Electronics-Component
Distributors) 190,707 997,045
--------------------------------------------------------------
Hon Hai Precision Industry Co.,
Ltd.-Equity Participation Ctfs.,
expiring 01/21/01 (ABN-AMRO)
(Electronics-Component
Distributors)(d) 15 101
--------------------------------------------------------------
Siliconware Precision Industries
Co.-ADR
(Electronics-Semiconductors)(a) 508,724 2,034,896
--------------------------------------------------------------
Siliconware Precision Industries
Co.-Equity Participation Ctfs.,
expiring 01/21/01 (ABN-AMRO)
(Electronics-Semiconductors)
(Acquired (03/15/00-03/16/00);
Cost $2,941,233)(d)(e) 2,000,000 963,400
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.
(Electronics-Semiconductors)(a) 529,920 1,606,563
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.-ADR (Electronics-
Semiconductors) 201,560 4,572,893
--------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.-Equity Participation
Ctfs., expiring 01/27/01
(ABN-AMRO)
(Electronics-Semiconductors)(d) 404,988 1,559,447
--------------------------------------------------------------
United Microelectronics Corp. Ltd.
(Electronics-Component
Distributors)(a) 1,046,600 1,845,513
--------------------------------------------------------------
United Microelectronics Corp.
Ltd.-Equity Participation Ctfs.,
expiring 03/23/01 (UBS Warburg)
(Electronics-Component
Distributors)(d) 1,676,040 2,949,830
--------------------------------------------------------------
|
FS-3
MARKET
SHARES VALUE
TAIWAN-(CONTINUED)
Via Technologies Inc.-Equity
Participation Ctfs., expiring
02/16/01 (ABN-AMRO)
(Electronics-Component
Distributors)(d)(f) 145,838 $ 1,555,424
==============================================================
24,337,519
==============================================================
TURKEY-5.74%
Haci Omer Sabanci Holding A.S.
(Investment Management) 276,345,680 2,794,541
--------------------------------------------------------------
Turkcell Iletisim Hizmetleri A.S.
(Investments)(a) 35,023,300 1,539,881
--------------------------------------------------------------
Turkiye Garanti Bankasi A.S.
(Banks-Regional)(a) 332,991,500 3,416,173
--------------------------------------------------------------
Turkiye Is Bankasi (Isbank)
(Banks-Money Center) 76,378,000 1,455,192
--------------------------------------------------------------
Yapi ve Kredi Bankasi A.S.
(Banks-Major Regional) 379,746,596 3,283,633
==============================================================
12,489,420
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$201,792,081) 177,553,785
==============================================================
|
PRINCIPAL
AMOUNT
U.S. DOLLAR DENOMINATED BONDS &
NOTES-15.95%
SOVEREIGN DEBT-15.95%
Republic of Brazil (Brazil) Unsec.
Bonds, 10.13%, 05/15/27 $ 3,520,000 2,641,552
--------------------------------------------------------------
Republic of Brazil (Brazil),
Floating Rate Gtd. Bonds, 7.69%,
04/15/12(g) 5,797,000 4,349,240
--------------------------------------------------------------
Republic of Brazil (Brazil), Series
C, Bonds, 8.00%, 04/15/14 6,030,215 4,535,813
--------------------------------------------------------------
Republic of Brazil (Brazil), Unsec.
Bonds, 12.25%, 03/06/30 630,000 549,990
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
SOVEREIGN DEBT-(CONTINUED)
Republic of Venezuela (Venezuela),
Unsec. Bonds, 9.25%, 09/15/27 $ 2,879,000 $ 1,886,263
--------------------------------------------------------------
Republic of Venezuela
(Venezuela)-Series DL, Floating
Rate Deb., 7.88%, 12/18/07(g) 1,964,270 1,653,303
--------------------------------------------------------------
Russian Federation (Russia), Sr.
Unsec. Unsub. Bonds, 11.75%,
06/10/03 1,250,000 1,196,606
--------------------------------------------------------------
Russian Federation (Russia), Sr.
Unsec. Unsub. Euro Bonds, 12.75%,
06/24/28 5,663,000 4,793,866
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Disc. Bonds, 7.50%,
03/31/30 (Acquired 08/25/00; Cost
$5,614,371)(e)(h) 13,102,320 4,913,370
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Euro Bonds, 11.00%,
07/24/18 4,000,000 2,934,248
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Euro Notes, 8.75%,
07/24/05 5,020,000 3,954,063
--------------------------------------------------------------
Russian Federation (Russia), Unsec.
Unsub. Notes, 8.25%, 03/31/10
(Acquired 08/25/00-09/01/00; Cost
$1,341,703)(e) 1,975,614 1,274,271
==============================================================
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$31,996,162) 34,682,585
==============================================================
|
SHARES
MONEY MARKET FUNDS-1.08%
STIC Liquid Assets Portfolio(i) 1,174,363 1,174,363
--------------------------------------------------------------
STIC Prime Portfolio(i) 1,174,363 1,174,363
==============================================================
Total Money Market Funds
(Cost $2,348,726) 2,348,726
==============================================================
TOTAL INVESTMENTS-98.65%
(Cost $236,136,969) 214,585,096
==============================================================
OTHER ASSETS LESS LIABILITIES-1.35% 2,947,252
==============================================================
NET ASSETS-100.00% $217,532,348
______________________________________________________________
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior |
Unsec. - Unsecured
Unsub. - Unsubordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit includes common or preferred
shares of the issuer.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Acquired as part of a unit with or in exchange for other securities.
(e) 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 aggregate market value of these securities at 10/31/00
was $11,040,040, which represented 5.08% of the Fund's net assets.
(f) Affiliated issuer in which the Fund's holdings of the 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 10/31/00 represented 0.72% of the Fund's net assets.
(g) The coupon rate shown on floating rate bonds represents the rate at period
end.
(h) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-4
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$236,136,969) $214,585,096
------------------------------------------------------------
Foreign currencies, at value (cost $3,145,936) 3,153,650
------------------------------------------------------------
Cash 100,055
------------------------------------------------------------
Receivables for:
Investments sold 2,448,057
------------------------------------------------------------
Fund shares sold 650,936
------------------------------------------------------------
Dividends and interest 1,573,710
------------------------------------------------------------
Collateral for securities loaned 10,496,794
------------------------------------------------------------
Other Assets 14,346
============================================================
Total assets $233,022,644
============================================================
LIABILITIES:
Payables for:
Investments purchased 3,914,097
------------------------------------------------------------
Fund shares reacquired 618,235
------------------------------------------------------------
Collateral upon return of securities loaned 10,496,794
------------------------------------------------------------
Accrued advisory fees 17,388
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 175,736
------------------------------------------------------------
Accrued trustees' fees 1,834
------------------------------------------------------------
Accrued transfer agent fees 111,571
------------------------------------------------------------
Accrued operating expenses 150,406
============================================================
Total liabilities 15,490,296
============================================================
Net assets applicable to shares outstanding $217,532,348
____________________________________________________________
============================================================
NET ASSETS:
Class A $136,160,449
____________________________________________________________
============================================================
Class B $ 79,754,001
____________________________________________________________
============================================================
Class C $ 1,617,898
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 15,323,976
____________________________________________________________
============================================================
Class B 9,069,002
____________________________________________________________
============================================================
Class C 184,146
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 8.89
------------------------------------------------------------
Offering price per share:
(Net asset value of $8.89 divided by
95.25%) $ 9.33
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 8.79
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 8.79
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$513,163) $ 2,186,759
------------------------------------------------------------
Dividends from affiliated money market funds 342,057
------------------------------------------------------------
Interest 1,886,629
------------------------------------------------------------
Security lending income 65,936
============================================================
Total investment income 4,481,381
============================================================
EXPENSES:
Advisory fees 2,321,564
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 212,346
------------------------------------------------------------
Distribution fees -- Class A 646,612
------------------------------------------------------------
Distribution fees -- Class B 712,953
------------------------------------------------------------
Distribution fees -- Class C 13,244
------------------------------------------------------------
Interest 10,831
------------------------------------------------------------
Transfer agent fees 1,005,593
------------------------------------------------------------
Trustees' fees 10,749
------------------------------------------------------------
Other 90,938
============================================================
Total expenses 5,074,830
============================================================
Less: Fees waived (195,861)
------------------------------------------------------------
Expenses paid indirectly (64,654)
============================================================
Net expenses 4,814,315
============================================================
Net investment income (loss) (332,934)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (5,531,214)
------------------------------------------------------------
Foreign currencies (405,617)
============================================================
(5,936,831)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (18,746,181)
------------------------------------------------------------
Foreign currencies 9,375
============================================================
(18,736,806)
============================================================
Net gain (loss) from investment securities and
foreign currencies (24,673,637)
============================================================
Net increase (decrease) in net assets
resulting from operations $(25,006,571)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------- -------------
OPERATIONS:
Net investment income (loss) $ (332,934) $ 867,596
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (5,936,831) 2,820,314
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (18,736,806) 23,887,175
============================================================================================
Net increase (decrease) in net assets resulting from
operations (25,006,571) 27,575,085
============================================================================================
Distributions to shareholders from net investment income:
Class A (611,162) (1,347,785)
--------------------------------------------------------------------------------------------
Class B -- (1,895)
--------------------------------------------------------------------------------------------
Advisor Class* (1,538) (510)
--------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,288,646) 46,114,455
--------------------------------------------------------------------------------------------
Class B 42,716,558 46,958,649
--------------------------------------------------------------------------------------------
Class C 1,635,318 409,273
--------------------------------------------------------------------------------------------
Advisor Class* (659,631) 340,294
============================================================================================
Net increase in net assets 9,784,328 120,047,566
============================================================================================
NET ASSETS:
Beginning of year 207,748,020 87,700,454
============================================================================================
End of year $ 217,532,348 $ 207,748,020
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 424,284,883 $ 462,286,688
--------------------------------------------------------------------------------------------
Undistributed net investment income 88,436 601,051
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (185,222,717) (252,000,704)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (21,618,254) (3,139,015)
============================================================================================
$ 217,532,348 $ 207,748,020
____________________________________________________________________________________________
============================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of close of business February 11, 2000.
See Notes to Financial Statements.
FS-6
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Developing Markets Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of nine
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 long-term growth of capital and its secondary
objective is income, to the extent consistent with seeking growth of capital.
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 -- Securities, including restricted securities, are
valued according to the following policy. 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 October 31, 2000, undistributed net investment income was increased by
$433,019, undistributed net realized gains increased by $72,714,818 and paid
in capital decreased by $73,147,837 as a result of differing book/tax
treatment of foreign currency transactions, merger transactions, capital
losses and other reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and 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 $184,591,854 as of October 31,
2000, to the extent provided by regulations, which may be carried forward to
offset future taxable gains, if any, which expires on varying dates, if not
previously utilized, through the year 2008.
FS-7
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.
G. Bond Premiums -- It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was
issued and is effective for fiscal years beginning after December 15, 2000.
The revised Guide will require the Fund to amortize premium and discount on
all fixed-income securities. Upon initial adoption, the Fund will be required
to adjust the cost of its fixed-income securities by the cumulative amount of
amortization that would have been recognized had amortization been in effect
from the purchase date of each holding. Adopting this accounting principle
will not effect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund expects that
the impact of the adoption of this principle will not be material to the
financial statements.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.975% on the first $500 million of the Fund's average
daily net assets, plus 0.95% on the next $500 million of the Fund's average
daily net assets, plus 0.925% on the next $500 million of the Fund's average
daily net assets, plus 0.90% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit total annual operating
expenses (excluding interest, taxes, dividend expense on short sales,
extraordinary items and increases in expenses due to offset arrangements, if
any) for Class A, Class B and Class C shares to 1.75%, 2.40% and 2.40%,
respectively. Prior to June 19, 2000, AIM had agreed to limit total annual
operating expenses (excluding interest, taxes, dividend expense on short sales,
extraordinary items and increases in expenses due to offset arrangements, if
any) for Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%,
respectively. During the year ended October 31, 2000, AIM waived fees of
$247,246.
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 October 31, 2000, AIM was
paid $50,000 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 October 31, 2000, AFS was
paid $655,263 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $646,612, $712,953
and $13,244, respectively, as compensation under the Plans.
AIM Distributors received commissions of $25,847 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $45,221 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $3,308 and reductions in custodian fees of $61,346 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $64,654.
FS-8
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly and failed to return the securities.
At October 31, 2000, securities with an aggregate value of $10,290,974 were on
loan to brokers. The loans were secured by cash collateral of $10,496,794
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $65,936 for securities lending.
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 October 31, 2000 was
$470,416,958 and $438,231,041, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 20,760,351 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (42,943,087) ========================================================= Net unrealized appreciation (depreciation) of investment securities $(22,182,736) _________________________________________________________ ========================================================= Cost of investments for tax purposes is $236,767,832. |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -----------
Sold:
Class A 4,368,248 $ 46,361,270 3,932,389 $45,584,472
-----------------------------------------------------------------------------------------------------------------------
Class B 828,920 9,063,557 911,202 18,260,670
-----------------------------------------------------------------------------------------------------------------------
Class C* 149,805 1,690,938 68,223 667,879
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** 3,615 (118,692) 67,714 758,300
=======================================================================================================================
Issued as reinvestment of dividends:
Class A 40,351 452,453 125,865 932,660
-----------------------------------------------------------------------------------------------------------------------
Class B 2,445 25,799 255 1,881
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** 137 1,534 69 510
=======================================================================================================================
Issued in connection with acquisitions:
Class A 4,474,504 47,588,765*** 9,961,789 87,233,513****
-----------------------------------------------------------------------------------------------------------------------
Class B 7,049,831 74,412,545*** 5,660,631 42,682,248****
-----------------------------------------------------------------------------------------------------------------------
Class C* 32,330 341,089*** -- --
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** -- -- 64,652 488,211****
=======================================================================================================================
Conversion of Advisor Class to Class A shares*****
Class A 8,558 109,035 -- --
-----------------------------------------------------------------------------------------------------------------------
Advisor Class (8,558) (109,035) -- --
=======================================================================================================================
Reacquired:
Class A****** (9,512,192) (102,800,169) (9,691,690) (87,636,190)
-----------------------------------------------------------------------------------------------------------------------
Class B (3,891,896) (40,785,343) (1,512,951) (13,986,150)
-----------------------------------------------------------------------------------------------------------------------
Class C* (40,068) (396,709) (26,144) (258,606)
-----------------------------------------------------------------------------------------------------------------------
Advisor Class** (37,214) (433,438) (94,292) (906,727)
=======================================================================================================================
3,468,816 $ 35,403,599 9,467,712 $93,822,671
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** As of the close of business on June 16, 2000, the Fund acquired all the net assets of AIM Emerging Markets Debt Fund pursuant to a plan of reorganization approved by Emerging Markets Debt Fund's shareholders on May 31, 2000. The acquisition was accomplished by a tax-free exchange of 11,556,665 shares of the Fund for 13,847,344 shares of Emerging Markets Debt Fund outstanding as of the close of business on June 16, 2000. Emerging Markets Debt Fund's net assets at that date of $122,342,399,
FS-9
including ($257,567) of unrealized appreciation, were combined with those
of the Fund. The aggregate net assets of the Fund immediately before the
acquisition were $193,278,258.
**** AIM Emerging Markets Fund (Emerging Markets Fund") and AIM Eastern Europe
Fund ("Eastern Europe Fund") transferred all of their assets to the Fund
on February 12, 1999 and September 10, 1999, respectively, pursuant to a
plan of reorganization and termination. The Fund assumed all of the
liabilities of the Emerging Markets Fund and the Eastern Europe Fund.
Shareholders of the Emerging Markets Fund and Eastern Europe Fund were
issued full and fractional shares of the applicable class of the Fund.
The acquisitions, which were approved by the shareholders of Emerging
Markets Fund and Eastern Europe Fund on February 10, 1999 and August 25,
1999, respectively, were accomplished by an exchange of 10,912,463 shares
of the Fund for the 11,087,719 shares then outstanding of the Emerging
Markets Fund and 4,774,609 shares of the Fund for the 5,864,782 shares
then outstanding of the Eastern Europe Fund. Based on the opinion of the
Fund counsel, the reorganization qualified as a tax-free reorganization
for federal income tax purposes with no gain or loss recognized to the
Fund or its shareholders. Emerging Markets Fund's and Eastern Europe
Fund's net assets, including($18,098,264) and ($1,068,554), respectively,
of unrealized depreciation were combined with the Fund for total net
assets after the acquisition of $159,666,366 and $238,151,276,
respectively.
***** Effective as of the close of business February 11, 2000, pursuant to
approval by the Board of Trustees on November 3, 1999, all shares were
converted to Class A shares of the Fund.
****** This amount includes $114,574 and $370,669 of redemption fees associated
with the merger of Eastern Europe Fund for 2000 and 1999, respectively.
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------------------------------------
TEN
MONTHS YEAR ENDED
YEAR ENDED OCTOBER 31, ENDED DECEMBER 31,
------------------------------ OCTOBER 31, ----------------------
2000(a) 1999(a) 1998(a) 1997(b) 1996 1995
-------- -------- -------- ----------- -------- --------
Net asset value, beginning of period $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60 $ 12.44
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.06 0.39(c) 0.25 0.53 0.72
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.95) 2.36 (5.10) (1.53) 2.19 (0.84)
=================================================================================================================================
Total from investment operations (0.94) 2.42 (4.71) (1.28) 2.72 (0.12)
=================================================================================================================================
Redemptions fees retained 0.01 0.03 0.28 -- --
=================================================================================================================================
Less distributions from net investment income (0.04) (0.12) (0.60) -- (0.48) (0.72)
=================================================================================================================================
Net asset value, end of period $ 8.89 $ 9.86 $ 7.53 $ 12.56 $ 13.84 $ 11.60
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(d) (9.52)% 33.11% (37.09)% (9.25)% 23.59% (0.95)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $136,160 $157,198 $87,517 $457,379 $504,012 $422,348
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including
interest expense):
With fee waivers 1.87%(e) 1.91% 1.93% 1.75%(f) 1.82% 1.77%
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.95%(e) 2.38% 2.34% 1.83%(f) 1.85% 1.80%
=================================================================================================================================
Ratio of net investment income to average net assets 0.05%(e) 0.68% 3.84% 2.03%(f) 4.07% 6.33%
=================================================================================================================================
Ratio of interest expense to average net assets 0.01%(e) 0.01% 0.20% -- -- --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 192% 125% 111% 184% 138% 75%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Prior to November 1, 1997 the Fund was known as G.T. Developing Markets
Fund, Inc. All Capital shares issued and outstanding on October 31, 1997
were reclassified as Class A shares.
(c) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.14 per share.
(d) Does not include sales charges and is not annualized for period less than
one year.
(e) Ratios are based on average daily net assets of $165,415,131.
(f) Annualized.
FS-10
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------------
NOVEMBER 3, 1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED)
---------------------- TO OCTOBER 31,
2000(a) 1999(a) 1998(a)
------- ------- ----------------
Net asset value, beginning of period $ 9.79 $ 7.49 $ 12.56
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) 0.01 0.31(b)
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.37 (5.07)
============================================================================================================
Total from investment operations (1.00) 2.38 (4.76)
============================================================================================================
Redemptions fees retained -- -- 0.28
============================================================================================================
Less distributions from net investment income -- (0.08) (0.59)
============================================================================================================
Net asset value, end of period $ 8.79 $ 9.79 $ 7.49
____________________________________________________________________________________________________________
============================================================================================================
Total return(c) (10.21)% 32.14% (39.76)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,754 $49,723 $ 154
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(d) 2.51% 2.68%(e)
------------------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(d) 2.98% 3.09%(e)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(d) 0.08% 3.09%(e)
============================================================================================================
Ratio of interest expense to average net assets 0.01%(d) 0.01% 0.20%(e)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 192% 125% 111%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.14 per share.
(c) Does not include contingent deferred sales charges and is not annualized for
period less than one year.
(d) Ratios are based on average daily net assets of $71,295,269.
(e) Annualized.
CLASS C
-----------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999(a)
----------- --------------
Net asset value, beginning of period $ 9.79 $ 7.47
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06) --
-------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.94) 2.32
=================================================================================================
Total from investment operations (1.00) 2.32
=================================================================================================
Net asset value, end of period $ 8.79 $ 9.79
_________________________________________________________________________________________________
=================================================================================================
Total return(b) (10.21)% 31.06%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,618 $ 412
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.47%(c) 2.51%(d)
-------------------------------------------------------------------------------------------------
Without fee waivers 2.55%(c) 2.98%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets (0.56)%(c) 0.08%(d)
=================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.01%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 192% 125%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
period less than one year.
(c) Ratios are based on average daily net assets of $1,324,425.
(d) Annualized.
FS-11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Latin American Growth Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Latin American Growth Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-12
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-99.67%
ARGENTINA-6.85%
Acindar Industria Argentina de
Aceros S.A.-Series B (Iron &
Steel)(a) 200,000 $ 179,038
--------------------------------------------------------------------
Banco Hipotecario S.A.-Wts.
(Banks-Regional), expiring
02/02/04(b)(c) 617 166,590
--------------------------------------------------------------------
Grupo Financiero Galicia S.A.-ADR
(Banks-Regional)(a) 119,816 1,744,820
--------------------------------------------------------------------
IRSA Inversiones y Representaciones
S.A.-GDR (Land Development) 46,066 958,749
--------------------------------------------------------------------
Nortel Inversora S.A.-ADR
(Telephone) 180,500 2,166,000
====================================================================
5,215,197
====================================================================
BRAZIL-45.56%
Brasil Telecom Participacoes S.A.
(Telephone) 150,766,000 1,184,336
--------------------------------------------------------------------
Brasil Telecom Participacoes
S.A.-ADR (Telephone) 37,500 2,032,031
--------------------------------------------------------------------
Caemi Mineracao e Metalurgica
S.A.-Pfd. (Iron & Steel) 8,750,000 1,191,411
--------------------------------------------------------------------
CIA Siderurgica Nacional (Iron &
Steel) 38,333,000 1,063,768
--------------------------------------------------------------------
Companhia Cimento Portland
Itau-Pfd. (Construction-Cement &
Aggregates) 650,000 103,483
--------------------------------------------------------------------
Companhia de Saneamento Basico do
Estado de Sao Paulo (Water
Utilities) 11,000,000 990,835
--------------------------------------------------------------------
Companhia de Tecidos Norte de
Minas-Pfd. (Textiles-Specialty) 11,622,000 858,184
--------------------------------------------------------------------
Companhia Energetica de Minas
Gerais-ADR (Electric Companies) 60,000 911,124
--------------------------------------------------------------------
Companhia Paranaense de
Energia-Copel (Electric
Companies) 68,692,000 482,052
--------------------------------------------------------------------
Companhia Paranaense de
Energia-Copel-ADR (Electric
Companies) 62,935 570,348
--------------------------------------------------------------------
Companhia Vale do Rio Doce-Pfd. A
(Iron & Steel) 105,000 2,419,482
--------------------------------------------------------------------
Eletropaulo Metropolitana-Eletricidade
de Sao Paulo S.A.-Pfd. (Electric
Companies) 28,000,000 1,568,997
--------------------------------------------------------------------
Embratel Participacoes S.A.-ADR
(Telephone) 55,000 890,313
--------------------------------------------------------------------
Embratel Participacoes S.A.-Pfd.
(Telephone) 109,450,000 1,755,671
--------------------------------------------------------------------
Itausa-Investimentos Itau S.A.-Pfd.
(Investment Management) 2,716,659 2,290,558
--------------------------------------------------------------------
Petroleo Brasileiro S.A. (Oil &
Gas-Exploration & Production) 128,000 3,706,939
--------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Oil &
Gas-Exploration & Production)(a) 20,000 581,250
--------------------------------------------------------------------
Tele Celular Sul Participacoes S.A.
(Telecommunications-Cellular/Wireless)(a) 44,674,000 86,564
--------------------------------------------------------------------
Tele Norte Leste Participacoes S.A.
(Telephone) 34,488,000 567,124
--------------------------------------------------------------------
Tele Norte Leste Participacoes
S.A.-ADR (Telephone) 52,183 1,154,549
--------------------------------------------------------------------
|
MARKET
SHARES VALUE
BRAZIL-(CONTINUED)
Tele Norte Leste Participacoes
S.A.-Pfd. (Telephone) 92,412,000 $ 2,017,143
--------------------------------------------------------------------
Telecomunicacoes Brasileiras S.A.
(Telephone)(a) 86,027,000 901
--------------------------------------------------------------------
Telemig Celular Participacoes
S.A.-ADR
(Telecommunications-Cellular/Wireless) 10,000 525,000
--------------------------------------------------------------------
Telesp Celular Participacoes S.A.
(Telecommunications-Cellular/Wireless)(a) 1,000 6
--------------------------------------------------------------------
Telesp Celular Participacoes
S.A.-Pfd.
(Telecommunications-Cellular/Wireless)(a) 108,294,000 1,280,590
--------------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-GDR
(Banks-Regional) 56,372 1,423,393
--------------------------------------------------------------------
Unibanco-Uniao de Bancos
Brasileiros S.A.-Units
(Banks-Regional)(d) 15,000,000 758,062
--------------------------------------------------------------------
Usinas Siderurgicas de Minas Gerais
S.A.-Class A Pfd.
(Manufacturing-Diversified) 360,300 1,849,144
--------------------------------------------------------------------
Votorantim Celulose e Papel
S.A.-ADR (Paper & Forest
Products) 52,254 901,382
--------------------------------------------------------------------
Votorantim Celulose e Papel
S.A.-Pfd. (Paper & Forest
Products) 45,587,000 1,523,148
====================================================================
34,687,788
====================================================================
CHILE-5.17%
Banco de A. Edwards-ADR
(Banks-Regional)(a) 26,700 320,400
--------------------------------------------------------------------
Compania Cervecerias Unidas
S.A.-ADR (Beverages-Alcoholic) 84,500 1,631,906
--------------------------------------------------------------------
Embotelladora Arica S.A.-ADR
(Beverages-Non-Alcoholic)(a) 40,500 138,449
--------------------------------------------------------------------
Quinenco S.A.-ADR
(Financial-Diversified) 102,400 857,600
--------------------------------------------------------------------
Sociedad Quimica y Minera de Chile
S.A.-ADR (Chemicals) 36,100 667,850
--------------------------------------------------------------------
Supermercados Unimarc S.A.-ADR
(Retail-Food Chains) 172,700 323,813
====================================================================
3,940,018
====================================================================
LUXEMBOURG-2.03%
Quilmes Industrial S.A.-ADR
(Beverages-Alcoholic) 187,164 1,544,103
====================================================================
MEXICO-37.82%
Alpha S.A. de C.V.-Class A
(Manufacturing-Diversified) 696,700 1,396,023
--------------------------------------------------------------------
Carso Global Telecom-Class A1
(Telephone)(a) 1,550,000 3,468,940
--------------------------------------------------------------------
Cemex S.A. de C.V.
(Construction-Cement &
Aggregates) 381,969 1,605,852
--------------------------------------------------------------------
Cemex S.A. de C.V.-Wts.,
(Construction-Cement &
Aggregates), expiring 12/13/02(b) 22,000 9,663
--------------------------------------------------------------------
Cintra S.A. (Airlines) 393,300 180,979
--------------------------------------------------------------------
|
FS-13
MARKET
SHARES VALUE
MEXICO-(CONTINUED)
Consorcio Ara, S.A. de C.V.
(Homebuilding)(a) 365,000 $ 514,558
--------------------------------------------------------------
Controladora Comercial Mexicana
S.A. de C.V.-ADR-Units
(Retail-General Merchandise)(e) 1,250,000 1,385,693
--------------------------------------------------------------
Corporacion GEO S.A. de C.V.-Series
B (Construction-Cement &
Aggregates)(a) 521,000 591,723
--------------------------------------------------------------
El Puerto de Liverpool S.A. de
C.V.-Series 1 (Retail-Department
Stores) 45,941 54,291
--------------------------------------------------------------
Fomento Economico Mexicano, S.A. de
C.V.-ADR (Beverages-Alcoholic) 88,705 3,387,422
--------------------------------------------------------------
Grupo Bimbo S.A. de C.V.-Series A
(Foods) 579,800 805,244
--------------------------------------------------------------
Grupo Carso S.A. de C.V.-Series A1
(Manufacturing-Diversified)(a) 163,876 509,006
--------------------------------------------------------------
Grupo Financiero Bancomer, S.A. de
C.V.-Class O (Banks-Regional)(a) 4,691,257 2,904,439
--------------------------------------------------------------
Grupo Financiero Banorte S.A. de
C.V.-Class O
(Financial-Diversified)(a) 1,445,455 2,158,659
--------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B (Foods) 485,164 106,551
--------------------------------------------------------------
Grupo Posadas S.A.-Series A
(Lodging-Hotels)(a) 471,000 339,877
--------------------------------------------------------------
Grupo Posadas S.A.-Series L
(Lodging-Hotels)(a) 752,300 527,129
--------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 90,000 4,871,250
--------------------------------------------------------------
Industrias Penoles S.A. (Metals
Mining) 506,267 590,874
--------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.-Class A (Paper & Forest
Products) 675,000 1,725,973
--------------------------------------------------------------
Nueva G.Mexico S.A.-Class B (Metals
Mining) 205,824 684,501
--------------------------------------------------------------
Pepsi-Gemex S.A.-GDR
(Beverages-Non-Alcoholic)(a) 222,100 971,688
==============================================================
28,790,335
==============================================================
|
MARKET
SHARES VALUE
PERU-0.43%
Union de Cervecerias Backus &
Johnston S.A.
(Beverages-Alcoholic) 1,173,686 $ 327,439
==============================================================
UNITED KINGDOM-1.25%
Antofagasta Holdings PLC (Gold &
Precious Metals Mining) 160,000 949,216
==============================================================
VENEZUELA-0.56%
Corporacion Venezolana de Cementos
S.A.C.A.-I (Constructions-Cement
& Aggregates) 759,439 262,725
--------------------------------------------------------------
Corporacion Venezolana de Cementos
S.A.C.A.-II (Constructions-Cement
& Aggregates) 502,029 166,438
==============================================================
429,163
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost $78,650,236) 75,883,259
==============================================================
PRINCIPAL
AMOUNT(f)
CORPORATE BONDS-0.00%
BRAZIL-0.00%
Companhia Vale Do Rio Doce-Non
Convertible (Cost $0) BRL 276,400 0
==============================================================
MONEY MARKET FUNDS-0.23%
STIC Liquid Assets Portfolio(g) 87,422 87,422
--------------------------------------------------------------
STIC Prime Portfolio(g) 87,422 87,422
==============================================================
Total Money Market Funds
(Cost $174,844) 174,844
==============================================================
TOTAL INVESTMENTS-99.90%
(Cost $78,825,080) 76,058,103
==============================================================
OTHER ASSETS LESS LIABILITIES-0.10% 75,024
==============================================================
NET ASSETS-100.00% $76,133,127
______________________________________________________________
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
Pfd. - Preferred
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Acquired as part of a unit with or in exchange for other securities.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Each unit represents one preferred share of Unibanco and one preferred B
share of Unibanco Holdings.
(e) Each unit represents three B shares and one C share.
(f) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(g) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-14
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost $78,825,080) $76,058,103
------------------------------------------------------------
Foreign currencies, at value (cost $26,113) 25,957
------------------------------------------------------------
Receivables for:
Investments sold 31,593
------------------------------------------------------------
Fund shares sold 2,656
------------------------------------------------------------
Dividends 362,249
------------------------------------------------------------
Collateral for securities loaned 2,435,363
------------------------------------------------------------
Other assets 10,507
============================================================
Total assets 78,926,428
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 115,686
------------------------------------------------------------
Collateral upon return of securities loaned 2,435,363
------------------------------------------------------------
Accrued advisory fees 78,410
------------------------------------------------------------
Accrued administrative services fees 4,098
------------------------------------------------------------
Accrued distribution fees 33,411
------------------------------------------------------------
Accrued trustees' fees 906
------------------------------------------------------------
Accrued transfer agent fees 42,219
------------------------------------------------------------
Accrued operating expenses 83,208
============================================================
Total liabilities 2,793,301
============================================================
Net assets applicable to shares outstanding $76,133,127
____________________________________________________________
============================================================
NET ASSETS:
Class A $42,347,478
____________________________________________________________
============================================================
Class B $33,047,028
____________________________________________________________
============================================================
Class C $ 738,621
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 2,742,928
____________________________________________________________
============================================================
Class B 2,169,343
____________________________________________________________
============================================================
Class C 48,471
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 15.44
------------------------------------------------------------
Offering price per share:
(Net asset value of $15.44 divided by
95.25%) $ 16.21
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 15.23
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 15.24
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$238,208) $ 2,249,203
------------------------------------------------------------
Dividends from affiliated money market funds 106,903
------------------------------------------------------------
Security lending income 45,504
============================================================
Total investment income 2,401,610
============================================================
EXPENSES:
Advisory fees 1,006,288
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 65,833
------------------------------------------------------------
Distribution fees -- Class A 298,720
------------------------------------------------------------
Distribution fees -- Class B 425,504
------------------------------------------------------------
Distribution fees -- Class C 7,773
------------------------------------------------------------
Interest 10,856
------------------------------------------------------------
Transfer agent fees 486,654
------------------------------------------------------------
Trustees' fees 8,959
------------------------------------------------------------
Other 127,728
============================================================
Total expenses 2,488,315
============================================================
Less: Fees waived (188,076)
------------------------------------------------------------
Expenses paid indirectly (10,743)
============================================================
Net expenses 2,289,496
============================================================
Net investment income 112,114
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities (353,147)
------------------------------------------------------------
Foreign currencies (292,259)
============================================================
(645,406)
============================================================
Change in net unrealized appreciation of:
Investment securities 12,728,960
------------------------------------------------------------
Foreign currencies 34,959
============================================================
12,763,919
============================================================
Net gain on investment securities and foreign
currencies 12,118,513
============================================================
Net increase in net assets resulting from
operations $12,230,627
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-15
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income $ 112,114 $ 1,204,092
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (645,406) (30,276,702)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 12,763,919 48,078,005
==========================================================================================
Net increase in net assets resulting from operations 12,230,627 19,005,395
==========================================================================================
Distributions to shareholders from net investment income:
Class A (559,152) (703,214)
------------------------------------------------------------------------------------------
Class B (242,204) (122,741)
------------------------------------------------------------------------------------------
Class C (1,126) --
------------------------------------------------------------------------------------------
Advisor Class* (7,099) (9,487)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A (13,979,698) (22,064,281)
------------------------------------------------------------------------------------------
Class B (10,270,500) (15,015,084)
------------------------------------------------------------------------------------------
Class C 711,686 158,037
------------------------------------------------------------------------------------------
Advisor Class* (537,577) (144,362)
==========================================================================================
Net increase (decrease) in net assets (12,655,043) (18,895,737)
==========================================================================================
NET ASSETS:
Beginning of year 88,788,170 107,683,907
==========================================================================================
End of year $ 76,133,127 $ 88,788,170
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $142,652,510 $167,043,253
------------------------------------------------------------------------------------------
Undistributed net investment income -- 675,072
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (63,720,298) (63,367,151)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (2,799,085) (15,563,004)
==========================================================================================
$ 76,133,127 $ 88,788,170
__________________________________________________________________________________________
==========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of close of business on February 11, 2000.
See Notes to Financial Statements.
FS-16
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Latin American Growth Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of nine separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 growth of capital.
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 October 31, 2000, undistributed net investment income was increased by
$22,395, undistributed net realized gains (losses) increased by $292,259 and
paid in capital decreased by $314,654 as a result of book/tax treatment of
foreign currency transactions and net operating loss reclassifications. Net
assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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 $62,498,841 as of October 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2008.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are
FS-17
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.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.975% on the first $500 million of the Fund's average
daily net assets, plus 0.95% on the next $500 million of the Fund's average
daily net assets, plus 0.925% on the next $500 million of the Fund's average
daily net assets, plus 0.90% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit total annual operating
expenses (excluding interest, taxes, dividend expense on short sales,
extraordinary items and increases in expenses due to offset arrangements, if
any) for Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%,
respectively. During the year ended October 31, 2000, AIM waived fees of
$188,076.
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 October 31, 2000, AIM was
paid $50,000 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 October 31, 2000, AFS was
paid $307,783 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $298,720, $425,504
and $7,773, respectively, as compensation under the Plans.
AIM Distributors received commissions of $12,961 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $5,658 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,396 and reductions in custodian fees of $9,347 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $10,743.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to not less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending
FS-18
securities entails a risk of loss to the Fund if and to the extent that the
market value of the securities loaned were to increase and the borrower did not
increase the collateral accordingly and the borrower fails to return the
securities.
At October 31, 2000, securities with an aggregate value of $2,387,611 were on
loan to brokers. The loans were secured by cash collateral of $2,435,363
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $45,504 for securities lending.
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 October 31, 2000 was
$32,461,272 and $55,588,789, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 14,201,241 ---------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (18,189,668) ========================================================== Net unrealized appreciation (depreciation) of investment securities $ (3,988,427) __________________________________________________________ ========================================================== Cost of investments for tax purposes is $80,046,530 |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Sold:
Class A 1,665,667 $ 29,183,062 10,698,303 $ 130,700,031
------------------------------------------------------------------------------------------------------------------------
Class B 353,912 6,184,261 1,074,686 14,304,893
------------------------------------------------------------------------------------------------------------------------
Class C* 80,679 1,423,016 20,395 302,050
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 4,828 77,585 103,353 1,459,954
========================================================================================================================
Issued as reinvestment of dividends:
Class A 30,264 511,470 56,745 633,836
------------------------------------------------------------------------------------------------------------------------
Class B 13,133 219,985 9,959 110,343
------------------------------------------------------------------------------------------------------------------------
Class C* 58 964 -- --
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 422 7,096 833 9,259
========================================================================================================================
Conversion of Advisor Class shares to Class A shares:***
Class A 26,127 493,538 -- --
------------------------------------------------------------------------------------------------------------------------
Advisor Class (26,252) (493,538) -- --
========================================================================================================================
Reacquired:
Class A (2,543,866) (44,167,768) (12,381,943) (153,398,148)
------------------------------------------------------------------------------------------------------------------------
Class B (986,553) (16,674,746) (2,351,288) (29,430,320)
------------------------------------------------------------------------------------------------------------------------
Class C* (42,890) (712,294) (9,771) (144,013)
------------------------------------------------------------------------------------------------------------------------
Advisor Class** (7,477) (128,720) (106,874) (1,613,575)
========================================================================================================================
(1,431,948) $(24,076,089) (2,885,602) $ (37,065,690)
________________________________________________________________________________________________________________________
========================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 2, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
FS-19
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
------- ------- ------- -------- --------
Net asset value, beginning of period $13.97 $ 11.70 $19.50 $ 17.95 $ 15.38
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06 0.21 0.13 0.11 0.09
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.58 2.20 (7.90) 1.44 2.59
=====================================================================================================================
Total from investment operations 1.64 2.41 (7.77) 1.55 2.68
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.14) (0.03) -- (0.08)
---------------------------------------------------------------------------------------------------------------------
Returns of capital -- -- -- -- (0.03)
=====================================================================================================================
Total distributions (0.17) (0.14) (0.03) -- (0.11)
=====================================================================================================================
Net asset value, end of period $15.44 $ 13.97 $11.70 $ 19.50 $ 17.95
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 11.61% 20.93% (39.86)% 8.52% 17.52%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $42,347 $49,789 $60,720 $159,496 $177,373
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.02%(c) 2.06% 2.17% 1.96% 2.03%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.20%(c) 2.65% 2.31% 2.06% 2.10%
=====================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.01%(c) 2.00% 2.00% 1.96% 2.03%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.19%(c) 2.59% 2.14% 2.06% 2.10%
=====================================================================================================================
Ratio of net investment income to average net assets 0.33%(c) 1.44% 0.78% 0.52% 0.46%
=====================================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06% 0.17% -- --
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 33% 30% 39% 130% 101%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $59,744,037.
FS-20
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
-------- ------- -------- -------- --------
Net asset value, beginning of period $ 13.79 $ 11.49 $ 19.23 $ 17.78 $ 15.21
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) 0.17 0.04 0.01 --
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.56 2.16 (7.78) 1.44 2.59
===================================================================================================================
Total from investment operations 1.53 2.33 (7.74) 1.45 2.59
===================================================================================================================
Less distributions:
From net investment income (0.09) (0.03) -- -- (0.01)
-------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- -- (0.01)
===================================================================================================================
Total distributions (0.09) (0.03) -- -- (0.02)
===================================================================================================================
Net asset value, end of period $ 15.23 $ 13.79 $ 11.49 $ 19.23 $ 17.78
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 11.03% 20.36% (40.19)% 8.04% 17.02%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $33,047 $38,456 $46,599 $133,448 $137,400
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.52%(c) 2.56% 2.67% 2.46% 2.53%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.70%(c) 3.15% 2.81% 2.56% 2.60%
===================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.51%(c) 2.50% 2.50% 2.46% 2.53%
===================================================================================================================
Without fee waivers 2.69%(c) 3.09% 2.64% 2.56% 2.60%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.17)%(c) 0.94% 0.28% 0.02% (0.04)%
===================================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06% 0.17% -- --
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 33% 30% 39% 130% 101%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $42,550,374.
FS-21
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
----------- --------------
Net asset value, beginning of period $13.79 $10.21
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03) 0.12
-------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.57 3.46
===========================================================================================
Total from investment operations 1.54 3.58
===========================================================================================
Less distributions from net investment income (0.09) --
===========================================================================================
Net asset value, end of period $15.24 $13.79
___________________________________________________________________________________________
===========================================================================================
Total return(b) 11.10% 35.06%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 739 $ 147
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets (including interest
expense):
With fee waivers 2.52%(c) 2.56%(d)
-------------------------------------------------------------------------------------------
Without fee waivers 2.70%(c) 3.15%(d)
===========================================================================================
Ratio of expenses to average net assets (excluding interest
expense):
With fee waivers 2.51%(c) 2.50%(d)
-------------------------------------------------------------------------------------------
Without fee waivers 2.69%(c) 3.09%(d)
___________________________________________________________________________________________
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.17)%(c) 0.94%(d)
===========================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.06%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 33% 30%
___________________________________________________________________________________________
===========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $777,298.
(d) Annualized.
FS-22
AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND
AIM Global Consumer Products and Services Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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--
|
----------------------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital.
The fund seeks to meet this objective by investing all of its investable assets in the Global Consumer Products and Services Portfolio (the portfolio), which in turn normally invests at least 65% of its total assets in equity securities of domestic and foreign consumer products and services companies. The portfolio considers a "consumer products or services" company to be one that (1) derives at least 50% of either its revenues or earnings from activities related to consumer products or services; or (2) devotes at least 50% of its assets to such activities, based on the company's most recent fiscal year. Such companies include those that manufacture, market, retail, or distribute consumer products (such as homes, automobiles, appliances, computers, household goods, food, and apparel) and goods and services related to entertainment, publishing, sports, and media (such as television broadcasts, motion pictures, theme parks, restaurants, and lodging) or supply goods and services to such companies (such as advertising, textile, and shipping companies).
The portfolio may invest up to 35% of its assets in debt securities of domestic and foreign consumer products and services companies and/or in equity and debt securities of companies outside the consumer products or services industry, which, in the opinion of the portfolio managers, stand to benefit from development in such industries. The portfolio will normally invest in the securities of issuers located in at least three countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the portfolio will invest no more than 50% of its total assets in the securities of issuers in any one country, other than the U.S. The portfolio may invest up to 20% of its total assets in lower-quality debt securities, i.e., "junk bonds."
The portfolio managers allocate the portfolio's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the portfolio's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 portfolio may temporarily hold all or a portion of its assets in cash (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality debt securities. As a result, the fund or the portfolio may not achieve its investment objective.
The portfolio may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the portfolio does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment. Active trading may also increase short-term capital gains and losses, which may affect the taxes you have to pay.
If the fund's Board of Trustees determines that it is in the best interests of the fund and its shareholders, the fund may redeem its investment in the portfolio.
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the portfolio invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting the consumer products and services industries, such as government regulation, demographic shifts, and intense competition. These factors may, among other things, affect the demand for and success of certain consumer products and services. Because the portfolio focuses its investments in the consumer products and services industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities.
The portfolio may participate in the initial public offering (IPO) market. Because of the portfolio's small asset base, any investment the portfolio may make in IPOs may significantly increase the fund's or the portfolio's total return. As the portfolio's assets grow, the impact of IPO investments will decline, which may reduce the fund's or the portfolio's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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. Total return information in the bar chart and table below has been affected by special market factors, including the portfolio's investments in initial public offerings (IPOs), which had a magnified impact on the fund and the portfolio due to the portfolio's small asset base. There is no guarantee that, as the portfolio assets grow, the fund and the portfolio will continue to experience substantially similar performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995 ....................................... 35.37%
1996 ....................................... 38.30%
1997 ....................................... 17.55%
1998 ....................................... 22.80%
1999 ....................................... 46.62%
2000 ....................................... -8.90%
|
During the periods shown in the bar chart, the highest quarterly return was 26.01% (quarter ended December 31, 1999) and the lowest quarterly return was -15.69% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of two broad-based securities market indices. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------ Class A (13.22)% 19.82% 22.28% 12/30/94 Class B (13.40) 20.20 22.65 12/30/94 Class C (10.18) -- 15.64 03/01/99 MSCI World Index(1) (12.92) 12.53 13.95(2) 12/31/94(2) MSCI AC World Index(3) (13.92) 11.58 12.66(2) 12/31/94(2) ------------------------------------------------------------------------ |
(1) The Morgan Stanley Capital International World Index measures the performance of 1,578 securities listed on major world stock exchanges. The fund has elected to use the MSCI World Index as its primary index rather than the MSCI AC World Index since the MSCI World Index more closely resembles the securities in which the fund invests.
(2) The average annual total return given is since the date closest to the inception date of the class with the longest history.
(3) The Morgan Stanley Capital International All Country World Index measures the performance of securities listed on the major world stock exchanges of 47 markets, including both developed and emerging markets.
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)(2) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.97% 0.97% 0.97% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.35 0.35 0.35 Total Annual Fund Operating Expenses 1.82 2.32 2.32 ------------------------------------------------------- |
(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) This fee table, and the expense example below, reflect the expenses of both
the fund and the portfolio.
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 $651 $1,020 $1,413 $2,511
Class B 735 1,024 1,440 2,531
Class C 335 724 1,240 2,656
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $651 $1,020 $1,413 $2,511
Class B 235 724 1,240 2,531
Class C 235 724 1,240 2,656
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor of Global Consumer Products and Services Portfolio (the portfolio) 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 portfolio's operations and provides investment advisory services to the portfolio, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the portfolio.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 130 investment portfolios, including the portfolio, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.97% 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 portfolio are
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1995.
- A. Dale Griffin, III, 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.
- Benjamin A. Hock, Jr., 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 1994 to 1999, he was, among other offices, head of equity research at John Hancock Advisers, Inc.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty.
- Derek S. Izuel, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1997. From 1995 to 1997 he was a full time student.
- Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1986.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1990.
SALES CHARGES
Purchases of Class A shares of AIM Global Consumer Products and Services 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
Total return information in this table has been affected by special market factors, including the portfolio's investments in initial public offerings (IPOs), which had a magnified impact on the fund and the portfolio due to the portfolio's small asset base. There is no guarantee that, as the portfolio's assets grow, the fund and the portfolio will continue to experience substantially similar performance.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $ 30.79 $ 22.16 $ 22.19 $ 20.98 $ 14.59
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.19) (0.15) (0.22)
-----------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.96 9.38 2.05 2.27 7.13
=================================================================================================================
Total from investment operations 1.74 9.19 1.86 2.12 6.91
=================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
=================================================================================================================
Net asset value, end of period $ 26.86 $ 30.79 $ 22.16 $ 22.19 $ 20.98
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) 5.07% 42.20% 8.66% 10.55% 48.82%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,692 $73,695 $59,880 $62,637 $76,900
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.82%(c) 1.91% 1.93% 1.84% 2.24%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers 1.82%(c) 1.91% 1.95% 1.99% 2.34%
=================================================================================================================
Ratio of net investment income (loss) to average net assets (0.76)%(c) (0.70)% (0.83)% (0.87)% (1.24)%
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $86,270,364.
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998 1997 1996
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 29.99 $ 21.70 $ 21.86 $ 20.79 $ 14.53
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.36) (0.31) (0.30) (0.24) (0.31)
-------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 9.16 2.03 2.22 7.09
===================================================================================================================
Total from investment operations 1.56 8.85 1.73 1.98 6.78
===================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
===================================================================================================================
Net asset value, end of period $ 25.88 $ 29.99 $ 21.70 $ 21.86 $ 20.79
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 4.53% 41.52% 8.16% 9.95% 48.11%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,664 $109,808 $91,613 $93,978 $87,904
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41% 2.43% 2.34% 2.74%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41% 2.45% 2.49% 2.84%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)% (1.33)% (1.37)% (1.74)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $121,391,977.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
----------- --------------
Net asset value, beginning of period $29.99 $24.70
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.35) (0.22)
-------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 5.51
===========================================================================================
Total from investment operations 1.57 5.29
===========================================================================================
Less distributions from net realized gains (5.67) --
===========================================================================================
Net asset value, end of period $25.89 $29.99
___________________________________________________________________________________________
===========================================================================================
Total return(b) 4.56% 21.42%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,564 $ 232
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41%(c)
-------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41%(c)
===========================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)%(d)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 259% 160%
___________________________________________________________________________________________
===========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $1,859,895.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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.
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request by
e-mail or download prospectuses,
annual or semiannual reports
via our website:
http://www.aimfunds.com
|
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: 811-05426 ---------------------------------------------- [AIM LOGO APPEARS HERES] www.aimfunds.com GCPS-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM GLOBAL
FINANCIAL SERVICES FUND
AIM Global Financial Services Fund seeks to provide long-term growth of
capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet this objective by investing, normally, at least 65% of its total assets in equity securities of domestic and foreign financial services companies. The fund considers a "financial services" company to be one that (1) derives at least 50% of its revenues or earnings from financial services activities; or (2) devotes at least 50% of its assets to such activities, based on its most recent fiscal year. Such companies include those that provide financial services (such as commercial banks, insurance brokerages, securities brokerages, investment banks, leasing companies, and real estate-related companies).
The fund may invest up to 35% of its assets in debt securities of domestic and foreign financial services companies and/or in equity and debt securities of companies outside the financial services industry, which, in the opinion of the portfolio managers, stand to benefit from developments in the financial services industries. The fund will normally invest in securities of issuers in at least three countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the fund will invest no more than 40% of its total assets in securities of issuers in any one country, other than the U.S.
The portfolio managers allocate the fund's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the fund's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality 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. The value of your investment in the fund will go up and down with the prices of securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting the financial services industry, such as government regulation, rapid business changes, significant competition, and value fluctuations. Such factors may limit the financial commitments that financial services companies can make, including amounts and types of loans, and interest rates they can charge. Because the fund focuses its investments in the financial services industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
The fund may participate in the initial public offering (IPO) market. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total returns. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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
----------- -------
1995....................................................... 19.06%
1996....................................................... 15.21%
1997....................................................... 30.32%
1998....................................................... 13.13%
1999....................................................... 24.24%
2000....................................................... 26.43%
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During the periods shown in the bar chart, the highest quarterly return was 24.04% (quarter ended December 31, 1998) and the lowest quarterly return was -21.49% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------ Class A 20.42% 20.51% 17.44% 05/31/94 Class B 20.82 20.91 17.73 05/31/94 Class C 24.76 -- 25.92 03/01/99 MSCI AC World Index(1) (13.92) 11.58 11.75(2) 05/31/94(2) ------------------------------------------------------------------------------ |
(1) The Morgan Stanley Capital International All Country World Index measures the performance of securities listed on the major world stock exchanges of 47 markets, including both developed and emerging markets.
(2) The average annual total return given is since 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 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.52 0.52 0.52 Total Annual Fund Operating Expenses(2) 2.00 2.50 2.50 -------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%, 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 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 $668 $1,073 $1,502 $2,692
Class B 753 1,079 1,531 2,713
Class C 353 779 1,331 2,836
----------------------------------------------
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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 $668 $1,073 $1,502 $2,692
Class B 253 779 1,331 2,713
Class C 253 779 1,331 2,836
----------------------------------------------
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THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.98% 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
- Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995. From 1991 to 1995, he was a financial analyst for CS First Boston.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1991.
SALES CHARGES
Purchases of Class A shares of AIM Global Financial Services 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers 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 OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 23.23 $ 17.05 $ 17.22 $ 14.20 $ 11.92
-------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07) (0.02) 0.07 0.04 0.05
-------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 5.87 6.25 0.37 3.97 2.36
=======================================================================================================
Total from investment operations 5.80 6.23 0.44 4.01 2.41
=======================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.02) (0.01) -- (0.12)
-------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) (0.03) (0.60) (0.99) (0.01)
=======================================================================================================
Total distributions (4.18) (0.05) (0.61) (0.99) (0.13)
=======================================================================================================
Net asset value, end of period $ 24.85 $ 23.23 $ 17.05 $ 17.22 $ 14.20
_______________________________________________________________________________________________________
=======================================================================================================
Total return(b) 30.06% 36.62% 2.53% 29.91% 20.21%
_______________________________________________________________________________________________________
=======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $95,393 $30,987 $28,433 $29,639 $ 7,302
_______________________________________________________________________________________________________
=======================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.00%(c) 1.99% 1.97% 2.29% 2.32%
-------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 2.00%(c) 2.12% 1.99% 2.36% 3.39%
=======================================================================================================
Ratio of net investment income (loss) to average
net assets (0.33)%(c) (0.08)% 0.37% 0.23% 0.41%
_______________________________________________________________________________________________________
=======================================================================================================
Portfolio turnover rate 41% 107% 111% 91% 103%
_______________________________________________________________________________________________________
=======================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $54,081,791.
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 22.67 $ 16.71 $ 16.97 $ 14.06 $ 11.83
---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.12) (0.02) (0.04) (0.01)
---------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.72 6.11 0.37 3.94 2.34
===============================================================================================================
Total from investment operations 5.54 5.99 0.35 3.90 2.33
===============================================================================================================
Less distributions:
Dividends from net investment income (0.14) -- (0.01) -- (0.09)
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) (0.03) (0.60) (0.99) (0.01)
===============================================================================================================
Total distributions (4.07) (0.03) (0.61) (0.99) (0.10)
===============================================================================================================
Net asset value, end of period $ 24.14 $ 22.67 $ 16.71 $ 16.97 $ 14.06
_______________________________________________________________________________________________________________
===============================================================================================================
Total return(b) 29.40% 35.91% 2.08% 29.13% 19.81%
_______________________________________________________________________________________________________________
===============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $92,343 $49,619 $48,785 $47,585 $9,886
_______________________________________________________________________________________________________________
===============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.50%(c) 2.49% 2.47% 2.79% 2.82%
---------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.50%(c) 2.62% 2.49% 2.86% 3.89%
===============================================================================================================
Ratio of net investment income (loss) to average net assets (0.83)%(c) (0.58)% (0.13)% (0.27)% (0.09)%
_______________________________________________________________________________________________________________
===============================================================================================================
Portfolio turnover rate 41% 107% 111% 91% 103%
_______________________________________________________________________________________________________________
===============================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $60,161,247.
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- -------------
Net asset value, beginning of period $ 22.67 $ 19.58
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.08)
------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.72 3.17
==========================================================================================
Total from investment operations 5.54 3.09
==========================================================================================
Less distributions:
Dividends from net investment income (0.14) --
------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) --
==========================================================================================
Total distributions (4.07) --
==========================================================================================
Net asset value, end of period $ 24.14 $22.67
__________________________________________________________________________________________
==========================================================================================
Total return(b) 29.40% 15.78%
__________________________________________________________________________________________
==========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,944 $ 605
__________________________________________________________________________________________
==========================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.50%(c) 2.49%(d)
------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.50%(c) 2.62%(d)
==========================================================================================
Ratio of net investment income (loss) to average net assets (0.83)%(c) (0.58)%(d)
__________________________________________________________________________________________
==========================================================================================
Portfolio turnover rate 41% 107%
__________________________________________________________________________________________
==========================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $7,627,355.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
|
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 GFS-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM GLOBAL HEALTH
CARE FUND
|
AIM Global Health Care Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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--
|
---------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of its total assets in equity securities of domestic and foreign health care companies. The fund considers a "health care company" to be one that (1) derives at least 50% of its revenues or earnings from health care activities; or (2) devotes at least 50% of its assets to such activities, based on its most recent fiscal year. Such companies include those that design, manufacture, or sell products or services used for or in connection with health care or medicine (such as pharmaceutical companies, biotechnology research firms, companies that sell medical products, and companies that own or operate health care facilities). The fund may invest up to 35% of its assets in debt securities issued by health care companies, or in equity and debt securities of other companies the portfolio manager believes will benefit from developments in the health care industry.
The fund will normally invest in the securities of companies located in at least three different countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the fund will invest no more than 50% of its total assets in the securities of issuers in any one country, other than the U.S.
The fund may invest in companies located in developing countries, i.e., those
countries that are in the initial stages of their industrial cycles. The fund
may also invest up to 5% of its total assets in lower-quality debt securities,
i.e., "junk bonds."
The portfolio managers allocate the fund's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the fund's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds or high-quality 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 and brokerage commissions, both of which can lower the actual return on your investment. Active trading may also increase short-term capital 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. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting the health care industry, such as substantial government regulation. Government regulation may impact the demand for products and services offered by health care companies. Also, the products and services offered by health care companies may be subject to rapid obsolescence caused by scientific advances and technological innovations. Because the fund focuses its investments in the health care industry, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities.
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
----------- -------
1991 ....................................... 57.88%
1992 ....................................... -13.51%
1993 ....................................... 2.61%
1994 ....................................... 0.29%
1995 ....................................... 36.96%
1996 ....................................... 23.84%
1997 ....................................... 7.96%
1998 ....................................... 18.43%
1999 ....................................... 5.52%
2000 ....................................... 52.08%
|
During the periods shown in the bar chart, the highest quarterly return was 22.13% (quarter ended March 31, 1991) and the lowest quarterly return was -14.87% (quarter ended March 31, 1993).
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, 2000) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE --------------------------------------------------------------------------------- Class A 44.87% 19.34% 16.63% 16.56% 08/07/89 Class B 46.34 19.72 -- 19.97 04/01/93 Class C 50.34 -- -- 28.97 03/01/99 MSCI AC World Index(1) (13.92) 11.58 11.94 8.98(2) 07/31/89(2) --------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International All Country World Index measures
the performance of securities listed on the major world stock exchanges of
47 markets, including both developed and emerging markets.
(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 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.25 0.25 0.25 Total Annual Fund Operating Expenses 1.73 2.23 2.23 ----------------------------------------------------- |
(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 $642 $994 $1,369 $2,419
Class B 726 997 1,395 2,439
Class C 326 697 1,195 2,565
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $642 $994 $1,369 $2,419
Class B 226 697 1,195 2,439
Class C 226 697 1,195 2,565
----------------------------------------------
|
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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.98% 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
- Derek S. Izuel, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1997. From 1995 to 1997 he was a full time student.
- Roger Mortimer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1994.
SALES CHARGES
Purchases of Class A shares of AIM Global Health Care 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers 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 OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 24.00 $ 20.15 $ 27.98 $ 23.60 $ 21.84
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.21) (0.25) (0.17)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.62 4.04 (0.91) 6.48 4.79
======================================================================================================================
Total from investment operations 8.40 3.85 (1.12) 6.23 4.62
======================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
======================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
======================================================================================================================
Net asset value, end of period $ 30.12 $ 24.00 $ 20.15 $ 27.98 $ 23.60
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) 38.49% 19.11% (4.71)% 28.36% 23.14%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $460,445 $357,747 $357,534 $472,083 $467,861
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.73%(c) 1.82% 1.84% 1.80% 1.84%
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.85)%(c) (0.81)% (0.98)% (1.03)% (0.75)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $388,771,812.
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 22.96 $ 19.37 $ 27.27 $ 23.15 $ 21.56
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.30) (0.30) (0.37) (0.27)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 3.89 (0.89) 6.34 4.72
========================================================================================================================
Total from investment operations 7.85 3.59 (1.19) 5.97 4.45
========================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
========================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
========================================================================================================================
Net asset value, end of period $ 28.53 $ 22.96 $ 19.37 $ 27.27 $ 23.15
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 37.78% 18.53% (5.20)% 27.75% 22.59%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,861 $102,916 $100,311 $147,440 $107,622
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33% 2.34% 2.30% 2.34%
========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)% (1.48)% (1.53)% (1.25)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $114,281,453.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- --------------
Net asset value, beginning of period $ 22.96 $22.50
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.21)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 0.67
=============================================================================================
Total from investment operations 7.85 0.46
=============================================================================================
Less distributions from net realized gains (2.28) --
=============================================================================================
Net asset value, end of period $ 28.53 $22.96
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 37.77% 2.04%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,339 $1,278
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33%(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 123%
_____________________________________________________________________________________________
=============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $6,015,947.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
-----------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------
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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 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
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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 GHC-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM GLOBAL
INFRASTRUCTURE FUND
AIM Global Infrastructure Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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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------------------------------
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INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet this objective by investing, normally, at least 65% of its total assets in equity securities of domestic and foreign infrastructure companies. The fund considers an "infrastructure company" to be one that (1) derives at least 50% of its revenues or earnings from infrastructure activities; or (2) devotes at least 50% of its assets to such activities, based on its most recent fiscal year. Such companies include those that design, develop, or provide products and services significant to a country's infrastructure (such as transportation systems, communications equipment and services, nuclear power and other energy sources, water supply, and oil, gas, and coal exploration). The fund may invest up to 35% of its assets in debt securities issued by infrastructure companies, or in equity and debt securities of other companies the portfolio managers believe will benefit from developments in the infrastructure industry.
The fund will normally invest in the securities of companies located in at least three different countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the fund will invest no more than 50% of its total assets in the securities of issuers in any one country, other than the U.S. The fund may invest in companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may also invest up to 20% of its total assets in lower-quality debt securities, i.e., "junk bonds."
The portfolio managers allocate the fund's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the fund's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality 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. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting the infrastructure industry, such as substantial political, environmental, and other governmental regulation. Such regulation may, among other things, increase compliance costs and proscribe the development of new technologies. In addition, increases in fuel, energy and other prices have historically limited the growth potential of infrastructure companies.
Because the fund focuses its investments in the infrastructure industry, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
The fund may participate in the initial public offering (IPO) market. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the portfolio's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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. Total return information in the bar chart and table below has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund 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.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995........................................................ 6.11%
1996........................................................ 22.56%
1997........................................................ 3.10%
1998........................................................ 4.35%
1999........................................................ 38.96%
2000........................................................ -12.54%
|
During the periods shown in the bar chart, the highest quarterly return was 32.53% (quarter ended December 31, 1999) and the lowest quarterly return was -20.68% (quarter ended December 31, 2000).
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, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- Class A (16.70)% 8.83% 8.09% 05/31/94 Class B (16.60) 9.04 8.35 05/31/94 Class C (13.84) -- 11.96 03/01/99 MSCI AC World Index(1) (13.92) 11.58 11.75(2) 05/31/94(2) ------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International All Country World Index measures
the performance of securities listed on the major world stock exchanges of
47 markets, including both developed and emerging markets.
(2) The average annual total return given is since 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 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.73 0.73 0.73 Total Annual Fund Operating Expenses 2.21 2.71 2.71 Fee Waivers(2) 0.21 0.21 0.21 Net Expenses 2.00 2.50 2.50 ------------------------------------------------------- |
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%, 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 costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $688 $1,133 $1,603 $2,898
Class B 774 1,141 1,635 2,922
Class C 374 841 1,435 3,041
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $688 $1,133 $1,603 $2,898
Class B 274 841 1,435 2,922
Class C 274 841 1,435 3,041
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.77% 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
- Claude C. Cody IV, Senior Portfolio Manager, who has been responsible for the fund since 1999 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 1999 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1991.
SALES CHARGES
Purchases of Class A shares of AIM Global Infrastructure 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes any 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 PricewaterhouseCoopers LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
Total return information in this table has been affected by special market factors, including the fund's investments in initial public offerings (IPOs), which had a magnified impact on the fund 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.
CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
---------- ---------- -------- -------- ----------
Net asset value, beginning of period $ 16.33 $ 14.18 $ 15.01 $ 14.42 $ 12.11
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) -- 0.07 (0.01) (0.03)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.16 3.07 (0.79) 1.32 2.34
=========================================================================================================================
Total from investment operations 4.01 3.07 (0.72) 1.31 2.31
=========================================================================================================================
Less distributions:
Dividends from net investment income -- (0.07) -- -- --
-------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.92) (0.85) (0.11) (0.72) --
=========================================================================================================================
Total distributions (1.92) (0.92) (0.11) (0.72) --
=========================================================================================================================
Net asset value, end of period $ 18.42 $ 16.33 $ 14.18 $ 15.01 $ 14.42
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 25.71% 22.72% (4.82)% 9.38% 19.08%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 24,745 $ 19,958 $ 23,531 $ 38,281 $ 38,397
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 2.00% 1.99% 2.00% 2.14%
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.21%(c) 2.22% 2.23% 2.08% 2.25%
=========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.75)% 0.09% 0.52% (0.09)% (0.19)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 66% 49% 96% 41% 41%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $25,566,123.
CLASS B
--------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
---------- ---------- -------- -------- ----------
Net asset value, beginning of period $ 15.94 $ 13.87 $ 14.75 $ 14.24 $ 12.03
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24) (0.06) -- (0.09) (0.09)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.06 2.98 (0.77) 1.32 2.30
=========================================================================================================================
Total from investment operations 3.82 2.92 (0.77) 1.23 2.21
=========================================================================================================================
Less distributions from net realized gains (1.92) (0.85) (0.11) (0.72) --
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.84 $ 15.94 $ 13.87 $ 14.75 $ 14.24
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 25.09% 22.03% (5.31)% 8.83% 18.37%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 28,378 $ 25,134 $ 32,349 $ 57,199 $ 53,678
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.49% 2.50% 2.64%
-------------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.71%(c) 2.72% 2.73% 2.58% 2.75%
=========================================================================================================================
Ratio of net investment income (loss) to average net
assets (1.25)%(c) (0.41)% 0.02% (0.59)% (0.69%)
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 66% 49% 96% 41% 41%
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $30,792,736.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- --------------
Net asset value, beginning of period $15.94 $13.99
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24) (0.03)
---------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 4.04 1.98
=============================================================================================
Total from investment operations 3.80 1.95
=============================================================================================
Less distributions from net realized gains (1.92) --
=============================================================================================
Net asset value, end of period $17.82 $15.94
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 24.94% 13.94%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 412 $ 16
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50(d)
---------------------------------------------------------------------------------------------
Without fee waivers 2.71%(c) 2.72(d)
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (0.41)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 66% 49%
_____________________________________________________________________________________________
=============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $190,872.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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.
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
ON THE INTERNET: You can send us a request by
e-mail or
download prospectuses, annual or
semiannual reports via our
website:
http://www.aimfunds.com
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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 GIF-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
AIM GLOBAL RESOURCES FUND
AIM Global Resources Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital.
The fund seeks to meet this objective by investing all of its investable assets in the Global Resources Portfolio (the portfolio), which in turn normally invests at least 65% of its total assets in equity securities of domestic and foreign natural resources companies. The portfolio considers a "natural resources" company to be one that (1) derives at least 50% of its revenues or earnings from natural resource activities; or (2) devotes at least 50% of its assets to such activities, based on its most recent fiscal year. Such companies include those that own, explore, or develop natural resources (such as oil, metals, forest products, and chemicals) and other basic commodities (such as foodstuffs) or supply goods and services to such companies. The portfolio may invest up to 35% of its assets in debt securities issued by natural resources companies, or in equity and debt securities of other companies the portfolio managers believe will benefit from developments in the natural resources industry.
The portfolio will normally invest in the securities of issuers located in at least three different countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the portfolio will invest no more than 50% of its total assets in the securities of issuers in any one country, other than the U.S. The portfolio may invest in companies located in developing countries, i.e., those countries that are in the initial stages of their industrial cycles. The portfolio may invest up to 20% of its total assets in lower-quality debt securities, i.e., "junk bonds."
The portfolio managers allocate the portfolio's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the portfolio's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 portfolio may temporarily hold all or a portion of its assets in cash (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality debt securities. As a result, the fund or the portfolio may not achieve its investment objective.
If the fund's Board of Trustees determines that it is in the best interests of the fund and its shareholders, the fund may redeem its investment in the portfolio.
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. The value of your investment in the fund will go up and down with the prices of the securities in which the portfolio invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting the natural resources industry, such as increasing regulation of the environment by both U.S. and foreign governments. Increased environmental regulations may, among other things, increase compliance costs and affect business opportunities for the companies in which the portfolio invests. The value is also affected by changing commodity prices, which can be highly volatile and are subject to risks of oversupply and reduced demand.
Because the portfolio focuses its investments in the natural resources industry, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities.
The portfolio may participate in the initial public offering (IPO) market. Because of the portfolio's small asset base, any investment the portfolio may make in IPOs may significantly increase the fund's and the portfolio's total return. As the portfolio's assets grow, the impact of IPO investments will decline, which may reduce the fund's and the portfolio's total return.
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by 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. Total return information in the bar chart and table below has been affected by special market factors, including the portfolio's investments in initial public offerings (IPOs), which had a magnified impact on the fund and the portfolio due to the portfolio's small asset base. There is no guarantee that, as the portfolio's assets grow, the fund and the portfolio will continue to experience substantially similar performance.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995........................................................ 7.05%
1996........................................................ 47.20%
1997........................................................ -1.51%
1998........................................................ -34.31%
1999........................................................ 18.69%
2000........................................................ 0.77%
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During the periods shown in the bar chart, the highest quarterly return was 31.87% (quarter ended September 30, 1997) and the lowest quarterly return was -21.61% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE -------------------------------------------------------------------------------- Class A (4.02)% 1.64% 2.57% 05/31/94 Class B (4.76) 1.78 2.82 05/31/94 Class C (0.76) -- 14.10 03/01/99 MSCI AC World Index(1) (13.92) 11.58 11.75(2) 05/31/94(2) -------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International All Country World Index measures
the performance of securities listed on the major world stock exchanges of
47 markets, including both developed and emerging markets.
(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)(2) CLASS A CLASS B CLASS C ------------------------------------------------------- Management Fees 0.98% 0.98% 0.98% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 1.32 1.32 1.32 Total Annual Fund Operating Expenses 2.80 3.30 3.30 Fee Waivers(3) 0.80 0.80 0.80 Net Expenses 2.00 2.50 2.50 ------------------------------------------------------- |
(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) This fee table, and the expense example below, reflect the expenses of both
the fund and the portfolio.
(3) The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 2.00%, 2.50% and 2.50%, 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 costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $745 $1,302 $1,884 $3,455
Class B 833 1,315 1,922 3,481
Class C 433 1,015 1,722 3,595
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $745 $1,302 $1,884 $3,455
Class B 333 1,015 1,722 3,481
Class C 333 1,015 1,722 3,595
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor of Global Resources Portfolio (the portfolio) 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 portfolio's operations and provides investment advisory services to the portfolio, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the portfolio.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 130 investment portfolios, including the portfolio, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.18% 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 portfolio are:
- Roger Mortimer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
SALES CHARGES
Purchases of Class A shares of AIM Global Resources 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
Total return information in this table has been affected by special market factors, including the portfolio's investments in initial public offerings (IPOs), which had a magnified impact on the fund and the portfolio due to the portfolio's small asset base. There is no guarantee that, as the portfolio's assets grow, the fund and the portfolio will continue to experience substantially similar performance.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 12.12 $ 10.95 $ 20.65 $ 17.43 $ 11.44
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 0.02 (0.11) (0.25) (0.24)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.08 1.15 (8.91) 4.08 6.28
===================================================================================================================
Total from investment operations 0.10 1.17 (9.02) 3.83 6.04
===================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.19) -- (0.04)
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) (0.61) (0.01)
===================================================================================================================
Total distributions -- -- (0.68) (0.61) (0.05)
===================================================================================================================
Net asset value, end of period $ 12.22 $ 12.12 $ 10.95 $ 20.65 $ 17.43
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 0.74% 10.68% (45.02)% 22.64% 53.04%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,638 $15,664 $19,463 $69,975 $48,729
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 2.00% 1.98% 2.03% 2.20%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.80%(c) 2.30% 2.29% 2.13% 2.30%
===================================================================================================================
Ratio of net investment income (loss) to average net assets 0.18%(c) 0.19% (0.75)% (1.41)% (1.55)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 105% 123% 201% 321% 94%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $13,934,536.
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 11.84 $ 10.75 $ 20.37 $ 17.29 $ 11.36
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.04) (0.18) (0.33 (0.31)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.08 1.13 (8.76) 4.02 6.25
===================================================================================================================
Total from investment operations 0.04 1.09 (8.94) 3.69 5.94
===================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.19) -- --
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) (0.61) (0.01)
===================================================================================================================
Total distributions -- -- (0.68) (0.61) (0.01)
===================================================================================================================
Net asset value, end of period $ 11.88 $ 11.84 $ 10.75 $ 20.37 $ 17.29
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 0.34% 10.14% (45.25)% 21.99% 52.39%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $13,710 $20,019 $28,996 $86,812 $57,749
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.48% 2.53% 2.70%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.30%(c) 2.80% 2.79% 2.63% 2.80%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.32)%(c) (0.31)% (1.25)% (1.91)% (2.05)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 105% 123% 201% 321% 94%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $16,325,863.
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- -------------
Net asset value, beginning of period $11.84 $10.00
--------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.03)
--------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.08 1.87
============================================================================================
Total from investment operations 0.04 1.84
============================================================================================
Net asset value, end of period $11.88 $11.84
____________________________________________________________________________________________
============================================================================================
Total return(b) 0.34% 18.40%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 453 $ 41
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50%(d)
--------------------------------------------------------------------------------------------
Without fee waivers 3.30%(c) 2.80%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (0.32)%(c) (0.31)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate 105% 123%
____________________________________________________________________________________________
============================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c)Ratios are based on average daily net assets of $271,111.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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--Registration Mark-- 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
ON THE INTERNET: You can send us a request by
e-mail or
download prospectuses, annual or
semiannual reports via our
website:
http://www.aimfunds.com
----------------------------------------------------
|
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 data base 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 GLR-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
AIM GLOBAL
TELECOMMUNICATIONS AND
TECHNOLOGY FUND
|
AIM Global Telecommunications and Technology Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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--
|
-------------------------------------------------
|
INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 long-term growth of capital.
The fund seeks to meet its objective by investing at least 65% of its total assets in equity securities of domestic and foreign telecommunications and technology companies. Such companies include those that develop, manufacture, or sell computer and electronic components and equipment, software, semiconductors, Internet technology, communications services and equipment, mobile communications and broadcasting. The fund may also invest up to 35% of its assets in debt securities issued by domestic and foreign telecommunications and technology companies, or in equity or debt securities of other companies the portfolio managers believe will benefit from developments in the telecommunications and technology industries.
The fund will normally invest in the securities of companies located in at least three different countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the fund will invest no more than 40% of its total assets in the securities of issuers in any one country, other than the U.S.
The fund may invest in companies located in developing countries, i.e., those
countries that are in the initial stages of their industrial cycles. The fund
may also invest up to 5% of its total assets in lower-quality debt securities,
i.e., "junk bonds."
The portfolio managers allocate the fund's assets among securities of countries and in currency denominations that are expected to provide the best opportunities for meeting the fund's investment objective. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. 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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality 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. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity.
Because the fund focuses its investments in the telecommunications and technology industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The value of the fund's shares is particularly vulnerable to factors affecting the telecommunications and technology industries, such as substantial government regulations and the need for governmental approvals, dependency on consumer and business acceptance as new technologies evolve, and large and rapid price movements resulting from, among other things, fierce competition in these industries. Additional factors affecting the technology industry and the value of your shares include rapid obsolescence of products and services, short product cycles, and aggressive pricing. Many technology companies are small and at an earlier state of development and, therefore, may be subject to risks such as those arising out of limited product lines, markets, and financial and managerial resources.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
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
----------- -------
1993 ....................................... 47.66%
1994 ....................................... -4.40%
1995 ....................................... 8.59%
1996 ....................................... 5.24%
1997 ....................................... 13.18%
1998 ....................................... 18.14%
1999 ....................................... 108.08%
2000 ....................................... -38.86%
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During the periods shown in the bar chart, the highest quarterly return was 62.18% (quarter ended December 31, 1999) and the lowest quarterly return was -39.39% (quarter ended December 31, 2000).
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, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------- Class A (41.77)% 11.27% 11.95% 01/27/92 Class B (41.69) 11.54 12.33 04/01/93 Class C (39.67) -- 9.76 03/01/99 S&P 500(1) (9.10) 18.33 16.49(2) 01/31/92(2) ------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks frequently used as a general measure of U.S. stock market performance.
(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 0.92% 0.92% 0.92% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.21 0.21 0.21 Total Annual Fund Operating Expenses 1.63 2.13 2.13 ------------------------------------------------------- |
(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 $633 $965 $1,319 $2,316
Class B 716 967 1,344 2,335
Class C 316 667 1,144 2,462
----------------------------------------------
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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 $633 $965 $1,319 $2,316
Class B 216 667 1,144 2,335
Class C 216 667 1,144 2,462
----------------------------------------------
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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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.92% 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
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1982.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, Mr. Garcia was a Senior Portfolio Manager for Waddell & Reed.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1990.
SALES CHARGES
Purchases of Class A shares of AIM Global Telecommunications and Technology 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 capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually.
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 PricewaterhouseCoopers 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 OCTOBER 31,
--------------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
---------- ---------- -------- -------- ----------
Net asset value, beginning of period $ 26.44 $ 16.28 $ 18.04 $ 16.69 $ 16.42
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.06(b) (0.25) (0.17) (0.17) (0.13)
-------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 7.23 10.97 (0.39) 2.93 1.22
=========================================================================================================================
Total from investment operations 7.29 10.72 (0.56) 2.76 1.09
=========================================================================================================================
Less distributions from net realized gains (3.12) (0.56) (1.20) (1.41) (0.82)
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.61 $ 26.44 $ 16.28 $ 18.04 $ 16.69
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(c) 27.52% 67.63% (3.16)% 17.70% 7.00%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,513,595 $1,023,124 $713,904 $910,801 $1,204,428
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.63%(d) 1.77% 1.88% 1.84% 1.79%
=========================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.16%(d) (1.11)% (0.93)% (1.06)% (0.89)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 111% 122% 75% 35% 37%
_________________________________________________________________________________________________________________________
=========================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income recognized from the spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $1,641,360,557.
CLASS B
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
---------- -------- -------- -------- ----------
Net asset value, beginning of period $ 25.43 $ 15.76 $ 17.58 $ 16.37 $ 16.20
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)(b) (0.35) (0.25) (0.25) (0.23)
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 6.97 10.58 (0.37) 2.87 1.22
========================================================================================================================
Total from investment operations 6.86 10.23 (0.62) 2.62 0.99
========================================================================================================================
Less distributions from net realized gains (3.12) (0.56) (1.20) (1.41) (0.82)
========================================================================================================================
Net asset value, end of period $ 29.17 $ 25.43 $ 15.76 $ 17.58 $ 16.37
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(c) 26.87% 66.84% (3.67)% 17.15% 6.46%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,414,915 $898,400 $614,715 $805,535 $1,007,654
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 2.13%(d) 2.28% 2.38% 2.34% 2.29%
========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.34)%(d) (1.62)% (1.43)% (1.56)% (1.39)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 111% 122% 75% 35% 37%
________________________________________________________________________________________________________________________
========================================================================================================================
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(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income recognized from the spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $1,506,497,660.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
----------- --------------
Net asset value, beginning of period $ 25.43 $ 19.23
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(b) (0.11)(b) (0.11)
-------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 6.96 6.31
===========================================================================================
Total from investment operations 6.85 6.20
===========================================================================================
Less distributions from net realized gains (3.12) --
===========================================================================================
Net asset value, end of period $ 29.16 $ 25.43
___________________________________________________________________________________________
===========================================================================================
Total return(c) 26.83% 32.24%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $114,667 $12,352
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets 2.13%(d) 2.28%(e)
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.34)%(d) (1.62)%(e)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 111% 122%
___________________________________________________________________________________________
===========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects dividend income recognized from the spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(d) Ratios are based on average daily net assets of $87,842,049.
(e) 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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
----------------------------------------------------------
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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
----------------------------------------------------------------------------------------------------------
|
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
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
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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 GTL-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
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CLASS A, CLASS B AND CLASS C SHARES OF
AIM GLOBAL THEME FUNDS:
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
AIM GLOBAL FINANCIAL SERVICES FUND
AIM GLOBAL HEALTH CARE FUND
AIM GLOBAL INFRASTRUCTURE FUND
AIM GLOBAL RESOURCES FUND
AIM GLOBAL TELECOMMUNICATIONS AND TECHNOLOGY FUND
(SERIES PORTFOLIOS OF
AIM INVESTMENT FUNDS)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
AIM DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246.
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 2001 RELATING TO THE
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND PROSPECTUS DATED MARCH 1, 2001,
THE AIM GLOBAL FINANCIAL SERVICES FUND PROSPECTUS DATED MARCH 1, 2001,
THE AIM GLOBAL HEALTH CARE FUND PROSPECTUS DATED MARCH 1, 2001,
THE AIM GLOBAL INFRASTRUCTURE FUND PROSPECTUS DATED MARCH 1, 2001,
THE AIM GLOBAL RESOURCES FUND PROSPECTUS DATED MARCH 1, 2001
THE AIM GLOBAL TELECOMMUNICATIONS AND TECHNOLOGY FUND PROSPECTUS DATED
MARCH 1, 2001
TABLE OF CONTENTS
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................1
The Trust and Its Shares.................................................................................1
INVESTMENT STRATEGIES AND RISKS...................................................................................3
Selection of Investments and Asset Allocation............................................................7
Privatizations...........................................................................................8
Temporary Defensive Strategies...........................................................................9
Equity-Linked Derivatives................................................................................9
Investments in Other Investment Companies................................................................9
Depositary Receipts......................................................................................9
Warrants or Rights......................................................................................10
Lending of Portfolio Securities.........................................................................10
Money Market Instruments................................................................................11
Commercial Bank Obligations.............................................................................11
Repurchase Agreements...................................................................................11
Borrowing, Reverse Repurchase Agreements and "Roll" Transactions........................................12
When Issued or Forward Commitment Securities............................................................12
Short Sales.............................................................................................13
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................13
Introduction............................................................................................13
Special Risks of Options, Futures and Currency Strategies...............................................14
Writing Call Options....................................................................................15
Writing Put Options.....................................................................................16
Purchasing Put Options..................................................................................16
Purchasing Call Options.................................................................................17
Index Options...........................................................................................18
Interest Rate, Currency and Stock Index Futures Contracts...............................................19
Options on Futures Contracts............................................................................22
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................22
Forward Contracts.......................................................................................22
Foreign Currency Strategies--Special Considerations.....................................................23
Cover...................................................................................................24
RISK FACTORS.....................................................................................................25
General.................................................................................................25
Consumer Products and Services Fund.....................................................................25
Financial Services Fund.................................................................................25
Health Care Fund........................................................................................26
Infrastructure Fund.....................................................................................26
Resources Fund..........................................................................................26
Telecommunications and Technology Fund..................................................................27
Lower Quality Debt Securities...........................................................................27
Investing in Smaller Companies..........................................................................28
Illiquid Securities.....................................................................................28
Foreign Securities......................................................................................29
INVESTMENT LIMITATIONS...........................................................................................34
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Feeder Funds............................................................................................34
Health Care Fund........................................................................................36
Telecommunications and Technology Fund..................................................................37
Financial Services Fund and Infrastructure Fund.........................................................39
Fundamental Restrictions................................................................................39
Non-Fundamental Restrictions............................................................................40
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................41
General Brokerage Policy................................................................................41
Allocation of Portfolio Transactions....................................................................42
Section 28(e) Standards.................................................................................42
Brokerage Commissions Paid..............................................................................43
Allocation of Initial Public Offering ("IPO") Securities Transactions...................................44
Portfolio Trading and Turnover..........................................................................45
MANAGEMENT.......................................................................................................45
Trustees and Executive Officers.........................................................................45
Investment Management and Administration Services relating to the Feeder
Funds and the Portfolios................................................................................47
Investment Management and Administration Services relating to the Health
Care Fund and Telecommunications and Technology Fund....................................................49
Investment Advisory and Administration Services relating to Financial
Services Fund and Infrastructure Fund...................................................................50
Expenses of the Funds and of the Portfolios.............................................................52
THE DISTRIBUTION PLANS...........................................................................................53
The Class A and C Plan..................................................................................53
The Class B Plan........................................................................................53
Both Plans..............................................................................................54
THE DISTRIBUTOR..................................................................................................58
SALES CHARGES AND DEALER CONCESSIONS.............................................................................60
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................63
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................66
HOW TO PURCHASE AND REDEEM SHARES................................................................................68
Backup Withholding......................................................................................69
NET ASSET VALUE DETERMINATION....................................................................................71
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................71
Reinvestment of Dividends and Distributions.............................................................71
Tax Matters.............................................................................................72
Taxation of the Funds...................................................................................72
Taxation of the Theme Portfolios........................................................................72
Exchange and Reinstatement Privileges and Wash Sales....................................................73
Taxation of Certain Investment Activities...............................................................73
Taxation of the Funds' Shareholders.....................................................................75
SHAREHOLDER INFORMATION..........................................................................................76
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MISCELLANEOUS INFORMATION........................................................................................78
Charges for Certain Account Information.................................................................78
Custodian and Transfer Agent............................................................................78
Independent Accountants.................................................................................79
Legal Matters...........................................................................................79
Shareholder Liability...................................................................................79
Control Persons and Principal Holders of Securities.....................................................79
INVESTMENT RESULTS...............................................................................................83
Total Return Quotations.................................................................................83
Performance Information.................................................................................88
General Information about the Theme Funds and Theme Portfolios..........................................90
Health Care Fund........................................................................................91
Information about the Global Health Care Industries.....................................................91
Telecommunications and Technology Fund..................................................................92
Deregulation in the United States.......................................................................92
Consumer Products and Services Fund.....................................................................93
Infrastructure Fund.....................................................................................93
Financial Services Fund.................................................................................94
Resources Fund..........................................................................................94
APPENDIX.........................................................................................................95
Description of Bond Ratings.............................................................................95
Description of Commercial Paper Ratings.................................................................96
Absence of Rating.......................................................................................96
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
This Statement of Additional Information relates to the Class A, Class B and Class C shares of AIM Global Consumer Products and Services Fund ("Consumer Products and Services Fund"), AIM Global Financial Services Fund ("Financial Services Fund"), AIM Global Health Care Fund ("Health Care Fund"), AIM Global Infrastructure Fund ("Infrastructure Fund"), AIM Global Resources Fund ("Resources Fund") and AIM Global Telecommunications and Technology Fund ("Telecommunications and Technology Fund") (formerly, AIM Global Telecommunications Fund) (each, a "Fund" or "Theme Fund," and, collectively, the "Funds" or "Theme Funds"). Each Fund is a diversified series of AIM Investment Funds (the "Trust"), a registered open-end management investment company organized as a Delaware business trust. The Consumer Products and Services Fund and Resources Fund (each, a "Feeder Fund," and, collectively, the "Feeder Funds") invest all of their investable assets in the Global Consumer Products and Services Portfolio and Global Resources Portfolio (each, a "Portfolio," and, collectively, the "Portfolios"), respectively.
A I M Advisors, Inc. ("AIM" or the "Advisor") serves as the investment manager of and administrator for the Financial Services Fund, Health Care Fund, Infrastructure Fund, Telecommunications and Technology Fund and the Portfolios (each a "Theme Portfolio," and collectively the "Theme Portfolios"). AIM also serves as the administrator for each Feeder Fund.
The Trust is a series mutual fund. The rules and regulations of the Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information for Consumer Products and Services Fund is included in a Prospectus dated March 1, 2001, for Financial Services Fund is included in a Prospectus dated March 1, 2001, for Health Care Fund is included in a Prospectus dated March 1, 2001, for Infrastructure Fund is included in a Prospectus dated March 1, 2001, for Resources Fund is included in a Prospectus dated March 1, 2001 and for Telecommunications and Technology Fund is included in a Prospectus dated March 1, 2001. Additional copies of the Prospectuses and this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Funds' shares, AIM Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Funds. Some of the information required to be in this Statement of Additional Information is also included in the Prospectuses; and, in order to avoid repetition, reference will be made to sections of the Prospectuses. Additionally, the Prospectuses 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 from the Prospectuses and this Statement of Additional Information, may be obtained from the SEC by paying the charges described under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust was organized as a Delaware business trust on May 7, 1998, and previously operated under the name G.T. Investment Funds, Inc., which was organized as a Maryland corporation on October 29, 1987. The Trust was reorganized on September 8, 1998 as a Delaware business trust, and is registered with the SEC as a diversified open-end series management investment company. The Trust currently consists of the following portfolios: AIM Developing Markets Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial Services Fund, AIM Global Health Care Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM Global Telecommunications and Technology Fund, AIM Latin American Growth Fund and AIM Strategic Income Fund. Each of these funds has three separate classes: Class A, Class B and Class C shares. The Board is authorized to establish additional series of shares, or additional classes of
shares of any fund, at any time. All historical financial and other information contained in this Statement of Additional Information for periods prior to September 8, 1998, is that of the series of AIM Investment Funds, Inc.
The term "majority of the outstanding shares" of the Trust, of a particular Fund or of a particular class of a Fund or of a particular Portfolio means, respectively, the vote of the lesser of (a) 67% or more of the shares of the Trust, such Fund, such class or such Portfolio present at a meeting of the Trust's shareholders, if the holders of more than 50% of the outstanding shares of the Trust, such Fund, such class or such Portfolio are present or represented by proxy, or (b) more than 50% of the outstanding shares of the Trust, such Fund, such class or such Portfolio.
Unless specifically noted, the Fund's investment policies described in the Prospectuses and in this Statement of Additional Information may be changed by the Trust's Board of Trustees without shareholder approval. The Fund's policies regarding concentration and lending, and the percentage of the Fund's assets that may be committed to borrowing, are fundamental policies and may not be changed without shareholder approval.
The approval of the Fund and of other investors in the Portfolio, if any, is not required to change the investment objective, policies or limitations of the Portfolio, unless otherwise specified. Written notice shall be provided to shareholders of the Fund thirty days prior to any changes in the Portfolio's investment objective.
If a percentage restriction on investment or utilization of assets in an investment policy or restriction is adhered to at the time an investment is made, a later change in percentage ownership of a security or kind of securities resulting from changing market values or a similar type of event will not be considered a violation of the Fund's or Portfolio's investment policies or restrictions.
Class A, Class B and Class C shares of each Fund have equal rights and privileges. Each share of a particular class is entitled to one vote, to participate equally in dividends and distributions declared by the Trust's Board of Trustees with respect to the class of such Fund and, upon liquidation of the Fund, to participate proportionately in the net assets of the Fund allocable to such class remaining after satisfaction of outstanding liabilities of the Fund allocable to such class. Fund shares are fully paid, non-assessable and fully transferable when issued and have no preemptive rights and have such conversion and exchange rights as set forth in the Prospectus and this Statement of Additional Information. Fractional shares have proportionately the same rights, including voting rights, as are provided for a full share. Other than the automatic conversion of Class B Shares to Class A Shares, there are no conversions.
Shareholders of the Funds do not have cumulative voting rights, and therefore the holders of more than 50% of the outstanding shares of all Funds voting together for election of trustees may elect all of the members of the Board of Trustees of the Trust. In such event, the remaining holders cannot elect any trustees of the Trust.
Class A shares, Class B shares and Class C shares of the same Fund represent interests in that Fund's assets and have identical voting, dividend, liquidation and other rights on the same terms and conditions, except that each class of shares bears differing class-specific expenses, is subject to differing sales loads, conversion features and exchange privileges, and has exclusive voting rights on matters pertaining to that class' distribution plan (although Class A shareholders and Class B shareholders of a given Fund must approve any material increase in fees payable with respect to the Class A shares of such Fund under the Class A and C Plan.) On any matter submitted to a vote of shareholders, shares of each Fund will be voted by each Fund's shareholders individually when the matter affects the specific interest of a Fund only, such as approval of its investment management arrangements. In addition, shares of a particular class of a Fund may vote on matters affecting only that class. The shares of each Fund will be voted in the aggregate on other matters, such as the election of Trustees and ratification of the selection of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders for any of the Funds in any year, except as required under the Investment Company Act of 1940, as amended (the "1940 Act"). A Trustee may be removed at any meeting of the shareholders of the Trust by a vote of the shareholders owning at least two-thirds of the outstanding shares. Any Trustee may call a special meeting of shareholders for any purpose. Furthermore, Trustees shall promptly call a meeting of shareholders solely for the purpose of removing one or more Trustees when requested in writing to do so by shareholders holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue an unlimited number of shares of each Fund. Each share of a Fund represents an interest in the Fund only, has a par value of $0.01 per share, represents an equal proportionate interest in the Fund with other shares of the Fund and is entitled to such dividends and distributions out of the income earned and gain realized on the assets belonging to the Fund as may be declared by the Board of Trustees. Each share of a Fund is equal in earnings, assets and voting privileges except that each class normally has exclusive voting rights with respect to its distribution plan and bears the expenses, if any, related to the distribution of its shares.
INVESTMENT STRATEGIES AND RISKS
The following discussion of investment policies supplements the discussion of the investment objectives and policies set forth in the Prospectus under the headings "Investment Objectives and Strategies" and "Principal Risks of Investing in the Fund." If a percentage restriction on investment or utilization of assets in an investment policy or restriction is adhered to at the time an investment is made, a later change in percentage ownership of a security or kind of securities resulting from changing market values or a similar type of event will not be considered a violation of the Fund's and Portfolio's investment policies or restrictions.
The investment objective of each Feeder Fund, Financial Services Fund, Health Care Fund, Infrastructure Fund and Telecommunications and Technology Fund is long-term capital growth. The investment objective of a Fund may not be changed without the approval of a majority of the outstanding voting shares of the Fund.
Each Feeder Fund seeks to achieve its investment objective by investing all of its investable assets in a Portfolio, each of which is a subtrust (a "series") of Global Investment Portfolio (an open-end management investment company), with an investment objective that is identical to that of its corresponding Feeder Fund. Whenever the phrase "all of a Fund's investable assets" is used herein and in the Prospectus, it means that the only investment securities held by a Feeder Fund will be its interest in its corresponding Portfolio. A Feeder Fund may withdraw its investment in its corresponding Portfolio at any time, if the Board of Trustees of the Trust determines that it is in the best interests of the Fund and its shareholders to do so. A change in the Portfolio's investment objective, policies or limitations that is not approved by the Board or the shareholders of the Feeder Fund could require the Feeder Fund to redeem its interest in the Portfolio. Any such redemption could result in a distribution in kind of portfolio securities (as opposed to a cash distribution) by the Portfolio. Should such a distribution occur, the Feeder Fund could incur brokerage fees or other transaction costs in converting such securities to cash. In addition, a distribution in kind could result in a less diversified portfolio of investments for the Feeder Fund and could adversely affect its liquidity. Upon redemption, the Board would consider what action might be taken, including the investment of all the investable assets of the Feeder Fund in another pooled investment entity having substantially the same investment objective as the Feeder Fund or the retention by the Feeder Fund of its own investment advisor to manage its assets in accordance with its investment objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Feeder Fund, the Portfolio may sell interests therein to other non-affiliated investment companies and/or other institutional investors. All institutional investors in the Portfolio will pay a proportionate share of the Portfolio's expenses and will invest in the Portfolio on the same terms and conditions. However, if another investment company invests any or all of its assets in a
Portfolio, it would not be required to sell its shares at the same public offering price as the Feeder Fund and may charge different sales commissions. Therefore, investors in the Feeder Fund may experience different returns than investors in another investment company that invests exclusively in the Portfolio. As of the date of this Prospectus, the Feeder Fund is the only institutional investor in the Portfolio.
The Feeder Fund may be materially affected by the actions of other larger investors, if any, in the Portfolio. For example, as with all open-end investment companies, if a large investor were to redeem its interest in the Portfolio, (1) the Portfolio's remaining investors could experience higher pro rata operating expenses, thereby producing lower returns and (2) the Portfolio's security holdings may become less diverse, resulting in increased risk. Institutional investors in the Portfolio that have a greater pro rata ownership interest in the Portfolio than the Feeder Fund could have effective voting control over the operation of the Portfolio.
In addition to its primary investment policy set forth in its Prospectus, each Theme Portfolio may invest up to 35% of its total assets in debt securities issued by companies in the Theme Portfolio's particular industry and/or equity and debt securities of companies outside of that industry which, in the opinion of the Advisor, stand to benefit from developments in that industry. For each Theme Portfolio's investment purposes, an issuer is considered to be in a particular industry if: (i) at least 50% of either the revenues or the earnings of the issuer was derived from activities related to that particular industry or (ii) at least 50% of the assets was devoted to such activities, based upon the company's most recent fiscal year.
Consumer Products and Services Fund
Examples of consumer products and services companies include those that manufacture, market, retail, or distribute: durable goods (such as homes, household goods, automobiles, boats, furniture and appliances, and computers); non-durable goods (such as food and beverages and apparel); media, entertainment, broadcasting, publishing and sports-related goods and services (such as television and radio broadcast, motion pictures, wireless communications, gaming casinos, theme parks, restaurants and lodging); and goods and services to companies in the foregoing industries (such as advertisers, textile companies and distribution and shipping companies).
The Portfolio expects that a significant portion of its assets may be invested in the securities of U.S. issuers from time to time, particularly those that market their products globally. However, consumer products and services companies of a particular nation or region of the world are often operated and owned in their local markets, close to their customers. These companies, the Advisor believes, may offer superior opportunities for capital growth as compared to their larger, multinational counterparts. Certain global markets may be more attractive than others from time to time; companies dependent on U.S. markets, for example, may be outperformed by companies not dependent on U.S. markets.
The Advisor also believes that the demand for consumer products and services worldwide will increase along with rising disposable incomes in both developed and developing nations. Emerging economies, such as those in China, Southeast Asia, Eastern Europe and Latin America, offer opportunities for the growth and expansion of consumer markets. These regions currently comprise a growing source of inexpensive consumer products for export and a growing source of demand for consumer products and services as the disposable incomes of their populations increase. In the Advisor's view, these changes are likely to create investment opportunities in companies, both local and multinational, that are able to employ innovative manufacturing, marketing, retailing and distribution methods to open new markets and/or expand existing markets.
Financial Services Fund
Examples of financial services companies include commercial banks and savings institutions and loan associations and their holding companies; consumer and industrial finance companies; diversified financial services companies; investment banks; insurance brokerages; securities brokerage and investment
advisory companies; real estate-related companies; leasing companies; and a variety of firms in all segments of the insurance field such as multi-line, property and casualty and life insurance and insurance holding companies.
The Advisor believes an accelerating rate of global economic interdependence will lead to significant growth in the demand for financial services. In addition, in the Advisor's view, as the industries evolve, opportunities will emerge for those companies positioned for the future. Thus, the Advisor expects that banking and related financial institution consolidation in the developed countries, increased demand for retail borrowing in developing countries, a growing need for international trade-based financing, a rising demand for sophisticated risk management, the proliferating number of liquid securities markets around the world, and larger concentrations of investable assets should lead to growth in financial service companies that are positioned for the future.
Health Care Fund
Examples of health care companies include those that are substantially engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine. Such firms may include pharmaceutical companies; firms that design, manufacture, sell or supply medical, dental and optical products, hardware or services; companies involved in biotechnology, medical diagnostic, and biochemical research and development; and companies involved in the ownership and/or operation of health care facilities.
The Fund expects that, from time to time, a significant portion of its assets may be invested in the securities of U.S. issuers. Health care industries, however, are global industries with significant, growing markets outside of the United States. A sizeable portion of the companies which comprise the health care industries are headquartered outside of the United States, and many important pharmaceutical and biotechnology discoveries and technological breakthroughs have occurred outside of the United States, primarily in Japan, the United Kingdom and Western Europe.
The Advisor believes that the global health care industries offer attractive long-term supply/demand dynamics. While the United States, Western Europe, and Japan presently account for a substantial portion of health care expenditures, this should change dramatically in the coming decade if the populations of developing countries devote an increasing percentage of income to health care. Additionally, the Advisor believes demographics on aging point to a significant increase in demand from the industrialized nations, as the elderly account for a growing proportion of worldwide health care spending. Finally, in the Advisor's view, technology will continue to expand the range of products and services offered, with new drugs, medical devices and surgical procedures addressing medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently experiencing a period of rapid and profound change in its own health care system, marked by the rise of managed care, the formation of health care delivery networks, and widespread consolidation across all segments of the industry. The Advisor believes that this transition offers investment opportunities in those companies acting as consolidators or otherwise gaining market share at the expense of less efficient competitors.
Infrastructure Fund
Examples of infrastructure companies include those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal exploration, development, production
and distribution; water supply, including water treatment facilities; nuclear
power and other alternative energy sources; transportation, including the
construction or operation of transportation systems; steel, concrete, or similar
types of products; communications equipment and services (including equipment
and services for both data and voice transmission); mobile communications and
cellular radio/paging; emerging technologies combining telephone, television
and/or computer systems; and other products and
services, which, in the Advisor's judgment, constitute services significant to the development of a country's infrastructure.
The Advisor believes that a country's infrastructure is one key to the long-term success of that country's economy. The Advisor believes that adequate energy, transportation, water, and communications systems are essential elements for long-term economic growth. The Advisor believes that many developing nations, especially in Asia and Latin America, plan to make significant expenditures to the development of their infrastructure in the coming years, which is expected to facilitate increased levels of services and manufactured goods.
In the developed countries of North America, Europe, Japan and the Pacific Rim, the Advisor expects that the replacement and upgrade of transportation and communications systems should stimulate growth in the infrastructure industries of those countries. In addition, in the Advisor's view, deregulation of telecommunications and electric and gas utilities in many countries is promoting significant changes in these industries.
The Advisor believes that strong economic growth in developing countries and infrastructure replacement, upgrade, and deregulation in more developed countries provide an environment for favorable investment opportunities in infrastructure companies worldwide. In addition, the long-term growth rates of certain foreign countries' economies may be substantially higher than the long-term growth rate of the U.S. economy. An integral aspect of certain foreign countries' economies may be the development or improvement of their infrastructure.
Resources Fund
Examples of natural resource companies include those which own, explore or develop: energy sources (such as oil, gas and coal); ferrous and non-ferrous metals (such as iron, aluminum, copper, nickel, zinc and lead), strategic metals (such as uranium and titanium) and precious metals (such as gold, silver and platinum); chemicals; forest products (such as timber, coated and uncoated tree sheet, pulp and newsprint); other basic commodities (such as foodstuffs); refined products (such as chemicals and steel) and service companies that sell to these producers and refiners; and other products and services, which, in the Advisor's opinion are significant to the ownership and development of natural resources and other basic commodities.
The Advisor believes that the liberalization of formerly socialist economies will bring about dramatic changes in both the supply and demand for natural resources. In addition, rapid industrialization in developing countries of Asia and Latin America is generating new demands for industrial materials that are affecting world commodities markets. The Advisor believes these changes are likely to create investment opportunities that benefit from new sources of supply and/or from changes in commodities prices.
The Advisor also believes that investments in natural resource industries offer an opportunity to protect wealth against the capital-eroding effects of inflation. During periods of accelerating inflation or currency uncertainty, worldwide investment demand for natural resources, particularly precious metals, tends to increase, and during periods of disinflation or currency stability, it tends to decrease. The Advisor believes that rising commodity prices and increasing worldwide industrial production may favorably affect share prices of natural resource companies, and investments in such companies can offer excellent opportunities to offset the effects of inflation.
Telecommunications and Technology Fund
Telecommunications companies cover a variety of sectors, ranging from companies concentrating on established technologies to those primarily engaged in emerging or developing technologies. The characteristics of companies focusing on the same technology will vary among countries depending upon the extent to which the technology is established in the particular country. The Advisor will allocate
Telecommunications and Technology Fund's investments among these sectors depending upon its assessment of their relative long-term growth potential.
Examples of telecommunications companies include those engaged in
designing, developing or providing the following products and services:
communications equipment and services (including equipment and services for both
data and voice transmission); electronic components and equipment; broadcasting
(including television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
The Advisor believes that there are opportunities for continued growth in demand for components, products, media and systems to collect, store, retrieve, transmit, process, distribute, record, reproduce and use information. The pervasive societal impact of communications and information technologies has been accelerated by the lower costs and higher efficiencies that result from the blending of computers with telecommunications systems. Accordingly, companies engaged in the production of methods for using electronic and, potentially, video technology to communicate information are expected to be important in the Fund's portfolio. Older technologies, such as photography and print also may be represented, however.
In addition, for each Theme Portfolio's investment purposes, an issuer is typically considered as located in a particular country if it (a) is organized under the laws of or has its principal office in a particular country, or (b) normally derives 50% or more of its total revenues from business in that country, provided that, in the Advisor's view, the value of such issuer's securities will tend to reflect such country's development to a greater extent than developments elsewhere. However, these are not absolute requirements, and certain companies incorporated in a particular country and considered by the Advisor to be located in that country may have substantial foreign operations or subsidiaries and/or export sales exceeding in size the assets or sales in that country.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION
Each Theme Portfolio expects that, from time to time, a significant portion of its assets may be invested in the securities of domestic issuers. The industry represented in each Theme Portfolio, however, is a global industry with significant, growing markets outside of the United States. A sizeable proportion of the companies which comprise the infrastructure industries are headquartered outside of the United States.
For these reasons, the Advisor believes that a portfolio composed only of securities of U.S. issuers does not provide the greatest potential for return from an investment by a Theme Portfolio. The Advisor uses its financial expertise in markets located throughout the world and the substantial global resources of AMVESCAP PLC in attempting to identify those countries and companies then providing the greatest potential for long-term capital appreciation. In this fashion, the Advisor seeks to enable shareholders to capitalize on the substantial investment opportunities and the potential for long-term growth of capital presented by the industry represented in each Theme Portfolio.
The Advisor allocates each Theme Portfolio's assets among securities of countries and in currency denominations where opportunities for meeting the Theme Portfolio's investment objective are expected to be the most attractive. Each Theme Portfolio may invest substantially in securities denominated in one or more currencies. Under normal conditions, each Theme Portfolio invests in the securities of issuers located in at least three countries, including the United States; investments in securities of issuers in any one country, other than the United States, will represent no more than 40% of the Financial Services Fund's and the Telecommunications and Technology Fund's total assets, and no more than 50% of each of the other Theme Portfolio's total assets.
In analyzing specific companies for possible investment, the Advisor ordinarily looks for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets.
With respect to the Global Resources Portfolio, the Advisor has identified four areas that it expects will create investment opportunities: (i) improving supply/demand fundamentals, which may result in higher commodity prices; (ii) privatization of state-owned natural resource businesses; (iii) management which can improve production efficiencies without correspondingly increasing commodity prices; and (iv) service companies with emerging technologies that can enhance productivity or reduce production costs. Of course, there is no certainty that these factors will produce the anticipated results.
With respect to the Telecommunications and Technology Fund, the Advisor has identified four areas that it expects will create investment opportunities: (i) deregulation of companies in the industry, which will allow competition to promote greater efficiencies; (ii) privatization of state-owned telecommunications businesses; (iii) development of infrastructure in underdeveloped countries and upgrading of services in other countries; and (iv) emerging technologies that will enhance productivity and reduce costs in the telecommunications industry. Of course, there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of the Advisor, prevailing market, economic or political conditions warrant reducing the proportion of the Theme Portfolios' assets invested in equity securities and increasing the proportion held in cash (U.S. dollars, foreign currencies or multinational currency units) or invested in debt securities or high quality money market instruments issued by corporations, or the U.S., or a foreign government. A portion of each Theme Portfolio's assets normally will be held in cash (U.S. dollars, foreign currencies or multinational currency units) or invested in foreign or domestic high quality money market instruments pending investment of proceeds from new sales of Fund shares to provide for ongoing expenses and to satisfy redemptions.
In certain countries, governmental restrictions and other limitations on investment may affect a Theme Portfolio's ability to invest in such countries. In addition, in some instances only special classes of securities may be purchased by foreigners and the market prices, liquidity and rights with respect to those securities may vary from shares owned by nationals. The Advisor is not aware at this time of the existence of any investment or exchange control regulations which might substantially impair the operations of the Theme Portfolios as described in the Prospectus and this Statement of Additional Information. Restrictions may in the future, however, make it undesirable to invest in certain countries. None of the Theme Portfolios has a present intention of making any significant investment in any country or stock market in which the Advisor considers the political or economic situation to threaten a Theme Portfolio with substantial or total loss of its investment in such country or market.
PRIVATIZATIONS
The governments of some foreign countries have been engaged in selling part or all of their stakes in government-owned or controlled enterprises ("privatizations"). The Advisor believes that privatizations may offer opportunities for significant capital appreciation and intends to invest assets of the Theme Portfolios in privatizations in appropriate circumstances. In certain foreign countries, the ability of foreign entities such as the Theme Portfolios to participate may be limited by local law, or by the terms on which a Theme Portfolio may be permitted to participate may be less advantageous than those for local investors. There can be no assurance that foreign governments will continue to sell companies currently owned or controlled by them or that privatization programs will be successful.
TEMPORARY DEFENSIVE STRATEGIES
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each of the Theme Portfolios may temporarily hold all or a portion of its assets in cash (U.S. dollars, foreign currencies or multinational currency units), money market instruments, or high-quality debt securities. Each of the Theme Portfolios may also invest up to 25% of its total assets in money market investment companies advised by AIM or its affiliates ("Affiliated Money Market Funds") for these purposes. In addition, for temporary defensive purposes, most or all of each Theme Portfolio's investments may be made in the United States and denominated in U.S. dollars. To the extent a Fund or a Portfolio employs a temporary defensive strategy, it will not be invested so as to achieve directly its investment objectives. For a full description of money market instruments, see "Money Market Instruments" herein.
EQUITY-LINKED DERIVATIVES
The Theme Portfolios may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investments in other investment companies. See "Investments in Other Investment Companies."
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Theme Portfolio
presently may be made only by acquiring shares of other investment companies
(including investment vehicles or companies advised by AIM or its affiliates)
with local governmental approval to invest in those countries. At such time as
direct investment in these countries is allowed, the Theme Portfolios anticipate
investing directly in these markets.
A Theme Portfolio may invest in other investment companies to the extent permitted by the 1940 Act, and the 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: (i) a Theme Portfolio may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Theme Portfolio may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Theme Portfolio 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 Theme Portfolio's purchase of shares of another investment company, including Affiliated Money Market Funds, the Theme Portfolio will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Theme Portfolios have obtained an exemptive order from the SEC allowing them to invest in Affiliated Money Market Funds, provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Theme Portfolio.
DEPOSITARY RECEIPTS
A Theme Portfolio may hold securities of foreign issuers in the form of American Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs") or other securities convertible into securities of eligible foreign issuers. These securities may not necessarily be denominated in the same currency as the securities for which they may be exchanged. ADRs and ADSs are typically issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which are sometimes referred to as Continental Depositary Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust companies and evidence ownership of either foreign or domestic securities. GDRs are similar to EDRs and are designed for use in several international financial markets. Generally, ADRs and ADSs in registered form are designed for use in U.S. securities markets and EDRs in bearer form are designed for use in European securities markets. For purposes of each Theme Portfolio's investment policies, a Theme Portfolio's investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the equity securities representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While ADRs issued under these two types of facilities are in some respects similar, there are distinctions between them relating to the rights and obligations of ADR holders and the practices of market participants. A depository may establish an unsponsored facility without participation by (or even necessarily the acquiescence of) the issuer of the deposited securities, although typically the depository requests a letter of non-objection from such issuer prior to the establishment of the facility. Holders of unsponsored ADRs generally bear all the costs of such facilities. The depository usually charges fees upon the deposit and withdrawal of the deposited securities, the conversion of dividends into U.S. dollars, the disposition of non-cash distributions, and the performance of other services. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass-through voting rights to ADR holders in respect of the deposited securities. Sponsored ADR facilities are created in generally the same manner as unsponsored facilities, except that the issuer of the deposited securities enters into a deposit agreement with the depository. The deposit agreement sets out the rights and responsibilities of the issuer, the depository and the ADR holders. With sponsored facilities, the issuer of the deposited securities generally will bear some of the costs relating to the facility (such as dividend payment fees of the depository), although ADR holders continue to bear certain other costs (such as deposit and withdrawal fees). Under the terms of most sponsored arrangements, depositories agree to distribute notices of shareholder meetings and voting instructions, and to provide shareholder communications and other information to the ADR holders at the request of the issuer of the deposited securities. The Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other securities or separately and provide the Theme Portfolio with the right to purchase at a later date other securities of the issuer. Warrants are securities permitting, but not obligating, their holder to subscribe for other securities or commodities. Warrants do not carry with them the right to dividends or voting rights with respect to the securities that they entitle their holder to purchase, and they do not represent any rights in the assets of the issuer. As a result, warrants may be considered more speculative than certain other types of investments. In addition, the value of a warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make secured loans of its securities holdings amounting to not more than 30% of its total assets. Securities loans are made to broker/dealers or institutional investors pursuant to agreements requiring that the loans be continuously secured by collateral consisting of cash, U.S. government securities, or certain other irrevocable letters of credit at least equal at all times to the value of the securities lent plus any accrued interest, "marked to market" on a daily basis. The collateral for such loans, if received in cash, may be held in investment vehicles with investment objectives and policies similar to those of money market funds or limited duration income funds (longer maturities than may be held by money market funds), advised by the Advisor or its affiliates or by unaffiliated advisers. The Funds may pay a fee to the Advisor of such investment vehicles for its services. The Theme Portfolios may pay reasonable administrative and custodial fees in connection with the loans of their securities. While the securities loan is outstanding, a Theme Portfolio will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. A Theme Portfolio will have a right to call each loan and obtain the securities within the stated settlement period. A Theme Portfolio will not have the right to vote equity securities while they are being lent, but it may call in a loan in anticipation of any important vote. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delays in receiving additional collateral or in recovery of the securities and possible loss of rights in the collateral should the borrower fail financially. Loans will only be made to firms deemed by the Advisor to be of good standing and will not be made unless, in the judgment of the Advisor, the consideration to be earned from such loans would justify the risk.
MONEY MARKET INSTRUMENTS
Money market instruments in which the Theme Portfolios may invest include U.S. government securities, high-grade commercial paper, bank certificates of deposit, bankers' acceptances and repurchase agreements related to any of the foregoing. "High-grade commercial paper" refers to commercial paper rated A-1 by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or P-1 by Moody's Investors Services, Inc. or, if not rated, determined by the Advisor to be of comparable quality.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio's investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations may, however, be limited by the terms of a specific obligation and by government regulation. As with investments in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject each Theme Portfolio to investment risks that are different in some respects from those of investments in obligations of U.S. issuers. Although each Theme Portfolio will typically acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase of $1 billion or more, this $1 billion figure is not an investment policy or restriction of each Theme Portfolio. For the purposes of calculation with respect to the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Theme Portfolio purchases a security from a bank or recognized securities dealer and simultaneously commits to resell that security to the bank or dealer at an agreed upon price, date, and market rate of interest unrelated to the coupon rate or maturity of the purchased security. Although repurchase agreements carry certain risks not associated with direct investments in securities, including possible decline in the market value of the underlying securities and delays and costs to the Theme Portfolio if the other party to the repurchase agreement becomes bankrupt, the Theme Portfolios intend to enter into repurchase agreements only with banks and dealers believed by the Advisor to present minimal credit risks in accordance with guidelines established by the Trust's or the Portfolios' Board of Trustees, as applicable. The Advisor will review and monitor the creditworthiness of such institutions under the applicable Board's general supervision.
Each Theme Portfolio will invest only in repurchase agreements collateralized at all times in an amount at least equal to the repurchase price plus accrued interest. To the extent that the proceeds from any sale of such collateral upon a default in the obligation to repurchase were less than the repurchase price, a Theme Portfolio would suffer a loss. If the financial institution which is party to the repurchase agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or other liquidation proceedings, there may be restrictions on a Theme Portfolio's ability to sell the collateral and a Theme Portfolio could suffer a loss. However, with respect to financial institutions whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy Code, each Theme Portfolio intends to comply with provisions under such Code that would allow the immediate resale of such collateral. Each Theme Portfolio will not enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more than 15% of the value of its net assets would be invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio may borrow from banks or may borrow through reverse repurchase agreements and "roll" transactions in connection with meeting requests for the redemptions of the Funds' shares. Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets, i.e., the Theme Portfolio's total assets at all times will equal at least 300% of the amount of outstanding borrowings. If market fluctuations in the value of a Theme Portfolio's securities holdings or other factors cause the ratio of a Theme Portfolio's total assets to outstanding borrowings to fall below 300%, within three days (excluding Sundays and holidays) of such event that Theme Portfolio may be required to sell portfolio securities to restore the 300% asset coverage, even though from an investment standpoint such sales might be disadvantageous. Each Theme Portfolio may also borrow up to 5% of its total assets for temporary or emergency purposes other than to meet redemptions. However, no additional investments will be made if a Theme Portfolio's borrowings exceed 5% of its total assets. Any borrowing by a Theme Portfolio may cause greater fluctuation in the value of its shares than would be the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio is currently prohibited, pursuant to a non-fundamental investment policy, from borrowing money in order to purchase securities. Nevertheless, this policy may be changed in the future by the Trust's or the Portfolios' Board of Trustees, as applicable. If a Theme Portfolio employs leverage in the future, it would be subject to certain additional risks. Use of leverage creates an opportunity for greater growth of capital but would exaggerate any increases or decreases in the net asset value of the Financial Services Fund, Infrastructure Fund, Resources Fund, Consumer Products and Services Fund or a Theme Portfolio. When the income and gains on securities purchased with the proceeds of borrowings exceed the costs of such borrowings, a Theme Portfolio's earnings or a Fund's net asset value will increase faster than otherwise would be the case; conversely, if such income and gains fail to exceed such costs, a Theme Portfolio's earnings or a Fund's net asset value would decline faster than would otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements. A reverse repurchase agreement is a borrowing transaction in which the Portfolio transfers possession of a security to another party, such as a bank or broker/dealer, in return for cash, and agrees to repurchase the security in the future at an agreed upon price, which includes an interest component. Each Theme Portfolio may also engage in "roll" borrowing transactions, which involve the sale of Government National Mortgage Association certificates or other securities together with a commitment (for which the Theme Portfolio may receive a fee) to purchase similar, but not identical, securities at a future date. Each Theme Portfolio will segregate with a custodian liquid assets in an amount sufficient to cover its obligations under "roll" transactions and reverse repurchase agreements with broker/dealers. No segregation is required for reverse repurchase agreements with banks.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES
Each Theme Portfolio may purchase debt securities on a "when-issued" basis and may purchase or sell such securities on a "forward commitment" basis in order to hedge against anticipated changes in interest rates and prices. The price, which is generally expressed in yield terms, is fixed at the time that the commitment is made, but delivery and payment for the securities take place at a later date. When-issued securities and forward commitments may be sold prior to the settlement date, but a Theme Portfolio will purchase or sell when-issued securities or enter into forward commitments only with the intention of actually receiving or delivering the securities, as the case may be. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery to the Theme Portfolio. If a Theme Portfolio disposes of the right to acquire a when-issued security prior to its acquisition or disposes of its right to deliver or receive against a forward commitment, it may incur a gain or loss. At the time that a Theme Portfolio enters into a transaction on a when-issued or forward commitment basis, the
Theme Portfolio will segregate cash or liquid securities equal to the value of the when-issued or forward commitment securities with its custodian and will mark to market daily such assets. There is a risk that the securities may not be delivered and that the Theme Portfolio may incur a loss.
SHORT SALES
Each Theme Portfolio may make short sales of securities. A short sale is a transaction in which a Theme Portfolio sells a security in anticipation that the market price of that security will decline. A Theme Portfolio may make short sales (i) as a form of hedging to offset potential declines in long positions in securities it owns, or anticipates acquiring, or in similar securities, and (ii) in order to maintain flexibility in its securities holdings.
When a Theme Portfolio makes a short sale of a security it does not own, it must borrow the security sold short and deliver it to the broker/dealer or other intermediary through which it made the short sale. The Theme Portfolio may have to pay a fee to borrow particular securities and will often be obligated to pay over any payments received on such borrowed securities.
A Theme Portfolio's obligation to replace the borrowed security when the borrowing is called or expires will be secured by collateral deposited with the intermediary. The Theme Portfolio will also be required to deposit collateral with its custodian to the extent, if any, necessary so that the value of both collateral deposits in the aggregate is at all times equal to at least 100% of the current market value of the security sold short. Depending on arrangements made with the intermediary from which it borrowed the security regarding payment of any amounts received by that Theme Portfolio on such security, a Theme Portfolio may not receive any payments (including interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short sale and the time a Theme Portfolio replaces the borrowed security, that Theme Portfolio will incur a loss; conversely, if the price declines, the Theme Portfolio will realize a gain. Any gain will be decreased, and any loss increased, by the transaction costs associated with the transaction. Although a Theme Portfolio's gain is limited by the price at which it sold the security short, its potential loss theoretically is unlimited.
No Theme Portfolio will make a short sale if, after giving effect to such sale, the market value of the securities sold short exceeds 25% of the value of its total assets or the Theme Portfolio's aggregate short sales of the securities of any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2% of the securities of any class of the issuer. Moreover, a Theme Portfolio may engage in short sales only with respect to securities listed on a national securities exchange. A Theme Portfolio may make short sales "against the box" without respect to such limitations. In this type of short sale, at the time of the sale the Theme Portfolio owns the security it has sold short or has the immediate and unconditional right to acquire at no additional cost the identical security.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
Each Theme Portfolio may use forward currency 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 Theme Portfolio 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). Each Theme Portfolio may invest in such instruments up to the full value of its portfolio assets.
To attempt to hedge against adverse movements in exchange rates between currencies, each Theme Portfolio may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date. Such contracts may involve the purchase or sale of a foreign currency against the U.S. dollar or may involve two foreign currencies. A Theme Portfolio may enter into forward currency contracts either with respect to specific transactions or with respect to its portfolio positions. A Theme Portfolio also may purchase and sell put and call options on currencies, futures contracts on currencies and options on such futures contracts to hedge against movements in exchange rates.
In addition, each Theme Portfolio may purchase and sell put and call options on equity and debt securities to hedge against the risk of fluctuations in the prices of securities held by a Theme Portfolio or that the Advisor intends to include in a Theme Portfolio's holdings. Each Theme Portfolio also may purchase and sell put and call options on stock indexes to hedge against overall fluctuations in the securities markets generally or in a specific market sector.
Further, each Theme Portfolio may sell stock index futures contracts and may purchase put options or write call options on such futures contracts to protect against a general stock market decline or a decline in a specific market sector that could adversely affect the Portfolio's holdings. Each Theme Portfolio also may purchase stock index futures contracts and purchase call options or write put options on such contracts to hedge against a general stock market or market sector advance and thereby attempt to lessen the cost of future securities acquisitions. Each Theme Portfolio may use interest rate futures contracts and options thereon to hedge the debt portion of its portfolio against changes in the general level of interest rates.
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward Contracts") involves special considerations and risks, as described below. Risks pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the Advisor's ability to predict movements of the overall securities and currency markets, which requires different skills than predicting changes in the prices of individual securities. While the Advisor is experienced in the use of these instruments, there can be no assurance that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation, between price movements of an instrument and price movements of the investments being hedged. For example, if the value of an instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which the hedging instrument is traded. The effectiveness of hedges using hedging instruments on indices will depend on the degree of correlation between price movements in the index and price movements in the investments being hedged.
(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. For example, if a Theme Portfolio entered into a short hedge because the Advisor projected a decline in the price of a security in the Theme Portfolio's portfolio, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the hedging instrument. Moreover, if the price of the hedging instrument declined by more than the increase in the price of the security, the Theme Portfolio could suffer a loss. In either such case, the Theme Portfolio would have been in a better position had it not hedged at all.
(4) As described below, the Theme Portfolio 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 (i.e., instruments other than purchased options). If the Theme Portfolio 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 Theme Portfolio'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 Theme Portfolio sell a portfolio security at a disadvantageous time. The Theme Portfolio's ability to close out a position in an instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the other party to the transaction ("contra party") to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio may write (sell) call options on securities, indices and currencies. Call options generally will be written on securities and currencies that, in the opinion of the Advisor are not expected to make any major price moves in the near future but that, over the long term, are deemed to be attractive investments for the Theme Portfolios.
A call option gives the holder (buyer) the right to purchase a security or currency 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 the writer of a call option continues, he or she may be assigned an exercise notice, requiring him or her to deliver the underlying security or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which the writer effects a closing purchase transaction by purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with each Theme Portfolio's investment objective. When writing a call option, a Theme Portfolio, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security or currency above the exercise price, and retains the risk of loss should the price of the security or currency decline. Unlike one who owns securities or currencies not subject to an option, a Theme Portfolio has no control over when it may be required to sell the underlying securities or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that a Theme Portfolio has written expires, the Theme Portfolio 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 or currency during the option period. If the call option is exercised, the Theme Portfolio will realize a gain or loss from the sale of the underlying security or currency, which will be increased or offset by the premium received. Each Theme Portfolio does not consider a security or currency covered by a call option to be "pledged" as that term is used in that Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and a Theme Portfolio will be obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed to constitute the market value of an option. The premium the Theme Portfolio will receive from writing a call option will reflect, among other things, the current market price of the underlying investment, the relationship of the exercise price to such market price, the historical price volatility of the underlying investment, and the length of the option period. In determining whether a particular call option should be written, the Advisor will consider the
reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. Furthermore, effecting a closing transaction will permit a Theme Portfolio to write another call option on the underlying security or currency with either a different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing of options and in entering into closing purchase contracts. Transaction costs relating to options activity are normally higher than those applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current market values of the underlying securities, indices or currencies at the time the options are written. From time to time, a Theme Portfolio may purchase an underlying security or currency for delivery in accordance with the exercise of an option, rather than delivering such security or currency from its portfolio. In such cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more, respectively, than the premium received from writing the option. Because increases in the market price of a call option generally will reflect increases in the market price of the underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or currency owned by a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on securities, indices and currencies. A put option gives the purchaser of the option the right to sell, and the writer (seller) the obligation to buy, the underlying security or currency at the exercise price at any time until (American style) or on (European style) the expiration date. The operation of put options in other respects, including their related risks and rewards, is substantially identical to that of call options.
A Theme Portfolio generally would write put options in circumstances where the Advisor wishes to purchase the underlying security or currency for a Theme Portfolio's holdings at a price lower than the current market price of the security or currency. In such event, a Theme Portfolio 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. Since the Theme Portfolio would also receive interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be used to enhance current return during periods of market uncertainty. The risk in such a transaction would be that the market price of the underlying security or currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and a Theme Portfolio will be obligated to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and currencies. As the holder of a put option, a Theme Portfolio would have the right to sell the underlying security or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Theme Portfolio may enter into closing sale transactions with respect to such options, exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or currency ("protective put") owned by the Theme Portfolio in order to protect against an anticipated decline in the value of the security or currency. Such hedge protection is provided only during the life of the put option when the Theme Portfolio, as the holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security's market price or currency's exchange value. The premium paid for the put option and any transaction costs would reduce any profit otherwise available for distribution when the security or currency is eventually sold.
A Theme Portfolio may also purchase put options at a time when it does not own the underlying security or currency. By purchasing put options on a security or currency it does not own, that Theme Portfolio seeks to benefit from a decline in the market price of the underlying security or currency. If the put option is not sold when it has remaining value, and if the market price of the underlying security or currency remains equal to or greater than the exercise price during the life of the put option, the Theme Portfolio will lose its entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of the underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and currencies. As the holder of a call option, the Theme Portfolio would have the right to purchase the underlying security or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Theme Portfolio 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 Theme Portfolio for the purpose of acquiring the underlying security or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Theme Portfolio to acquire the security or currency at the exercise price of the call option plus the premium paid. At times, the net cost of acquiring the security or currency in this manner may be less than the cost of acquiring the security or currency directly. This technique may also be useful to a Theme Portfolio in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. So long as it holds such a call option, rather than the underlying security or currency itself, the Theme Portfolio is partially protected from any unexpected decline in the market price of the underlying security 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.
A Theme Portfolio may also purchase call options on underlying securities or currencies it owns to avoid realizing losses that would result in a reduction of its current return. For example, where a Theme Portfolio has written a call option on an underlying security or currency having a current market value below the price at which it purchased the security or currency, an increase in the market price could result in the exercise of the call option written by the Theme Portfolio and the realization of a loss on the underlying security or currency. Accordingly, the Theme Portfolio could purchase a call option on the same underlying security or currency, which could be exercised to fulfill the Theme Portfolio's delivery obligations under its written call (if it is exercised). This strategy could allow the Theme Portfolio to avoid selling the portfolio security or currency at a time when it has an unrealized loss; however, the Theme Portfolio would have to pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each Theme Portfolio's total assets at the time of each purchase.
A Theme Portfolio may attempt to accomplish objectives similar to those involved in using Forward Contracts, by purchasing put or call options on currencies. A put option gives the Theme Portfolio as purchaser the right (but not the obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the option. A call option gives the Theme Portfolio as purchaser the right (but not the obligation) to purchase a specified amount of currency at the exercise price at any time until (American style) or on (European style) the expiration date of the option. A Theme Portfolio might purchase a currency put option, for example, to protect itself against a decline in the dollar value of a currency in which it holds or anticipates holding securities. If the currency's value should decline against the dollar, the loss in currency value should be offset, in whole or in part, by an increase in the value of the put. If the value of the currency instead should rise against the dollar, any gain to a Theme Portfolio would be reduced by the premium it had paid for the put option. A currency call option might be purchased, for example, in anticipation of, or to protect against, a rise in the value against the dollar of a currency in which a Theme Portfolio anticipates purchasing securities.
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 Theme Portfolio 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.
The staff of the SEC considers purchased OTC options to be illiquid securities. A Theme Portfolio may also sell OTC options and, in connection therewith, segregate assets or cover its obligations with respect to OTC options written by the Theme Portfolio. The assets used as cover for OTC options written by a Theme Portfolio will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Theme Portfolio 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.
A Theme Portfolio's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. A Theme Portfolio intends to purchase or write only those exchange-traded options for which there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the contra party or by a transaction in the secondary market if any such market exists. Although a Theme Portfolio will enter into OTC options only with contra parties that are expected to be capable of entering into closing transactions with the Theme Portfolio, there is no assurance that the Theme Portfolio 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 contra party, the Theme Portfolio might be unable to close out an OTC option position at any time prior to its expiration.
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 sector generally) rather than on price movements in individual securities or futures contracts. When a Theme Portfolio writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Theme Portfolio an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference. When a Theme Portfolio buys a call
on an index, it pays a premium and has the same rights as to such call as are indicated above. When a Theme Portfolio buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Theme Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When the Theme Portfolio writes a put on an index, it receives a premium and the purchaser has the right, prior to the expiration date, to require the Theme Portfolio to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Theme Portfolio writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Theme Portfolio can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, a Theme Portfolio 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 vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the "timing risk" inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, the Theme Portfolio, as the call writer, will not know that it has been assigned until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as common stock, because there the writer's obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date; and by the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its securities portfolio. This "timing risk" is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.
If a Theme Portfolio purchases an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Theme Portfolio will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio may enter into interest rate or currency futures contracts, and may enter into 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 in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by the Theme Portfolio. A Theme Portfolio'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.
Each Theme Portfolio only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading Commission ("CFTC"). Futures are exchanged in London at the London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be used to reduce a Theme Portfolio's exposure to interest rate, currency exchange rate and stock market fluctuations, that Theme Portfolio may be able to hedge its exposure more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (security or currency) for a specified price at a designated date, time and place. A stock index Futures Contract 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 at which the Futures Contract is originally struck; 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for financial instruments or currencies, Futures Contracts usually are closed out before the delivery date. Closing out an open Futures Contract sale or purchase is effected by entering into an offsetting Futures Contract purchase or sale, respectively, for the same aggregate amount of the identical financial instrument or currency and the same delivery date. If the offsetting purchase price is less than the original sale price, the Theme Portfolio realizes a gain; if it is more, the Theme Portfolio realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, the Theme Portfolio realizes a gain; if it is less, the Theme Portfolio realizes a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that a Theme Portfolio will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If a Theme Portfolio is not able to enter into an offsetting transaction, that Theme Portfolio will continue to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising from the sale of one Futures Contract of September Deutschemarks on an exchange may be fulfilled at any time before delivery under the Futures Contract is required (i.e., on a specified date in September, the "delivery month") by the purchase of another Futures Contract of September Deutschemarks on the same exchange. In such instance, the difference between the price at which the Futures Contract was sold and the price paid for the offsetting purchase, after allowance for transaction costs, represents the profit or loss to the Theme Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that a Theme Portfolio owns, or Futures Contracts will be purchased to protect a Theme Portfolio against an increase in the price of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Theme Portfolio in order to initiate Futures trading and maintain the Theme Portfolio's open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered into ("initial margin") is intended to ensure the Theme Portfolio's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract 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 the Theme Portfolio 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 Contract more or less valuable, a process known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile and are influenced by, among other things, actual and anticipated changes in interest rates and currency exchange rates, and in stock market movements, which in turn are affected by fiscal and monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures Contracts and prices of the securities or currencies in a Theme Portfolio's portfolio being hedged. The degree of imperfection of correlation depends upon circumstances such as variations in speculative market demand for Futures and for securities or currencies, including technical influences in Futures trading; and differences between the financial instruments being hedged and the instruments underlying the standard Futures Contracts available for trading. A decision of whether, when and how to hedge involves skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an extremely high degree of leverage. As a result, a relatively small price movement in a Futures Contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the Futures Contract is deposited as margin, a subsequent 10% decrease in the value of the Futures Contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the Futures Contract were closed out. Thus, a purchase or sale of a Futures Contract may result in losses in excess of the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures Contract and options on Futures Contracts prices during a single trading day. The daily limit establishes the maximum amount that the price of a Futures Contract or option may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of Futures Contract or option, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures Contract and option prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some traders to substantial losses.
If a Theme Portfolio were unable to liquidate a Futures or option on Futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Theme Portfolio would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Theme Portfolio 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.
Certain characteristics of the Futures market might increase the risk that movements in the prices of Futures Contracts or options on Futures might not correlate perfectly with movements in the prices of the investments being hedged. For example, all participants in the Futures and options on Futures markets are subject to daily variation margin calls and might be compelled to liquidate Futures or options on Futures positions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase price volatility of the instruments and distort the normal price relationship between the Futures or options and the investments being hedged. Also, because initial margin deposit requirements in the Futures market are less onerous than margin requirements in the securities markets, there might be increased participation by speculators in the Futures markets. This participation also might cause temporary price distortions. In addition, activities of large traders in both the Futures and securities markets involving arbitrage, "program trading" and other investment strategies might result in temporary price distortions.
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, which represents the amount by which the market price of the Futures Contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the Futures Contract. If an option is exercised on the last trading day prior to the expiration date of the option, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the securities, currencies or index upon which the Futures Contract is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the purchase of put options on Futures can serve as a short hedge. Writing call options on Futures can serve as a limited short hedge, and writing put options on Futures can serve as a limited long hedge, using a strategy similar to that used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required to deposit initial and variation margin pursuant to requirements similar to those applicable to Futures Contracts. Premiums received from the writing of an option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option covering the same Futures Contract and having the same exercise price and expiration date. The ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON CURRENCIES
To the extent that a Theme Portfolio 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 by which options are "in-the-money") will not exceed 5% of the total assets of the Theme Portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Theme Portfolio has entered into. In general, a call option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract exceeds the strike, i.e., exercise, price of the call; a put option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract is exceeded by the strike price of the put. This guideline may be modified by the Trust's Board of Trustees and the Portfolio's Board of Trustees, as applicable, without a shareholder vote. This limitation does not limit the percentage of a Theme Portfolio's assets at risk to 5%.
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 Theme Portfolio either may accept or make delivery of the currency at the maturity of the Forward Contract. A Theme Portfolio may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract.
A Theme Portfolio engages in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Theme Portfolio might sell a particular foreign currency forward, for example, when it holds bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly, a Theme Portfolio might sell the U.S. dollar forward when it holds bonds denominated in U.S. dollars but anticipates, and seeks to be protected against, a decline in the U.S. dollar relative to other currencies. Further, a Theme Portfolio might purchase a currency forward to "lock in" the price of securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A Forward Contract generally has no deposit requirement, and no commissions are charged at any stage for trades. Each Theme Portfolio will enter into such Forward Contracts with major U.S. or foreign banks and securities or currency dealers in accordance with guidelines approved by the Trust's or the Portfolios' Board of Trustees, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to specific transactions or with respect to overall investments of that Theme Portfolio. The precise matching of the Forward Contract amounts and the value of specific securities generally will not be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the Forward Contract is entered into and the date it matures. Accordingly, it may be necessary for that Theme Portfolio to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Theme Portfolio is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency the Theme Portfolio is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward Contracts involve the risk that anticipated currency movements will not be predicted accurately, causing a Theme Portfolio to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to sell a currency, that Theme Portfolio either may sell a security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Theme Portfolio will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, a Theme Portfolio may close out a Forward Contract requiring it to purchase a specified currency by entering into a second contract, if its contra party agrees, entitling it to sell the same amount of the same currency on the maturity date of the first contract. A Theme Portfolio would realize a gain or loss as a result of entering into such an offsetting Forward Contract under either circumstance to the extent the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and the offsetting contract.
The cost to a Theme Portfolio 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 Theme Portfolio 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.
FOREIGN CURRENCY STRATEGIES--SPECIAL CONSIDERATIONS
A Theme Portfolio may use options on foreign currencies, Futures on foreign currencies, options on Futures on foreign currencies and Forward Contracts to hedge against movements in the values of the foreign currencies in which the Theme Portfolio's securities are denominated. Such currency hedges can protect against price movements in a security that the Theme Portfolio owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.
A Theme Portfolio might seek to hedge against changes in the value of a particular currency when no Futures Contract, Forward Contract or option involving that currency is available or one of such contracts is more expensive than certain other contracts. In such cases, the Theme Portfolio may hedge against price movements in that currency by entering into a contract on another currency or basket of currencies, the values of which the Advisor believes will have a positive correlation to the value of the currency being hedged. The risk that movements in the price of the contract will not correlate perfectly with movements in the price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts and options on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of Futures Contracts, Forward Contracts or options, the Theme Portfolio could be disadvantaged by dealing in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies or any regulatory requirements that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or Futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Futures contracts or options until they reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, the Theme Portfolio might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than options purchased by a Theme Portfolio) expose the Theme Portfolio to an obligation to another party. A Theme Portfolio 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, receivables and short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Theme Portfolio will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account 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 Theme Portfolio's assets is used for cover or otherwise set aside, it could affect portfolio management or the Theme Portfolio's ability to meet redemption requests or other current obligations.
RISK FACTORS
GENERAL
Equity securities, particularly common stocks, generally represent the most junior position in an issuer's capital structure, and entitle holders to an interest in the assets of the issuer, if any, remaining after all more senior claims have been satisfied. The value of equity securities held by a Theme Portfolio will fluctuate in response to general market and economic developments, as well as developments affecting the particular issuers of such securities. The value of debt securities held by a Theme Portfolio generally will fluctuate with changes in the perceived creditworthiness of the issuers of such securities and interest rates.
CONSUMER PRODUCTS AND SERVICES FUND
The performance of consumer products and services companies relates closely to the actual and perceived performance of the overall economy, interest rates, and consumer confidence. In addition, many consumer products and services companies have unpredictable earnings, due in part to changes in consumer tastes and intense competition. As a result of either of these factors, consumer products and services companies may be subject to increased share price volatility.
Changes in governmental policy and the need for regulatory approvals may have a material effect on the products and services offered by companies in the consumer products and services industries. Such governmental regulations may also hamper the development of new business opportunities.
FINANCIAL SERVICES FUND
Companies in the financial services sector are subject to rapid business changes, significant competition, value fluctuations due to the concentration of loans in particular industries significantly affected by economic conditions (such as real estate or energy), and volatile performance dependent upon the availability and cost of capital and prevailing interest rates. In addition, general economic conditions significantly affect these companies. Credit and other losses resulting from the financial difficulty of borrowers or other third parties potentially may have an adverse effect on companies in these industries. Foreign banks, particularly those of Japan, have reported financial difficulties attributed to increased competition, regulatory changes, and general economic difficulties.
The financial services area in the United States currently is changing relatively rapidly as existing distinctions between various financial service segments become less clear. For instance, recent business combinations have included insurance, finance, and securities brokerage under single ownership. Some primarily retail corporations have expanded into securities and insurance fields. Investment banking, securities brokerage, and investment advisory companies are subject to government regulation and risk due to securities trading and underwriting activities.
Many of the investment considerations discussed in connection with banks, savings institutions and loan associations, and finance companies also apply to insurance companies. The performance of insurance company investments will be subject to risk from several factors. The earnings of insurance companies will be affected by interest rates, pricing (including severe pricing competition from time to time), claims activity, marketing competition and general economic conditions. Particular insurance lines also will be influenced by specific matters. Property and casualty insurance profits may be affected by certain weather catastrophes and other disasters. Life and health insurers' profits may be affected by mortality and morbidity rates. Individual companies may be exposed to material risks, including reserve inadequacy, problems in investment portfolios (due to real estate or "junk" bond holdings, for example), and the inability to collect from reinsurance carriers. Insurance companies are subject to extensive governmental regulation, including the imposition of maximum rate levels, which may not be adequate for some lines of business. Proposed or potential anti-trust
or tax law changes also may affect adversely insurance companies' policy sales, tax obligations, and profitability.
HEALTH CARE FUND
Health care industries generally are subject to substantial governmental regulation. Changes in governmental policy or regulation could have a material effect on the demand for products and services offered by companies in the health care industries and therefore could affect the performance of the Fund. Regulatory approvals are generally required before new drugs and medical devices or procedures may be introduced and before the acquisition of additional facilities by health care providers. In addition, the products and services offered by such companies may be subject to rapid obsolescence caused by technological and scientific advances.
INFRASTRUCTURE FUND
The nature of regulation of infrastructure industries continues to evolve in both the United States and foreign countries, and changes in governmental policy and the need for regulatory approvals may have a material effect on the products and services offered by companies in the infrastructure industries. Electric, gas, water, and most telecommunications companies in the United States, for example, are subject to both federal and state regulation affecting permitted rates of return and the kinds of services that may be offered. Government regulation may also hamper the development of new technologies. Adverse regulatory developments could therefore potentially affect the performance of Infrastructure Fund.
In addition, many infrastructure companies have historically been subject to the risks attendant to increases in fuel and other operating costs, high interest costs on borrowed funds, costs associated with compliance with environmental, and other safety regulations and changes in the regulatory climate. Changes in prevailing interest rates may also affect the Infrastructure Fund's share values because prices of equity and debt securities of infrastructure companies tend to increase when interest rates decline and decrease when interest rates rise. Further, competition is intense for many infrastructure companies. As a result, many of these companies may be adversely affected in the future and such companies may be subject to increased share price volatility. In addition, many companies have diversified into oil and gas exploration and development, and therefore returns may be more sensitive to energy prices.
Some infrastructure companies, such as water supply companies, operate in highly fragmented market sectors due to local ownership. In addition, some of these companies are mature and experience little or no growth. Either of these factors could have a material effect on infrastructure companies and could therefore affect the performance of Infrastructure Fund.
RESOURCES FUND
Global Resources Portfolio invests in companies that engage in the exploration, development, and distribution of coal, oil and gas in the United States. These companies are subject to significant federal and state regulation, which may affect rates of return on such investments and the kinds of services that may be offered. In addition, many natural resource companies historically have been subject to significant costs associated with compliance with environmental and other safety regulations. Governmental regulation may also hamper the development of new technologies. These companies could also be affected by foreign countries' oil production policies, social and political unrest in oil-producing nations, global weather trends and U.S. taxes on petroleum-based products.
Further, competition is intense for many natural resource companies. As a result, many of these companies may be adversely affected in the future and the value of the securities issued by such companies may be subject to increased price volatility. Such companies may also be subject to irregular fluctuations in earnings due to changes in the availability of money, the level of interest rates, and other factors.
The value of securities of natural resource companies will fluctuate in response to market conditions for the particular natural resources with which the issuers are involved. The price of natural resources will fluctuate due to changes in worldwide levels of inventory, and changes, perceived or actual, in production and consumption. With respect to precious metals, such price fluctuations may be substantial over short periods of time. In addition, the value of natural resources may fluctuate directly with respect to various stages of the inflationary cycle and perceived inflationary trends and are subject to numerous factors, including national and international politics.
TELECOMMUNICATIONS AND TECHNOLOGY FUND
Telecommunications and technology industries may be subject to greater governmental regulation than many other industries and changes in governmental policy and the need for regulatory approvals may have a material effect on the products and services offered by companies in the telecommunications and technology industries generally. Telephone operating companies in the United States, for example, are subject to both federal and state regulation affecting permitted rates of return and the kinds of services that may be offered. In addition, certain types of companies in the telecommunications and technology industries are engaged in fierce competition for market share that could result in increased share price volatility. This fierce competition, limited products, narrow business platforms and small markets could also result in the risk of technological obsolescence.
LOWER QUALITY DEBT SECURITIES
The Global Resources Portfolio, Global Consumer Products and Services Portfolio, and Infrastructure Fund may invest up to 20%, and Health Care Fund, Telecommunications and Technology Fund, and Financial Services Fund may invest up to 5%, of their respective total assets in below investment grade debt securities, that is, rated below BBB by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Baa by Moody's Investors Service, Inc. ("Moody's") or, if unrated, deemed to be of equivalent quality in the judgment of the Advisor. Such investments involve a high degree of risk. However, the Theme Portfolios will not invest in debt securities that are in default as to payment of principal and interest.
Debt rated Baa by Moody's is considered by Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as predominately speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. While such lower quality debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not in default as to principal or interest, and such issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Lower quality debt securities are also generally considered to be subject to greater risk than securities with higher ratings with regard to a deterioration of general economic conditions. These lower quality debt securities are the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their quality and are not a guarantee of quality. Rating agencies attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Also, rating agencies may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer's current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual developments of the issuer to a greater extent than do higher quality securities, which react primarily to fluctuations in the general level of interest rates. In addition, lower quality debt securities tend to be more sensitive to economic conditions and generally have more volatile prices than higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of financing. For example, during an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of lower quality securities may experience financial stress. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations may also be adversely affected by specific developments affecting the issuer, such as the issuer's inability to meet specific projected business forecasts or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders of lower quality securities because such securities are generally unsecured and may be subordinated to the claims of other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or buy-back features which would permit an issuer to call or repurchase that security from a Theme Portfolio. If an issuer exercises these provisions in a declining interest rate market, the Theme Portfolio may have to replace the security with a lower yielding security, resulting in a decreased return for investors. In addition, the Theme Portfolio may have difficulty disposing of lower quality securities because they may have a thin trading market. There may be no established retail secondary market for many of these securities, and the Theme Portfolio anticipates that such securities could be sold only to a limited number of dealers or institutional investors. The lack of a liquid secondary market also may have an adverse impact on market prices of such instruments and may make it more difficult for the Theme Portfolio to obtain accurate market quotations for purposes of valuing its investments. The Theme Portfolios may also acquire lower quality debt securities during an initial underwriting or which are sold without registration under applicable securities laws. Such securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the market value of lower quality debt securities in which the Theme Portfolios may invest include: (i) potential adverse publicity; (ii) heightened sensitivity to general economic or political conditions, and (iii) the likely adverse impact of a major economic recession. The Theme Portfolios may also incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on portfolio holdings, and the Theme Portfolios may have limited legal recourse in the event of a default.
INVESTING IN SMALLER COMPANIES
While a Theme Portfolio's holdings normally will include securities of established suppliers of traditional products and services, a Theme Portfolio may invest in smaller companies which can benefit from the development of new products and services. These smaller companies may present greater opportunities for capital appreciation, but may also involve greater risks than large, established issuers. Such smaller companies may have limited product lines, markets or financial resources, and their securities may trade less frequently and in more limited volume than the securities of larger, more established companies. As a result, the prices of the securities of such smaller companies may fluctuate to a greater degree than the prices of the securities of other issuers.
ILLIQUID SECURITIES
Each Theme Portfolio may invest up to 15% of its net assets in illiquid securities. Securities may be considered illiquid if a Theme Portfolio cannot reasonably expect within seven days to sell the securities for approximately the amount at which that Theme Portfolio values such securities. See "Investment Limitations." The sale of illiquid securities, if they can be sold at all, generally will require more time and result in higher brokerage charges or dealer discounts and other selling expenses than will the sale of liquid securities such as securities eligible for trading on U.S. securities exchanges or in OTC markets. Moreover, restricted securities, which may be illiquid for purposes of this limitation, often sell, if at all, at a price lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in the securities laws of other countries. However, securities that are freely marketable in the country where they are principally traded, but would not be freely marketable in the United States, will not be considered illiquid. Where registration is required, a Theme Portfolio may be obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the Theme Portfolio may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Theme Portfolio might obtain a less favorable price than prevailed when it decided to sell.
The Advisor believes that carefully selected investments in joint ventures, cooperatives, partnerships and state enterprises which are illiquid (collectively, "Special Situations") could enable the Theme Portfolios to achieve capital appreciation substantially exceeding the appreciation the Theme Portfolios would realize if they did not make such investments. However, in order to attempt to limit investment risk, the Theme Portfolios will invest no more than 5% of its total assets in Special Situations.
Not all restricted securities are illiquid. In recent years a large institutional market has developed for certain securities that are not registered under the Securities Act of 1933, as amended ("1933 Act"), including private placements, repurchase agreements, commercial paper, foreign securities and corporate bonds and notes. These instruments are often restricted securities because the securities are sold in transactions not requiring registration. Institutional investors generally will not seek to sell these instruments to the general public, but instead will often depend either on an efficient institutional market in which such unregistered securities can be readily resold or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are contractual or legal restrictions on resale to the general public or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration requirements of the 1933 Act for resales of certain securities to qualified institutional buyers. Institutional markets for restricted securities have developed as a result of Rule 144A, providing both readily ascertainable values for restricted securities and the ability to liquidate an investment to satisfy share redemption orders. Such markets include automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the National Association of Securities Dealers, Inc. An insufficient number of qualified institutional buyers interested in purchasing Rule 144A-eligible restricted securities held by a Theme Portfolio, however, could affect adversely the marketability of such portfolio securities and the Theme Portfolio might be unable to dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's or the Portfolios' Board of Trustees, as applicable, has the ultimate responsibility for determining whether specific securities, including restricted securities pursuant to Rule 144A under the 1933 Act, are liquid or illiquid. Each Board has delegated the function of making day-to-day determinations of liquidity to the Advisor, in accordance with procedures approved by that Board. The Advisor takes into account a number of factors in reaching liquidity decisions, including, but not limited to, (i) the frequency of trading in the security; (ii) the number of dealers that make quotes for the security; (iii) the number of dealers that have undertaken to make a market in the security; (iv) the number of other potential purchasers; and (v) the nature of the security and how trading is effected (e.g., the time needed to sell the security, how offers are solicited and the mechanics of transfer). The Advisor monitors the liquidity of securities held by each Theme Portfolio and periodically reports such determinations to the Trust's or the Portfolios' Board of Trustees, as applicable. If the liquidity percentage restriction of a Theme Portfolio is satisfied at the time of investment, a later increase in the percentage of illiquid securities held by the Theme Portfolio resulting from a change in market value or assets will not constitute a violation of that restriction. If as a result of a change in market value or assets, the percentage of illiquid securities held by the Theme Portfolio increases above the applicable limit, the Advisor will take appropriate steps to bring the aggregate amount of illiquid assets back within the prescribed limitations as soon as reasonably practicable, taking into account the effect of any disposition on the Theme Portfolio.
FOREIGN SECURITIES
Political, Social and Economic Risks. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, rate
of savings and capital reinvestment, resource self sufficiency and balance of payments positions. Investing in securities of non-U.S. companies may entail additional risks due to the potential political, social and economic instability of certain countries and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment convertibility of currencies into U.S. dollars and on repatriation of capital invested. In the event of such expropriation, nationalization, confiscatory taxation or other confiscation by any country, a Theme Portfolio could lose its entire investment in any such country. In addition, governmental regulation in certain foreign countries may impose interest rate controls, credit controls, and price controls. These factors could have a material effect on foreign companies and could therefore affect the performance of the Funds.
Religious, Political and Ethnic Instability. Certain countries in which a Theme Portfolio may invest may have groups that advocate radical religious or revolutionary philosophies or support ethnic independence. Any disturbance on the part of such individuals could carry the potential for widespread destruction or confiscation of property owned by individuals and entities foreign to such country and could cause the loss of a Theme Portfolio's investment in those countries. Instability may also result from, among other things: (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; and (iii) hostile relations with neighboring or other countries. Such political, social and economic instability could disrupt the principal financial markets in which a Theme Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
Foreign Investment Restrictions. Certain countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as a Theme Portfolio. These restrictions or controls may at times limit or preclude investment in certain securities and may increase the cost and expenses of a Theme Portfolio. For example, certain countries require prior governmental approval before investments by foreign persons may be made, or may limit the amount of investment by foreign persons in a particular company or limit the investment by foreign persons to only a specific class of securities of a company that may have less advantageous terms than securities of the company available for purchase by nationals. Moreover, the national policies of certain countries may restrict investment opportunities in issuers or industries deemed sensitive to national interests. In addition, some countries require governmental approval for the repatriation of investment income, capital or the proceeds of securities sales by foreign investors. In addition, if there is a deterioration in a country's balance of payments or for other reasons, a country may impose restrictions on foreign capital remittances abroad. A Theme Portfolio could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental Regulation. Foreign companies are subject to accounting, auditing and financial standards and requirements that differ, in some cases significantly, from those applicable to U.S. companies. In particular, the assets, liabilities and profits appearing on the financial statements of such a company may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. generally accepted accounting principles. Most of the foreign securities held by a Theme Portfolio will not be registered with the SEC or regulators of any foreign country, nor will the issuers thereof be subject to the SEC's reporting requirements. Thus, there will be less available information concerning most foreign issuers of securities held by a Theme Portfolio than is available concerning U.S. issuers. In instances where the financial statements of an issuer are not deemed to reflect accurately the financial situation of the issuer, the Advisor will take appropriate steps to evaluate the proposed investment, which may include on-site inspection of the issuer, interviews with its management and consultations with accountants, bankers and other specialists. There is substantially less publicly available information about foreign companies than there are reports and ratings published about U.S. companies and the U.S. government. In addition, where public information is available, it may be less reliable than such information regarding U.S. issuers. Issuers of securities in foreign jurisdictions are generally not subject to the same degree of regulation as are U.S. issuers with respect to such matters as restrictions on market manipulation, insider trading rules, shareholder proxy requirements and timely disclosure of information.
Currency Fluctuations. Because each Theme Portfolio, under normal circumstances, will invest a substantial portion of its total assets in the securities of foreign issuers which are denominated in foreign currencies, the strength or weakness of the U.S. dollar against such foreign currencies will account for part of a Theme Portfolio's investment performance. A decline in the value of any particular currency against the U.S. dollar will cause a decline in the U.S. dollar value of that Theme Portfolio's holdings of securities and cash denominated in such currency and, therefore, will cause an overall decline in the appropriate Fund's net asset value and any net investment income and capital gains derived from such securities to be distributed in U.S. dollars to shareholders of that Fund. Moreover, if the value of the foreign currencies in which a Theme Portfolio receives its income falls relative to the U.S. dollar between receipt of the income and the making of Theme Portfolio distributions, the Theme Portfolio may be required to liquidate securities in order to make distributions if the Theme Portfolio has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined by several factors, including the supply and demand for particular currencies, central bank efforts to support particular currencies, the relative movement of interest rates and the pace of business activity in the other countries and the United States, and other economic and financial conditions affecting the world economy.
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.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars, the Portfolios do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. Each Portfolio will do so, from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference ("spread") between the prices at which they buy and sell various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should a Portfolio desire to sell that currency to the dealer.
Adverse Market Characteristics. Securities of many foreign issuers may be less liquid and their prices more volatile than securities of comparable U.S. issuers. In addition, foreign securities markets and brokers generally are subject to less governmental supervision and regulation than in the United States, and foreign securities transactions usually are subject to fixed commissions, which generally are higher than negotiated commissions on U.S. transactions. In addition, foreign securities transactions may be subject to difficulties associated with the settlement of such transactions. Delays in settlement could result in temporary periods when assets of a Theme Portfolio are uninvested and no return is earned thereon. The inability of a Theme Portfolio to make intended security purchases due to settlement problems could cause that Theme Portfolio to miss attractive investment opportunities. Inability to dispose of a portfolio security due to settlement problems either could result in losses to that Theme Portfolio due to subsequent declines in value of the portfolio security or, if that Theme Portfolio has entered into a contract to sell the security, could result in possible liability to the purchaser. The Advisor will consider such difficulties when determining the allocation of a Theme Portfolio's assets, although the Advisor does not believe that such difficulties will have a material adverse effect on a Theme Portfolio's portfolio trading activities.
Each Theme Portfolio may use foreign custodians, which may charge higher custody fees than those attributable to domestic investing and may involve risks in addition to those related to its use of U.S. custodians. Such risks include uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards concerning that Theme Portfolio's investments; and possible difficulties in obtaining and enforcing judgments against such custodians.
Withholding Taxes. Each Theme Portfolio's net investment income from foreign issuers may be subject to withholding taxes by the foreign issuer's country, thereby reducing that income or delaying the receipt of income when those taxes may be recaptured. See "Dividends, Distributions and Tax Matters."
Concentration. To the extent a Theme Portfolio invests a significant portion of its assets in securities of issuers located in a particular country or region of the world, such Portfolio may be subject to greater risks and may experience greater volatility than a fund that is more broadly diversified geographically.
Special Considerations Affecting Western European Countries. The countries that are members of the European Economic Community ("Common Market") (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom) eliminated certain import tariffs and quotas and other trade barriers with respect to one another over the past several years. The Advisor believes that this deregulation should improve the prospects for economic growth in many Western European countries. Among other things, the deregulation could enable companies domiciled in one country to avail themselves of lower labor costs existing in other countries. In addition, this deregulation could benefit companies domiciled in one country by opening additional markets for their goods and services in other countries. Since, however, it is not clear what the exact form or effect of these Common Market reforms will be on business in Western Europe, it is impossible to predict the long-term impact of the implementation of these programs on the securities owned by a Theme Portfolio.
Special Considerations Affecting Russia and Eastern European
Countries. Investing in Russia and Eastern European countries involves a high
degree of risk and special considerations not typically associated with
investing in the United States securities markets, and should be considered
highly speculative. Such risks include: (1) delays in settling portfolio
transactions and risk of loss arising out of the system of share registration
and custody; (2) the risk that it may be impossible or more difficult than in
other countries to obtain and/or enforce a judgement; (3) pervasiveness of
corruption and crime in the economic system; (4) currency exchange rate
volatility and the lack of available currency hedging instruments; (5) higher
rates of inflation (including the risk of social unrest associated with periods
of hyper-inflation) and high unemployment; (6) controls on foreign investment
and local practices disfavoring foreign investors and limitations on
repatriation of invested capital, profits and dividends, and on a fund's ability
to exchange local currencies for U.S. dollars; (7) political instability and
social unrest and violence; (8) the risk that the governments of Russia and
Eastern European countries may decide not to continue to support the economic
reform programs implemented recently and could follow radically different
political and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries at the
expense of other sectors or investors, or a return to the centrally planned
economy that existed when such countries had a communist form of government; (9)
the financial condition of companies in these countries, including large amounts
of inter-company debt which may create a payments crisis on a national scale;
(10) dependency on exports and the corresponding importance of international
trade; (11) the risk that the tax system in these countries will not be reformed
to prevent inconsistent, retroactive and/or exorbitant taxation; and (12) the
underdeveloped nature of the securities markets.
Special Considerations Affecting Japan. Japan's economic growth has declined significantly since 1990. The general government position has deteriorated as a result of weakening economic growth and stimulative measures taken to support economic activity and to restore financial stability. Although the decline in interest rates and fiscal stimulation packages have helped to contain recessionary forces, uncertainties remain. Japan is also heavily dependent upon international trade, so its economy is especially sensitive to trade barriers and disputes. Japan has had difficult relations with its trading partners, particularly the United States, where the trade imbalance is the greatest. It is possible that trade sanctions and other protectionist measures could impact Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings ratios. Differences in accounting methods make it difficult to compare the earnings of Japanese companies with those of companies in other countries, especially in the U.S. In general, however, reported net income in Japan is understated relative to U.S. accounting standards and this is one reason why price-earnings ratios of the stocks of Japanese companies have tended historically to be higher than those for U.S. stocks. In addition, Japanese companies have tended to have higher growth rates than U.S. companies and Japanese interest rates have generally been lower than in the U.S., both of which factors tend to result in lower discount rates and higher price-earnings ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United States. Evidence has emerged from time to time of distortion of market prices to serve political or other purposes. Shareholders' rights are not always equally enforced. In addition, Japan's banking industry is undergoing problems related to bad loans and declining values in real estate.
Special Considerations Affecting Pacific Region Countries. Certain of the risks associated with international investments are heightened for investments in Pacific region countries. For example, some of the currencies of Pacific region countries have experienced steady devaluations relative to the U.S. dollar, and major adjustments have been made periodically in certain of such currencies. Certain countries, such as India, face serious exchange constraints. Jurisdictional disputes also exist between South Korea and North Korea. In addition, the Theme Portfolios may invest in Hong Kong, which reverted to Chinese Administration on July 1, 1997. Investments in Hong Kong may be subject to expropriation, national, nationalization or confiscation, in which case a Theme Portfolio could lose its entire investment in Hong Kong. In addition, the reversion of Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a risk of possible loss of investor confidence in Hong Kong's currency, stock market and assets.
Special Considerations Affecting Latin American Countries. Most Latin American countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain Latin American countries. Certain Latin American countries are also among the largest debtors to commercial banks and foreign governments. At times certain Latin American countries have declared moratoria on the payment of principal and/or interest on external debt. In addition, certain Latin American securities markets have experienced high volatility in recent years.
Latin American countries may also close certain sectors of their economies to equity investments by foreigners. Further due to the absence of securities markets and publicly owned corporations and due to restrictions on direct investment by foreign entities, investments may only be made in certain Latin American countries solely or primarily through governmentally approved investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. For example, in late 1994, the value of the Mexican peso lost more than one-third of its value relative to the U.S. dollar.
Special Considerations Affecting Emerging Markets. Investing in the securities of companies in emerging markets may entail special risks relating to potential political and economic instability and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment, convertibility of currencies into U.S. dollars and on repatriation of capital invested. In the event of such expropriation, nationalization or other confiscation by any country, a Theme Portfolio could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less liquid and more volatile than the major securities markets. The limited size of emerging securities markets and limited trading value in issuers compared to the volume of trading in U.S. securities could cause prices to be erratic for reasons
apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced by traders who control large positions. Adverse publicity and investors' perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. In addition, securities traded in certain emerging markets may be subject to risks due to the inexperience of financial intermediaries, a lack of modern technology, the lack of a sufficient capital base to expand business operations, and the possibility of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and reliable than in more developed markets. In such emerging securities there may be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates and corresponding currency devaluations have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries.
INVESTMENT LIMITATIONS
FEEDER FUNDS
The Resources Fund and Consumer Products and Services Fund each has the following fundamental investment policy to enable it to invest in the Global Resources Portfolio and Global Consumer Products and Services Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental investment policies, of each Feeder Fund and its corresponding Portfolio are identical. Therefore, although the following discusses the investment policies of each Portfolio and its Board of Trustees, it applies equally to each Feeder Fund and its Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental policies that (unless otherwise noted) may not be changed without approval by the affirmative vote of a majority of the outstanding shares of the Portfolio. Whenever a Feeder Fund is requested to vote on a change in the investment limitations of its corresponding Portfolio, the Fund will hold a meeting of its shareholders and will cast its votes as instructed by its shareholders.
No Portfolio may:
(1) Purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Portfolio may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Portfolio may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments;
(3) Engage in the business of underwriting securities of other issuers, except to the extent that the Portfolio might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of the Portfolio's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Portfolio may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5% of the Portfolio's total assets would be invested in securities of that issuer or the Portfolio would own or hold more than 10% of the outstanding voting securities of that issuer, except that up to 25% of the Portfolio's total assets may be invested without regard to this limitation, and except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or to securities issued by other investment companies.
The following investment policies of each Portfolio are not fundamental policies and may be changed by vote of the Portfolios' Board of Trustees without shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the Portfolio to own more than 10% of any class of securities of any one issuer, except that the Portfolio may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including securities that are illiquid by virtue of the absence of a readily available market;
(4) Enter into a futures contract, an option on a futures contract, or an option on foreign currency traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), if the aggregate initial margin and premiums required to establish all of those positions (excluding the amount by which options are "in-the-money") exceeds 5% of the liquidation value of the Portfolio's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into;
(5) Borrow money except for temporary or emergency purposes (other than to meet redemptions). While borrowings exceed 5% of the Portfolio's total assets, the Portfolio will not make any additional investments;
(6) Invest more than 10% of its total assets in shares of other investment companies and may not invest more than 5% of its total assets in any one investment company or acquire more than 3% of the outstanding voting securities of any one investment company, except that the Portfolio may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(7) Purchase securities on margin, provided that each Portfolio may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Portfolio may make margin deposits in connection with its use of financial options
and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities.
Investors should refer to the Prospectus for further information with respect to the investment objective of each Feeder Fund, which may not be changed without the approval of the Fund's shareholders, and its corresponding Portfolio's investment objective, which may be changed without the approval of the Portfolio's shareholders, and other investment policies, techniques and limitations, which may or may not be changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as fundamental policies, which (unless otherwise noted) may not be changed without approval by the affirmative vote of the lesser of (i) 67% of its shares represented at a meeting at which more than 50% of the outstanding shares are represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Health Care Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(2) Engage in the business of underwriting securities of other issuers, except to the extent that the Health Care Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(3) Make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan;
(4) Purchase or sell physical commodities, but the Health Care Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments;
(5) Issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of the Health Care Fund's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Health Care Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5% of the Health Care Fund's total assets would be invested in securities of that issuer or the Health Care Fund would own or hold more than 10% of the outstanding voting securities of that issuer, except that up to 25% of the Health Care Fund's total assets may be invested without regard to this limitation, and except that
this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Health Care Fund, the Health Care Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
The following investment policies of the Health Care Fund are not fundamental policies and may be changed by vote of the Trust's Board of Trustees without shareholder approval. The Health Care Fund will not:
(1) Purchase securities for which there is no readily available market, or enter into repurchase agreements or purchase time deposits maturing in more than seven days, or purchase OTC options or hold assets set aside to cover OTC options written by the Health Care Fund, if immediately after and as a result, the value of such securities would exceed, in the aggregate, 15% of the Health Care Fund's net assets;
(2) Purchase securities on margin, provided that the Health Care Fund may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Health Care Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities; or
(4) Borrow money except for temporary or emergency purposes (other than to meet redemptions). While borrowings exceed 5% of the Health Care Fund's total assets, it will not make any additional investments.
Investors should refer to the Health Care Fund's Prospectus for further information with respect to the Health Care Fund's investment objective, which may not be changed without the approval of its shareholders, and other investment policies, techniques and limitations, which may be changed without shareholder approval.
TELECOMMUNICATIONS AND TECHNOLOGY FUND
The Telecommunications and Technology Fund has adopted the following investment limitations as fundamental policies, which (unless otherwise noted) may not be changed without approval by the affirmative vote of the lesser of (i) 67% of its shares represented at a meeting at which more than 50% of the outstanding shares are represented, or (ii) more than 50% of the outstanding shares.
The Telecommunications and Technology Fund may not:
(1) Purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Telecommunications and Technology Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Telecommunications and Technology Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments;
(3) Engage in the business of underwriting securities of other issuers, except to the extent that the Telecommunications and Technology Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of the Telecommunications and Technology Fund's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Telecommunications and Technology Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase securities of any one issuer if, as a result, more than 5% of the Telecommunications and Technology Fund's total assets would be invested in securities of that issuer or the Telecommunications and Technology Fund would own or hold more than 10% of the outstanding voting securities of that issuer, except that up to 25% of the Telecommunications and Technology Fund's total assets may be invested without regard to this limitation, and except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or to securities issued by other investment companies.
Notwithstanding any other investment policy of the Telecommunications and Technology Fund, the Telecommunications and Technology Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
The following investment policies of the Telecommunications and Technology Fund are not fundamental policies and may be changed by vote of the Trust's Board of Trustees without shareholder approval. The Telecommunications and Technology Fund may not:
(1) Invest in securities of an issuer if the investment would cause the Telecommunications and Technology Fund to own more than 10% of any class of securities of any one issuer, except that the Telecommunications and Technology Fund may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including securities that are illiquid by virtue of the absence of a readily available market;
(4) Enter into a futures contract, an option on a futures contract, or an option on foreign currency traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), if the aggregate initial margin and premiums required to establish all of those positions (excluding the amount by which options are "in-the-money") exceeds 5% of the liquidation value of the Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into;
(5) Borrow money except for temporary or emergency purposes (other than to meet redemptions). While borrowings exceed 5% of the Telecommunications and Technology Fund's total assets, it will not make any additional investments;
(6) Purchase securities on margin, provided that the Telecommunications and Technology Fund may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Telecommunications and Technology Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities.
Investors should refer to the Telecommunications and Technology Fund's Prospectus for further information with respect to the Telecommunications and Technology Fund's investment objective, which may not be changed without the approval of its shareholders, and other investment policies, techniques and limitations, which may be changed without shareholder approval.
FINANCIAL SERVICES FUND AND INFRASTRUCTURE FUND
FUNDAMENTAL 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 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) Financial Services Fund will concentrate (as such term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) its investments in the securities of domestic and foreign financial services companies.
Infrastructure Fund will concentrate (as such term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) its investments in the securities of domestic and foreign infrastructure companies.
(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 the 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 Financial Services Fund and Infrastructure 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 Funds have this flexibility, the Board of Trustees has adopted internal guidelines for each Fund relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these guidelines, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to Financial Services Fund and Infrastructure Fund. They may be changed for either Fund without approval of that Fund's voting securities. Any investment restriction that involves a maximum or minimum percentage of securities or assets (other than with respect to borrowing) 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) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% 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, 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) For purposes of AIM Global Financial Services Fund's fundamental investment restriction regarding industry concentration, financial services companies include those that provide, and derive at least 40% of their revenues from, financial services (such as commercial banks, insurance companies, investment management companies, trust companies, savings banks, insurance brokerages, securities brokerages, investment banks, leasing companies, and real estate-related companies).
For purposes of AIM Global Infrastructure Fund's fundamental investment restriction regarding industry concentration, infrastructure companies include those that design, develop, or provide products and services significant to a country's infrastructure, and derive at least 40% of their revenues from these products and services (such as transportation systems, communications equipment and services, nuclear power and other energy sources, water supply, and oil, gas, and coal exploration).
(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 an 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.
If a percentage restriction on investment or utilization of assets in an investment policy or restriction is adhered to at the time an investment is made, a later change in percentage ownership of a security or kind of securities resulting from changing market values or a similar type of event will not be considered a violation of a Fund's or Portfolio's investment policies or restrictions. A Fund or Portfolio may exchange securities, exercise conversion or subscription rights, warrants or other rights to purchase common stock or other equity securities and may hold, except to the extent limited by the 1940 Act, any such securities so acquired without regard to the Fund's or Portfolio's investment policies and restrictions. The original cost of the securities so acquired will be included in any subsequent determination of a Fund's or Portfolio's compliance with the investment percentage limitations referred to above and in the Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
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. 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.
Some of the securities in which the Funds invest are traded in over-the-counter markets. In such transactions, a 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. ("AIM Capital") (collectively, the "AIM Funds") in particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers 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 a Fund, provided the conditions of an exemptive order received by the Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account provided the Funds follow procedures adopted by the Board 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 Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another 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, 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 Company's directors with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of custody services, as well as the providing of equipment used to communicate research information, the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory 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.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 2000, 1999 and 1998, the Global Consumer Products and Services Portfolio paid aggregate brokerage commissions of $1,152,921, $719,925 and $1,004,439, respectively.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Global Financial Services Portfolio paid aggregate brokerage commissions of $183,970, $302,742 and $404,804, respectively.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Health Care Fund paid aggregate brokerage commissions of $3,030,188, $1,680,496 and $1,647,939, respectively.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Global Infrastructure Portfolio paid aggregate brokerage commissions of $51,077, $110,072 and $317,191, respectively.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Global Resources Portfolio paid aggregate brokerage commissions of $139,146, $221,586 and $798,398, respectively
For the fiscal years ended October 31, 2000, 1999 and 1998, the Telecommunications and Technology Fund paid aggregate brokerage commissions of $2,967,281, $3,353,749 and $2,740,833, respectively.
For the fiscal year ended October 31, 1998, the Health Care Fund paid to LGT Bank in Liechtenstein AG, which was an "affiliated" broker, an aggregate brokerage commission of $23,081, for transactions involving purchases and sales of portfolio securities which represented 2.01% of the total brokerage commissions paid by the Health Care Fund and 1.61% of the aggregate dollar amount of transactions involving payment of commissions by the Health Care Fund.
For fiscal year ended October 31, 1998, the Telecommunications and Technology Fund paid to LGT Bank in Liechtenstein, AG, which was an "affiliated" broker, aggregate brokerage commissions of $22,584 for transactions involving purchases and sales of portfolio securities which represented 1.00% of the total brokerage commissions paid by the Fund and 0.67% of the aggregate dollar amount of transactions involving payment of commissions by the Fund.
ALLOCATION OF INITIAL PUBLIC OFFERING ("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.
Any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in syndicates, 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.
PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term profits, the securities held by that Theme Portfolio will be sold whenever management believes it is appropriate to do so, without regard to the length of time a particular security may have been held. Portfolio turnover rate is calculated by dividing the lesser of sales or purchases of portfolio securities by each Theme Portfolio's average month-end portfolio value, excluding short-term investments. The portfolio turnover rate will not be a limiting factor when management deems portfolio changes appropriate. Higher portfolio turnover involves correspondingly greater brokerage commissions and other transaction costs that the Theme Portfolio will bear directly, and may result in the realization of net capital gains that are taxable when distributed to each Fund's shareholders.
The portfolio turnover rates for Global Consumer Products and Services Portfolio, Financial Services Fund, Health Care Fund, Infrastructure Fund, Global Resources Portfolio and Telecommunications and Technology Fund the last two fiscal years were as follows:
YEAR ENDED YEAR ENDED
OCT. 31, OCT. 31,
2000 1999
---------- ----------
Global Consumer Products and Services Portfolio........ 259% 160%
Financial Services Fund................................ 41% 107%
Health Care Fund....................................... 242% 123%
Infrastructure Fund.................................... 66% 49%
Global Resources Portfolio............................. 105% 123%
Telecommunications and Technology Fund................. 111% 122%
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Financial Services Fund had lower portfolio turnover than in previous years because the Fund's portfolio managers believed that the Fund was well-positioned in the market and therefore the Fund bought and sold fewer securities.
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of the Funds. The Trust's Board of Trustees has approved all significant agreements between the Trust on the one side and persons or companies furnishing services to the Fund on the other, including the investment management and administration agreement with AIM, the agreements with AIM Distributors regarding distribution of the Fund's shares, the custody agreement and the transfer agency agreement. The day-to-day operations of the Fund are delegated to the officers of the Trust, subject always to the investment objectives and policies of the Fund and to the general supervision of the Trust's Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and AIM Management Group Inc. ("AIM Management"), the parent corporation of AIM.
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers and the Portfolios' Trustees and Executive Officers are listed below. Unless otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
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POSITIONS
HELD WITH PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
NAME, ADDRESS AND AGE REGISTRANT
------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (54) Trustee, Director, President and Chief Executive Officer,
Chairman and A I M Management Group, Inc.; Director and
President 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 Vice Chairman, AMVESCAP PLC.
------------------------------------------------------------------------------------------------------------
C. DEREK ANDERSON (59) Trustee Senior Managing Partner, Plantagenet Capital
456 Montgomery Street Management, LLC (an investment partnership); Chief
Suite 200 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); and Director,
PremiumWear, Inc. (formerly Munsingwear, Inc.)
(a casual apparel company), "R" Homes, Inc. and
various other privately owned companies.
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FRANK S. BAYLEY (61) Trustee Partner, law firm of Baker & McKenzie; Director
Two Embarcadero Center and Chairman, Stimson Marina, Inc., a subsidiary
Suite 2400 of C. D. Stimson Company (a private investment
San Francisco, CA 94111 company); and Trustee, The Badgley Funds.
------------------------------------------------------------------------------------------------------------
RUTH H. QUIGLEY (66) Trustee Private investor; and President, Quigley
1055 California Street Friedlander & Co., Inc. (a financial advisory
San Francisco, CA 94108 services firm) from 1984 to 1986.
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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.
------------------------------------------------------------------------------------------------------------
GARY T. CRUM (53) 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.
============================================================================================================
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============================================================================================================
POSITION
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
REGISTRANT
------------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN (46) 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; Vice
President and General Counsel, A I M Fund
Services, Inc.; and Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.
------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (42) Vice President Vice President and Fund Controller, A I M
and Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
============================================================================================================
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The Board of Trustees has a Nominating and Audit Committee, comprised of Miss Quigley (Chairman) and Messrs. Anderson and Bayley, which is responsible for nominating persons to serve as Directors, reviewing audits of the Trust and its funds and recommending firms to serve as independent auditors of the Trust. All of the Trust's Trustees also serve as directors or trustees of some or all of the other investment companies managed, administered or advised by AIM. All of the Trust's executive officers hold similar offices with some or all of the other investment companies managed, administered or advised by AIM.
Each Trustee who is not a director, officer or employee of AIM or any affiliated company is paid an annual retainer component plus a per-meeting fee component, and reimbursed travel and other expenses incurred in connection with attendance at such meetings. Other Trustees and Officers receive no compensation or expense reimbursement from the Trust. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not directors, officers or employees of any affiliated company, received total compensation of $64,278, $66,351 and $66,351, respectively, from the Trust for their services as Trustees. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not directors, officers or employees of any other affiliated company, received total compensation of $105,000, $107,000, and $107,000, respectively, from the investment companies managed or administered by AIM and for which he or she serves as a Director or Trustee. Fees and expenses disbursed to the Directors contained no accrued or payable pension or retirement benefits.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS AND THE PORTFOLIOS
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, was organized in 1976 and, together with its subsidiaries, manages or advises approximately 130 investment portfolios encompassing a broad range of investment objectives. AIM and its worldwide asset management affiliates provide investment management and/or administrative services to institutional, corporate and individual clients around the world.
AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM is also the sole shareholder of the Funds' principal underwriter, AIM Distributors.
AIM Management and AIM are indirect wholly owned subsidiaries of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an independent management group that has a significant presence in the institutional and retail segment of the
investment management industry in North America and Europe, and a growing presence in Asia. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management" herein.
In addition to the investment resources of their Houston office, AIM draws upon the expertise, personnel, data and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing the Funds and the Portfolios, the Advisor employs a team approach, taking advantage of its investment resources around the world.
AIM and 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) to file reports regarding such transactions; (c) to refrain from personally engaging in (i) short-term trading of a security (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security, (subject to a de minimus exemption), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to a de minimus exemption); and (d) abide by certain other provisions of the Code of Ethics. The de minimus 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 prohibits AIM employees from purchasing securities in initial public offerings. 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.
AIM serves as each Portfolio's investment manager and administrator under an investment management and administration contract between each Portfolio and AIM ("Portfolio Management Contract"). AIM serves as administrator to each Feeder Fund under an administration contract between the Trust and AIM ("Administration Contract"). The Administration Contract will not be deemed an advisory contract, as defined under the 1940 Act. As investment manager and administrator, AIM makes all investment decisions for each Portfolio and, as administrator, administers each Portfolio's and each Feeder Fund's affairs. Among other things, AIM furnishes the services and pays the compensation and travel expenses of persons who perform the executive, administrative, clerical and bookkeeping functions of each Portfolio and each Feeder Fund and provides suitable office space, necessary small office equipment and utilities.
The Portfolio Management Contract may be renewed with respect to a Portfolio for additional one-year terms, provided that any such renewal has been specifically approved at least annually by (i) the Portfolios' Board of Trustees or the vote of a majority of the Portfolio's outstanding voting securities (as defined in the 1940 Act) and (ii) a majority of Trustees who are not parties to the Portfolio Management Contract or "interested persons" of any such party (as defined in the 1940 Act), cast in person at a meeting called for the specific purpose of voting on such approval. The Portfolio Management Contract provides that with respect to each Portfolio, and the Administration Contract provides that with respect to each Feeder Fund, either the Trust, each Portfolio or AIM may terminate the Contracts without penalty upon sixty days' written notice to the other party. The Portfolio Management Contract terminates automatically in the event of its assignment (as defined in the 1940 Act).
AIM became investment manager and/or administrator to the Funds and the Portfolios effective June 1, 1998. Prior to that date, Chancellor LGT Asset Management, Inc. served as investment manager and administrator.
Each of the named Theme Portfolios paid the following investment management and administration fees net of any fee waivers for the period indicated or years ended October 31, 2000, 1999 and 1998:
2000* 1999 1998
---- ---- ----
Global Consumer Products and Services Portfolio $ 1,507,384 $ 1,323,258 $ 1,329,063
Global Financial Services Portfolio 654,466 520,478 726,002
Global Infrastructure Portfolio 248,577 280,012 418,974
Global Resources Portfolio 54,033 191,117 434,214
Health Care Fund 4,963,633 4,855,959 5,149,191
Telecommunications and Technology Fund 29,880,111 15,437,508 15,344,878
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For the period indicated or fiscal years ended October 31, 2000 and 1999, AIM waived the named Portfolios for their respective investment management and administration fees as follows:
2000* 1999
---- ----
Global Consumer Products and Services Portfolio $ -0- $ 16,422
Global Financial Services Portfolio -0- 144,306
Global Infrastructure Portfolio 94,079 123,428
Global Resources Portfolio 242,924 135,288
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* Reimbursement of fees with respect to Global Financial Services Portfolio and Global Infrastructure Portfolio was through September 10, 2000.
For the period indicated or fiscal years ended October 31, 2000, 1999 and 1998, each named Feeder Fund, Financial Services Fund and Infrastructure Fund paid AIM and the prior investment manager and administrator the following administrative services fees:
2000* 1999 1998
---- ---- ----
Consumer Products and Services Fund $524,730 $461,258 $457,314
Financial Services Fund 226,807 218,971 250,093
Infrastructure Fund 118,140 138,782 210,329
Resources Fund -0- 112,982 233,400
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* Financial Services Fund and Infrastructure Fund paid fees pursuant to the Administration Contract through September 10, 2000.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE FUND AND TELECOMMUNICATIONS AND TECHNOLOGY FUND
AIM serves as the investment manager and administrator to the Health Care Fund and Telecommunications and Technology Fund under an Investment Management and Administration Contract ("Management Contract") between the Trust and AIM. As investment manager and administrator, AIM makes all investment decisions for the Health Care Fund and Telecommunications and Technology Fund and administers the Health Care Fund's and Telecommunications and Technology Fund's affairs. Among other things, AIM furnishes the services and pays the compensation and travel expenses of persons who perform the executive, administrative, clerical and bookkeeping functions of the Trust and the Health Care Fund and Telecommunications and Technology Fund, and provides suitable office space, necessary small office equipment and utilities.
The Management Contract may be renewed for additional one-year terms with respect to the Health Care Fund and Telecommunications and Technology Fund, provided that any such renewal has been specifically approved at least annually by: (i) the Trust's Board of Trustees, or by the vote of a majority of the Health Care Fund and Telecommunications and Technology Fund's outstanding voting securities (as defined in the 1940 Act), and (ii) a majority of Trustees who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a meeting called for the specific purpose of voting on such approval. The Management Contract provides that with respect to the Health Care Fund and Telecommunications and Technology Fund either the Trust or AIM may terminate the Contract without penalty upon sixty days' written notice to the other party. The Management Contract will terminate automatically in the event of their assignment (as defined in the 1940 Act).
Under a master accounting services agreement AIM serves as Consumer Products and Services Fund, Health Care Fund, Resources Fund and Telecommunications and Technology Fund's pricing and accounting agent. For these services, the Funds pay AIM such fees as are determined in accordance with methodologies established, from time to time, by the Trust's Board of Trustees.
For the period indicated or fiscal years ended October 31, 2000, 1999 and 1998, each Fund paid AIM and the prior investment manager the following accounting services fees:
2000* 1999 1998
---- ---- ----
Consumer Products and Services Fund $ 50,000 $ 49,731 $ 47,155
Financial Services Fund 41,667 34,005 27,027
Health Care Fund 117,295 142,382 142,357
Infrastructure Fund 41,667 25,171 22,640
Resources Fund 50,000 24,486 24,981
Telecommunications and Technology Fund 202,100 320,819 437,627
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* Financial Services Fund and Infrastructure Fund paid fees pursuant to the Master Accounting Services Agreement through September 10, 2000.
INVESTMENT ADVISORY AND ADMINISTRATION SERVICES RELATING TO FINANCIAL SERVICES FUND AND INFRASTRUCTURE FUND
Prior to September 11, 2000, Financial Services Fund and Infrastructure Fund were structured as feeder funds and invested all of their assets in the Global Financial Services Portfolio and Global Infrastructure Portfolio, respectively. Under the master-feeder structure, Global Financial Services Portfolio and Global Infrastructure Portfolio paid investment management and administration fees and Financial Services Fund and Infrastructure Fund paid administration fees pursuant to the terms of the contracts discussed above with respect to the Portfolios and Feeder Funds. As a result of the restructuring of Financial Services Fund and Infrastructure Fund, the Trust, on behalf of Financial Services Fund and Infrastructure Fund, have entered into a Master Investment Advisory Agreement, dated September 11, 2000. The Master Investment Advisory Agreement will remain in effect until June 30, 2001, and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees and by the affirmative vote of a majority of the trustees who are not parties to the agreement or "interested persons" of any such party by votes cast in person at a meeting called for such purpose. The agreement provides that either party may terminate such agreement on 60 days' written notice without penalty. The agreement terminates automatically in the event of its assignment.
In addition, if Financial Services Fund or Infrastructure Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Master Investment 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 fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
Under the terms of the Master Investment 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.
Each named Fund paid to AIM the following management fees net of fee waivers for the period September 11, 2000 through October 31, 2000:
2000
----
Financial Services Fund......... $310,991
Infrastructure Fund............. 68,334
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For the period September 11, 2000 through October 31, 2000, AIM waived management fees for the named Funds as follows:
2000
----
Infrastructure Fund............. $ 22,228
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For these services, Financial Services Fund, Infrastructure Fund, Health Care Fund and Telecommunications and Technology Fund pay AIM investment management and administration fees, computed daily and paid monthly, based on its average daily net assets, at the annualized rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925% on the next $500 million and 0.90% on the amounts thereafter. For these services, the Portfolios pay AIM investment management and administration fees computed daily and paid monthly, based on average daily net assets, at the annualized rate of 0.725% on the first $500 million, 0.70% on the next $500 million, 0.675% on the next $500 million and 0.65% on amounts thereafter. The investment management and administration fees paid by the Funds are higher than those paid by most mutual funds. The Funds pay all expenses not assumed by AIM, AIM Distributors or other agents. AIM has undertaken to limit each Fund's expenses (exclusive of brokerage commissions, taxes, interest and extraordinary expenses) to the annual rate of 2.00%, 2.50% and 2.50% of the average daily net assets of each Fund's Class A, Class B and Class C shares, respectively, until June 30, 2001.
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.
AIM and the Trust, on behalf of Financial Services Fund and Infrastructure Fund have entered into a Master Administrative Services Agreement pursuant to which AIM is entitled to receive from the Funds payment for its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is paid for the services of the Trust's principal financial officer and related staff, and any expenses related to fund accounting services. The Master Administrative Services Agreement will continue
in effect 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 Funds (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.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares and is reimbursed under the Master Administrative Services Agreement for the services of a principal financial officer of the Trust and her staff. The Master Administrative Services Agreement between the Trust and AIM provides that AIM may perform or arrange for the provision of certain accounting, and other administrative services to each Fund which are not required to be performed by AIM under the Master Investment Advisory Agreement. The Master Administrative Services Agreement will continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the "dis-interested" trustees, by votes cast in person at a meeting called for such purpose.
The named Funds paid AIM the following amounts for administrative services costs for the period September 11, 2000 through October 31, 2000:
2000
----
AMOUNT PAID
-----------
Financial Services Fund............. $ 8,333
Infrastructure Fund................. 8,333
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For the fiscal year ended October 2000, 1999 and 1998, AIM did not reimburse expenses of any of the above named Funds.
In addition, the Transfer Agency and Service Agreement between the Trust and A I M Fund Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary of AIM, provides that AFS will perform certain shareholder services for the Funds for a fee per account serviced. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by AIM, AIM Distributors and other agents. These expenses include, in addition to the advisory, administration, distribution, transfer agency, pricing and accounting agency and brokerage fees discussed above, legal and audit expenses, custodian fees, trustees' fees, organizational fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses and expenses of reports and prospectuses sent to existing investors. The allocation of general Trust expenses and expenses shared among the Funds and other funds organized as series of the Trust are allocated on a basis deemed fair and equitable, which may be based on the relative net assets of the Funds or the nature of the service performed and relative applicability to the Funds. Expenditures, including costs incurred in connection with the purchase or sale of portfolio securities, which are capitalized in accordance with generally accepted accounting principles applicable to investment companies, are accounted for as capital items and not as expenses. The ratio of each Fund's expenses to its relative net assets can be expected to be higher than the expense ratios of funds investing solely in domestic securities, since the cost of maintaining the custody of foreign securities and the rate of investment management fees paid by the Funds or the Portfolios generally are higher than the comparable expenses of such other funds.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan provides that the Class A shares pay 0.50% per annum of the average daily net assets attributable to Class A shares as compensation to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. Under the Class A and C Plan, Class C shares of each Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class C shares. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares of each Fund and who provide continuing personal services to their customers who own Class A and C shares of the Fund. The service fees payable to selected institutions are calculated at the annual rate of 0.25% of the average daily net asset value of those Fund shares that are held in such institution's customers' accounts which were purchased on or after a prescribed date set forth in the Class A and C Plan. Activities appropriate for financing under the Class A and C Plan include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions including AIM Distributors, acting as principal, for providing continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 0.25% of the average daily net assets of the Fund attributable to the customers of such dealers or financial institutions 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 and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Class A and C Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Fund 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 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 (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class B shares. 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 Fund; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of the several special investment plans offered in connection with the purchase of a Fund's shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in a Fund's shares; and providing such other information and services as a Fund 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 the Funds; 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.
The Trust may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Funds
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 the 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 the 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 institution 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, each Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement generally will be calculated at the end of each payment period for each business day of a Fund during such period at the annual rate of 0.25% of the average daily net asset value of the 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 each Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Funds to no more than 0.25% per annum of the average daily net assets of the funds attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Fund and its respective classes.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A 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 Fund.
Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Fund on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the 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. Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one class over another.
For the fiscal year ended October 31, 2000, the various classes of the Funds paid to AIM Distributors the following amounts pursuant to the Plans:
% OF CLASS
AVERAGE DAILY
NET ASSETS
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Consumer Products and
Services Fund $ 431,352 $ 1,213,920 $ 18,599 .50% 1.00% 1.00%
Financial Services Fund 270,409 601,612 76,274 .50% 1.00% 1.00%
Health Care Fund 1,943,859 1,142,815 60,160 .50% 1.00% 1.00%
Infrastructure Fund 127,803 307,927 1,909 .50% 1.00% 1.00%
Resources Fund 69,673 163,259 2,711 .50% 1.00% 1.00%
Telecommunications and
Technology Fund $8,206,803 $15,064,977 $878,420 .50% 1.00% 1.00%
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An estimate by category of actual fees paid by each Fund under the Class A and C Plan during the fiscal year ended October 31, 2000, were allocated as follows:
CONSUMER
PRODUCTS TELECOMMUNICATIONS
AND FINANCIAL HEALTH AND
SERVICES SERVICES CARE INFRASTRUCTURE RESOURCES TECHNOLOGY
FUND FUND FUND FUND FUND FUND
-------- --------- ------ -------------- --------- -------------------
CLASS A
Advertising $ 30,607 $ 16,482 $ 133,399 $ 10,794 $ 4,763 $ 515,831
Printing and Mailing
prospectuses, semi-annual
reports and annual
reports (other than
to current shareholders) 3,363 2,077 16,151 1,237 471 64,216
Seminars 10,191 5,517 43,985 3,437 0 192,494
Compensation to Underwriters
to partially offset
other marketing expenses 0 0 0 0 0 0
Compensation to Dealers
including Finder's Fees 387,191 246,333 1,750,324 112,335 64,439 7,434,262
Compensation to Sales
Personnel 0 0 0 0 0 0
Annual Report Total $ 431,352 $ 270,409 $ 1,943,859 $ 127,803 $ 69,673 $ 8,206,803
|
An estimate by category of actual fees paid by each Fund under the Class B Plan during the fiscal year ended October 31, 2000, were allocated as follows:
CONSUMER
PRODUCTS TELECOMMUNICATIONS
AND FINANCIAL HEALTH AND
SERVICES SERVICES CARE INFRASTRUCTURE RESOURCES TECHNOLOGY
FUND FUND FUND FUND FUND FUND
-------- --------- ------ -------------- --------- -------------------
CLASS B
Advertising $ 9,263 $ 11,005 $ 13,792 $ 1,721 $ 852 $ 200,494
Printing and Mailing
prospectuses, semi-annual
reports and annual
reports (other than
to current shareholders) 1,106 1,234 1,521 170 84 24,991
Seminars 3,457 3,917 4,224 315 468 78,815
Compensation to Underwriters
to partially offset
other marketing expenses 910,440 451,209 857,111 230,946 122,444 11,298,732
Compensation to Dealers 289,654 134,247 266,167 74,775 39,411 3,461,945
Compensation to Sales
Personnel 0 0 0 0 0 0
Annual Report Total $ 1,213,920 $ 601,612 $ 1,142,815 $ 307,927 $ 163,259 $ 15,064,977
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An estimate by category of actual fees paid by each Fund under the Class A and C Plan during the year ended October 31, 2000 were allocated as follows:
CONSUMER
PRODUCTS TELECOMMUNICATIONS
AND FINANCIAL HEALTH AND
SERVICES SERVICES CARE INFRASTRUCTURE RESOURCES TECHNOLOGY
FUND FUND FUND FUND FUND FUND
-------- --------- ------ -------------- --------- -------------------
CLASS C
Advertising $ 0 $ 6,243 $ 3,474 $ 421 $ 602 $ 47,669
Printing and Mailing
prospectuses, semi-annual
reports and annual
reports (other than
to current shareholders) 0 694 344 0 0 6,446
Seminars 0 2,312 1,909 0 0 21,487
Compensation to Underwriters
to partially offset
other marketing expenses 12,720 53,180 31,497 1,263 1,805 469,263
Compensation to Dealers 5,879 13,845 22,935 225 304 333,555
Compensation to Sales
Personnel 0 0 0 0 0 0
Annual Report Total $ 18,599 $ 76,274 $ 60,159 $ 1,909 $ 2,711 $ 878,420
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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.
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 ("Qualified 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 class of each Fund and their respective shareholders.
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, a Fund will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans continue in effect from year to year, as long as such continuance is specifically approved at least annually by the Board of Trustees, including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified 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, it may be amended by the trustees, including a majority of the Qualified 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 Qualified Trustees is
committed to the discretion of the Qualified 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 under the Class A and C Plan, the Class B
shares of each Fund will no longer convert into Class A shares of the same Fund
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 Fund 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 Fund will
be exchanged or converted into such new class of shares no later than the date
the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of each Fund, as
compared to 1.00% of such assets of the Funds' Class B shares; (ii) the Class B
Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors or its predecessor, GT Global, Inc. unless there has
been a complete termination of the Class B Plan (as defined in such Plan) and
(iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer
or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of each Fund's shares is set forth in the Prospectuses under the heading "Purchasing Shares." The Trust has entered into a Master Distribution Agreement with AIM Distributors relating to the Class A shares and Class C shares of the Funds and a Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Funds. Such Master Distribution Agreements are hereinafter collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the expenses of printing from the final proof and distributing each Fund's 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 Fund), and any promotional or sales literature used by AIM Distributors or furnished by AIM Distributors to dealers in connection with the public offering of each Fund's 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 any Fund.
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. 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.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B shares of the 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 anticipates that it will require a number of years to recoup from Class B Plan payments the sales commissions
paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor.
The Trust (on behalf of any class of a Fund) 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 and its predecessor; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments by the Fund of asset based distribution fees and service fees to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of 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 Agreement relating to Class B shares in order to finance distribution expenditures in respect of Class B shares.
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by the Trust's distributors for the fiscal years ended October 31, 2000, 1999 and 1998:
2000 1999 1998
----------------------- ----------------------- -----------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGE RETAINED CHARGE RETAINED CHARGE RETAINED
---------- ---------- ---------- ---------- ---------- ----------
Consumer Products and
Services Fund $ 386,481 $ 70,319 $ 162,704 $ 27,585 $ 14,898 $ 13,455
Financial Services Fund $ 784,002 $ 133,801 $ 86,372 $ 16,231 $ 5,454 $ 5,299
Health Care Fund $ 554,506 $ 97,946 $ 276,656 $ 51,905 $ 8,771 $ 9,735
Infrastructure Fund $ 48,611 $ 9,122 $ 15,244 $ 3,065 $ 1,469 $ 1,423
Resources Fund $ 35,823 $ 4,984 $ 47,364 $ 10,174 $ 3,733 $ 3,635
Telecommunications and $9,076,900 $1,575,107 $1,167,764 $ 205,929 $ 36,792 $ 34,813
Technology Fund
|
Prior to June 1, 1998, GT Global Inc. was the Trust's distributor, and a total of $389,099 sales charges were paid in connection with the sale of Class A shares of each Fund and the amount retained by GT Global Inc. was $97,425.
The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C* shareholders and retained by the Trust's distributor for the fiscal years ended October 31, 2000, 1999 and 1998:
2000 1999 1998
---------- ---------- ----------
Consumer Products and Services Fund $ 1,969 $ 94 $ 353,264
Financial Services Fund $ 10,205 $ 1,268 $ 191,418
Health Care Fund $ 3,020 $ 3,480 $ 511,753
Infrastructure Fund $ 6,965 $ 0 $ 352,924
Resources Fund $ 516 $ 0 $ 357,602
Telecommunications and Technology Fund $ 99,517 $ 8,313 $2,950,006
|
* Class C shares of each fund commenced operations on 03/01/99.
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 Euroland Growth Fund, AIM European Development Fund, AIM European Small Company 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, AIM Weingarten Fund and AIM Worldwide Spectrum 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
|
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(1) 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
|
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(1) 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; or
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 charge Categories I and II unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of each Fund may be purchased appears in the Prospectus under the heading "Purchasing Shares-How to Purchase Shares."
The sales charge normally deducted on purchases of Class A shares of the Funds is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of such shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons who, because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., because of the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons 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 listed under the caption "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 AIM Funds is set forth in the Prospectus under the heading "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in each Fund's Prospectus under the caption "Redeeming Shares." Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Fund telephone: or (800) 347-4246 and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value of the 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 CDSC) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction. AIM intends to redeem all shares of the Funds in cash
The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will 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
The net asset value per share of each Fund is normally determined once daily as of 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 a Fund share is determined as of the close of the NYSE on such day. Net asset value per share is determined by dividing the value of each Theme Portfolio's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of each Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each equity security held by a Theme Portfolio 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 last available bid. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. 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 mean between the closing bid and asked prices on that day. Debt securities 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, 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. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE.
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 of the Fund and the Portfolio.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gain distributions are automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in "Shareholder Information-Purchasing Shares-Special Plans-Automatic Dividend Investment." If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes. To continue to qualify for treatment as a regulated investment company ("RIC") under the Code, each Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain and net gains from certain foreign currency transactions) ("Distribution Requirement") and must meet several additional requirements. With respect to each Fund, these requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in securities or those currencies ("Income Requirement"); and (2) the Diversification Requirements. Each Feeder Fund, as an investor in its corresponding Portfolio, is deemed to own a proportionate share of the Portfolio's assets, and to earn a proportionate share of the Portfolio's income, for purposes of determining whether the Fund satisfies the requirements described above to qualify as a RIC.
By qualifying for treatment as a RIC, each Fund (but not its shareholders) will be relieved of federal income tax on the part of its investment company taxable income and net capital gain (the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. If a Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed as an ordinary corporation on the full amount of its taxable income for that year without being able to deduct the distributions it makes to its shareholders and (2) the shareholders would treat all those distributions, including distributions of net capital gain, as dividends (that is, ordinary income) to the extent of the Fund's earnings and profits. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for RIC treatment.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the extent it fails to distribute by the end of any calendar year substantially all of its ordinary income for that year and capital gain net income for the one-year period ending on October 31 of that year, plus certain other amounts.
See "Taxation of Certain Investment Activities" below for a discussion of the tax consequences to each Feeder Fund of hedging transactions engaged in, and investments in passive foreign investment companies ("PFICs") and other foreign securities by its corresponding Portfolio and to the Health Care Fund and Telecommunications and Technology Fund of those transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
The Portfolios and their Relationship to the Feeder Funds. Each Portfolio is treated as a separate partnership for federal income tax purposes and is not a "publicly traded partnership." As a result, each Portfolio is not subject to federal income tax; instead, each Feeder Fund, as an investor in its corresponding Portfolio, is required to take into account in determining its federal income tax liability its share of the Portfolio's income, gains, losses, deductions and credits, without regard to whether it has received any cash distributions from the Portfolio. Each Portfolio also is not subject to Delaware income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share of its corresponding Portfolio's assets, and to earn a proportionate share of its corresponding Portfolio's income, for purposes of determining whether the Fund satisfies the requirements to qualify as a RIC, each Portfolio
intends to conduct its operations so that its corresponding Fund will be able to continue to satisfy all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise) will not
result in the Fund's recognition of any gain or loss for federal income tax
purposes, except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio, and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. Each Feeder Fund's basis for its interest in
its corresponding Portfolio generally will equal the amount of cash and the
basis of any property the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (a) the amount of
cash and the basis of any property the Portfolio distributes to the Fund and (b)
the Fund's share of the Portfolio's losses.
EXCHANGE AND REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of a Fund's shares ("original shares") within
90 days after purchase thereof and subsequently reacquires shares of that Fund
or acquires shares of another AIM Fund on which a sales charge normally is
imposed ("replacement shares"), without paying the sales charge (or paying a
reduced charge) due to an exchange privilege or a reinstatement privilege, then
(1) any gain on the disposition of the original shares will be increased, or the
loss thereon decreased, by the amount of the sales charge paid when those shares
were acquired and (2) that amount will increase the adjusted basis of the
replacement shares that were subsequently acquired. In addition, if a
shareholder purchases shares of a Fund (whether pursuant to the reinstatement
privilege or otherwise) within 30 days before or after redeeming at a loss other
shares of that Fund (regardless of class), all or part of that loss will not be
deductible and instead will increase the basis of the newly purchased shares.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
Foreign Taxes. Dividends and interest received by a Theme Portfolio, and gains realized thereby, may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions ("foreign taxes") that would reduce the yield and/or total return on its securities. Tax conventions between certain countries and the United States may reduce or eliminate foreign taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors. If more than 50% of the value of a Fund's total assets (taking into account, in the case of a Feeder Fund, its proportionate share of its corresponding Portfolio's assets) at the close of its taxable year consists of securities of foreign corporations, the Fund will be eligible to, and may, file an election with the Internal Revenue Service that will enable its shareholders, in effect, to receive the benefit of the foreign tax credit with respect to any foreign taxes paid by it (taking into account, in the case of a Feeder Fund, its proportionate share of any foreign taxes paid by its corresponding Portfolio) (a "Fund's foreign taxes"). Pursuant to the election, a Fund would treat those taxes as dividends paid to its shareholders and each shareholder would be required to (1) include in gross income, and treat as paid by him, his share of the Fund's foreign taxes, (2) treat his share of those taxes and of any dividend paid by the Fund that represents its income from foreign and U.S. possessions sources (taking into account, in the case of a Feeder Fund, its proportionate share of its corresponding Portfolio's income from those sources) as his own income from those sources and (3) either deduct the taxes deemed paid by him in computing his taxable income or, alternatively, use the foregoing information in calculating the foreign tax credit against his federal income tax. Each Fund will report to its shareholders shortly after each taxable year their respective shares of the Fund's foreign taxes and income (taking into account, in the case of a Feeder Fund, its proportionate share of its corresponding Portfolio's income) from sources within foreign countries and U.S. possessions if it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax Act"), individuals who have no more than $300 ($600 for married persons filing jointly) of creditable foreign taxes included on Form 1099 and all of whose foreign source of income is "qualified passive income" may
elect each year to be exempt from the foreign tax credit limitation and will be able to claim a foreign tax credit without having to file the Form 1116 that otherwise is required.
Passive Foreign Investment Companies. Each Theme Portfolio may invest in the stock of passive foreign investment companies ("PFICs"). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, a Fund will be subject to federal income tax on a part (or, in the case of a Feeder Fund, its proportionate share of a part) of any "excess distribution" received by it (or, in the case of a Feeder Fund, by its corresponding Portfolio) on the stock of a PFIC or of any gain on the Fund's (or, in the case of a Feeder Fund, its corresponding Portfolio's) disposition of that stock (collectively "PFIC income"), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a "qualified electing fund" ("QEF"), then in lieu of the foregoing tax and interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) would be required to include in income each year its pro rata share (taking into account, in the case of a Feeder Fund, its proportionate share of its corresponding Portfolio's pro rata share) of the QEF's ordinary earnings and net capital gain which most likely would have to be distributed by the Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) to satisfy the Distribution Requirement and avoid imposition of the Excise Tax--even if those earnings and gain were not received thereby from the QEF. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.
A holder of stock in any PFIC may elect to include in ordinary income for each taxable year beginning after 1997 the excess, if any, of the fair market value of the stock over the adjusted basis therein as of the end of that year. Pursuant to the election, a deduction (as an ordinary, not capital, loss) also will be allowed for the excess, if any, of the holder's adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock included in income for prior taxable years. The adjusted basis in each PFIC's stock subject to the election will be adjusted to reflect the amounts of income included and deductions taken thereunder. Regulations proposed in 1992 provided a similar election with respect to the stock of certain PFICs.
Options, Futures and Foreign Currency Transactions. The Theme Portfolios' use of hedging transactions, such as selling (writing) and purchasing options and futures and entering into forward contracts, involves complex rules that will determine, for federal income tax purposes, the amount, character and timing of recognition of the gains and losses a Theme Portfolio realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures and forward contracts derived by a Theme Portfolio with respect to its business of investing in securities or foreign currencies, will qualify as permissible income under the Income Requirement for that Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund).
Futures and forward contracts that are subject to section 1256 of the Code (other than those that are part of a "mixed straddle") ("Section 1256 Contracts") and that are held by a Theme Portfolio at the end of its taxable year generally will be deemed to have been sold at that time at market value for federal income tax purposes. Sixty percent of any net gain or loss recognized on these deemed sales, and 60% of any net gain or loss realized from any actual sales of Section 1256 Contracts, will be treated as long-term capital gain or loss, and the balance will be treated as short-term capital gain or loss. That 60% portion will qualify for the reduced maximum tax rates on noncorporate taxpayers' net capital gain--20% (10% for non-corporate taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets held for more than 12 months.
Section 988 of the Code also may apply to gains and losses from transactions in foreign currencies, foreign-currency-denominated debt securities and options, futures and forward contracts on foreign currencies ("Section 988" gains and losses). Each Section 988 gain or loss generally is computed separately and treated as ordinary income or loss. In the case of overlap between Sections 1256 and 988, special provisions determine the character and timing of any income, gain or loss. Each Theme Portfolio attempts to monitor section 988 transactions to minimize any adverse tax impact.
If a Theme Portfolio has an "appreciated financial position"--generally, an interest (including an interest through an option, futures or forward contract or short sale) with respect to any stock, debt instrument (other than "straight debt") or partnership interest the fair market value of which exceeds its adjusted basis--and enters into a "constructive sale" of the same or substantially identical property, the Theme Portfolio will be treated as having made an actual sale thereof, with the result that gain will be recognized at that time unless the closed transaction exception applies. A constructive sale generally consists of a short sale, an offsetting notional principal contract or futures or forward contract entered into by a Theme Portfolio or a related person with respect to the same or substantially identical property. In addition, if the appreciated financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property will be deemed a constructive sale.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to shareholders of record as of a date in, October, November or December of any year will be deemed to have been paid by the Fund and received by the shareholders on December 31 of that year if the distributions are paid by the Fund during the following January. Accordingly, those distributions will be taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income (whether paid in cash or reinvested in additional shares) may be eligible for the dividends-received deduction allowed to corporations. The eligible portion may not exceed the aggregate dividends received by that Fund from U.S. corporations. However, dividends received by a corporate shareholder and deducted by it pursuant to the dividends-received deduction are subject indirectly to the federal alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Investors also should be aware that if shares are purchased shortly before the record date for any dividend or other distribution, the shareholder will pay full price for the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a nonresident alien individual, nonresident alien fiduciary of a trust or estate, foreign corporation or foreign partnership ("foreign shareholder") generally will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will not apply, however, to a dividend paid by a Fund to a foreign shareholder that is "effectively connected with the conduct of a U.S. trade or business," in which case the reporting and withholding requirements applicable to domestic shareholders will apply. A distribution of net capital gain by a Fund to a foreign shareholder generally will be subject to U.S. federal income tax (at the rates applicable to domestic persons) only if the distribution is "effectively connected" or the foreign shareholder is treated as a resident alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax considerations affecting the Funds, their shareholders and the Portfolios at the date of this Statement of Additional Information. Investors are urged to consult their own tax advisors for more detailed information and for information regarding any foreign, state and local taxes applicable to distributions received from a Fund.
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.
SHARE CERTIFICATES. AIM Funds will issue share certificates upon written request to AFS. Otherwise, shares are held on the shareholder's behalf and recorded on the Fund books. AIM Funds will not issue certificates for shares held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Share 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 EXCHANGE. 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 transactions. 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 transaction. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone 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 mailing 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
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.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by the Funds and performs certain other ministerial duties. AIM Fund Services, Inc., a wholly owned subsidiary of AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, acts as transfer and dividend disbursing agent for the Funds.
These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets. The Funds pay the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time.
INDEPENDENT ACCOUNTANTS
The Trust's and Theme Portfolios' independent accountants are PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110 conducts annual audits of the Portfolios' and the Funds' financial statements, assists in the preparation of each Portfolio's and each Fund's federal and state income tax returns and consults with the Trust and Global Investment Portfolio as to matters of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Trust included in this Statement of Additional Information have been examined by PricewaterhouseCoopers LLP, as stated in their opinion appearing herein, and are included in reliance upon such opinion given upon the authority of that firm as experts in accounting and auditing.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and the Funds.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations extended to shareholders of private, for-profit corporations. There is a remote possibility, however, that under certain circumstances shareholders of the Trust may be held personally liable for the Trust's 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 a trustee. If a shareholder is held personally liable for the obligations of the Trust, the Trust Agreement provides that the shareholder shall be entitled out of the assets belonging to the applicable Fund (or allocable to the applicable Class), to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring financial loss on account of such liability is limited to circumstances in which the Trust itself would be unable to meet its obligations and where the other party was held not to be bound by the disclaimer.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of each Fund's equity securities as of February 5, 2001, and the percentage of the outstanding shares held by such holders are set forth below:
PERCENT PERCENT
OWNED OF OWNED OF
NAME AND ADDRESS RECORD RECORD AND
FUND OF RECORD OWNER ONLY* BENEFICIALLY
---- ---------------- -------- ------------
Consumer Products and Services Fund -
Class B Merrill Lynch Pierce Fenner & Smith 6.90% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Consumer Products and Services Fund -
Class C Merrill Lynch Pierce Fenner & Smith 9.99% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Financial Services Fund -
Class A Merrill Lynch Pierce Fenner & Smith 15.75% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Financial Services Fund -
Class B Merrill Lynch Pierce Fenner & Smith 14.88% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Financial Services Fund -
Class C Merrill Lynch Pierce Fenner & Smith 19.64% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Health Care Fund -
Class A Merrill Lynch Pierce Fenner & Smith 11.93% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Health Care Fund -
Class B Merrill Lynch Pierce Fenner & Smith 6.87% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
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PERCENT PERCENT
OWNED OF OWNED OF
NAME AND ADDRESS RECORD RECORD AND
FUND OF RECORD OWNER ONLY* BENEFICIALLY
---- ---------------- -------- ------------
Health Care Fund -
Class C Merrill Lynch Pierce Fenner & Smith 6.22% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Infrastructure Fund -
Class B Merrill Lynch Pierce Fenner & Smith 7.03% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Infrastructure Fund -
Class C ITC CUST Rollover IRA FBO -0- 15.20%
David D. Weitzel
10012-63 Ave.
Pleasant Prairie, WI 53158-0000
Donaldson Lufkin Jenrette 5.88% -0-
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Resources Fund -
Class A Merrill Lynch Pierce Fenner & Smith 6.15% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246
Resources Fund -
Class B Merrill Lynch Pierce Fenner & Smith 7.51% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Resources Fund -
Class C Merrill Lynch Pierce Fenner & Smith 16.84% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
NFSC/FMTC IRA FBO -0- 16.76%
Victor Gregory
4707 Albert Road
Bensalem, PA 19020
Kathy L. Keating -0- 10.40%
16 Morgan Way
Latham, NY 12110-0000
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PERCENT PERCENT
OWNED OF OWNED OF
NAME AND ADDRESS RECORD RECORD AND
FUND OF RECORD OWNER ONLY* BENEFICIALLY
---- ---------------- -------- ------------
Denise A. Caizzo -0- 9.46%
193 Briarcrest VLG
Norwalk, OH 44857-8854
Prudential Securities Inc. FBO -0- 9.29%
John T. Suter Successor TTEE
Lulu H. Bowman Trust
UA DTD 08/12/82
P.O. Box 3245
Hutchinson, KS 67504-3245
ITC CUST IRA FBO -0- 5.12%
Robert J. Schreiner
68 Hiawatha Drive
Guilderland, NY 12084-0000
Telecommunications and Technology Fund -
Class A Merrill Lynch Pierce Fenner & Smith 9.99% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Telecommunications and Technology Fund -
Class B Merrill Lynch Pierce Fenner & Smith 6.85% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
Telecommunications and Technology Fund -
Class C Merrill Lynch Pierce Fenner & Smith 10.14% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
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As of February 5, 2001, the trustees and officers of the Trust owned beneficially less than 1% of the outstanding shares of each class of Consumer Products and Services Fund, Financial Services Fund, Health Care Fund, Infrastructure Fund, Resources Fund and Telecommunications and Technology Fund.
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n P(1+T) = ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the
1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the 1, 5, or 10 year periods (or
fractional portion of such period).
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The standardized returns for the Class A shares for each of the named Funds, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions), were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 0.14% 20.55% N/A 22.38%
Financial Services Fund............................. 23.87% 22.07% N/A 17.57%
Health Care Fund.................................... 31.89% 18.80% 16.20% 15.51%
Infrastructure Fund................................. 19.77% 12.73% N/A 10.77%
Resources Fund...................................... (4.01)% 1.87% N/A 1.50%
Telecommunications and Technology Fund.............. 21.45% 19.95% N/A 16.71%
|
* The inception dates for Class A shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Financial Services Fund
05/31/94, Health Care Fund 08/07/89, Infrastructure Fund 05/31/94,
Resources Fund 05/31/94 and Telecommunications and Technology Fund
01/27/92.
The standardized returns for the Class B shares for each of the named Funds, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which deduct the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and include reinvestment of all dividends and distributions), were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 0.25% 20.93% N/A 22.73%
Financial Services Fund............................. 24.40% 22.49% N/A 17.88%
Health Care Fund.................................... 32.78% 19.18% N/A 18.46%
Infrastructure Fund................................. 20.09% 3.01% N/A 11.06%
Resources Fund...................................... (4.66)% 2.01% N/A 1.78%
Telecommunications and Technology Fund.............. 21.87% 20.33% N/A 17.88%
|
* The inception dates for Class B shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Financial Services Fund
05/31/94, Health Care Fund 04/01/93, Infrastructure Fund 05/31/94,
Resources Fund 05/31/94 and Telecommunications and Technology Fund
04/01/93.
The standardized returns for the Class C shares for each of the named Funds, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions), were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 3.78% N/A N/A 15.43%
Financial Services Fund............................. 28.40% N/A N/A 27.42%
Health Care Fund.................................... 36.77% N/A N/A 22.65%
Infrastructure Fund................................. 23.94% N/A N/A 23.57%
Resources Fund...................................... (0.66)% N/A N/A 10.88%
Telecommunications and Technology Fund.............. 25.83% N/A N/A 36.33%
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* The inception date for Class C shares of Consumer Products and Services Fund, Financial Services Fund, Health Care Fund, Infrastructure Fund, Resources Fund and Telecommunications and Technology Fund is 03/01/99.
Standard total return quotes may be accompanied by total return figures calculated by alternative methods. For example, average annual total return may be calculated without assuming payment of the full sales load according to the following formula:
n P(1+U) = ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the stated period.
|
The non-standardized returns for Class A shares for each of the named Funds (not taking the sales charges into account and including reinvestment of all dividends and distributions), stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 5.15% 21.73% N/A 23.41%
Financial Services Fund............................. 30.06% 23.26% N/A 18.46%
Health Care Fund.................................... 38.49% 19.96% 16.77% 16.01%
Telecommunications and Technology Fund.............. 27.52% 21.13% N/A 17.36%
|
* The inception dates for Class A shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Financial Services Fund
05/31/94, Health Care Fund 08/07/89 and Telecommunications and
Technology Fund 01/27/92.
The non-standardized returns for Class B shares for each of the named Funds (not taking the sales charges into account), stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 4.57% 21.12% N/A 22.79%
Health Care Fund.................................... 37.78% 19.38% N/A 18.46%
Telecommunications and Technology Fund.............. 26.87% 20.52% N/A 17.88%
|
* The inception dates for Class B shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Health Care Fund 04/01/93
and Telecommunications and Technology Fund 04/01/93.
The non-standardized returns for Class C shares for each of the named Funds, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 4.64% N/A N/A 15.43%
Health Care Fund.................................... 37.77% N/A N/A 22.65%
Telecommunications and Technology Fund.............. 26.83% N/A N/A 36.33%
|
* The inception date for Class C shares for Consumer Products and Services Fund, Health Care Fund and Telecommunications and Technology Fund is 03/01/99.
Cumulative total return across a stated period may be calculated as follows:
P(1+V)(n) = ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the end of the stated period.
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The non-standardized returns (not taking sales charges into account) for the Class A shares for each of the named Funds, stated as cumulative total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 5.15% 167.32% N/A 241.23%
Financial Services Fund............................. 30.06% 184.50% N/A 196.69%
Health Care Fund.................................... 38.49% 148.45% 371.21% 430.26%
Infrastructure Fund................................. 25.71% 91.10% N/A 102.47%
Resources Fund...................................... 0.74% 15.15% N/A 15.55%
Telecommunications and Technology Fund.............. 27.52% 160.72% N/A 306.42%
|
* The inception dates for Class A shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Financial Services Fund
05/31/94, Health Care Fund 08/07/89, Infrastructure Fund 05/31/94,
Resources Fund 05/31/94 and Telecommunications and Technology Fund
01/27/92.
The non-standardized returns (not taking sales charges into account) for the Class B shares for each of the named Funds, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 4.57% 160.66% N/A 231.36%
Financial Services Fund............................. 29.40% 177.75% N/A 187.47%
Health Care Fund.................................... 37.78% 142.46% N/A 261.40%
Infrastructure Fund................................. 25.09% 86.33% N/A 96.11%
Resources Fund...................................... 0.34% 12.47% N/A 12.01%
Telecommunications and Technology Fund.............. 26.87% 154.28% N/A 248.15%
|
* The inception dates for Class B shares of the Funds are as follows:
Consumer Products and Services Fund 12/30/94, Financial Services Fund
05/31/94, Health Care Fund 04/01/93, Infrastructure Fund 05/31/94,
Resources Fund 05/31/94 and Telecommunications and Technology Fund
04/01/93.
The non-standardized returns (not taking sales charges into account) for the Class C shares for each of the named Funds, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................. 4.64% N/A N/A 27.06%
Financial Services Fund............................. 29.40% N/A N/A 49.82%
Health Care Fund.................................... 37.77% N/A N/A 40.59%
Infrastructure Fund................................. 24.94% N/A N/A 42.36%
Resources Fund...................................... 0.34% N/A N/A 18.80%
Telecommunications and Technology Fund.............. 26.83% N/A N/A 67.72%
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* The inception date for Class C shares of Consumer Products and Services Fund, Financial Services Fund, Health Care Fund, Infrastructure Fund, Resources Fund and Telecommunications and Technology Fund is 03/01/99.
The standardized returns (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions) for the Class A shares for each of the named Funds, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Financial Services Fund............................. 23.87% 171.08% N/A 182.60%
Health Care Fund.................................... 31.89% 136.63% 348.83% 405.06%
Infrastructure Fund................................. 19.77% 82.08% N/A 92.86%
Resources Fund...................................... (4.01)% 9.69% N/A 10.06%
Telecommunications and Technology Fund.............. 21.45% 148.31% N/A 287.12%
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* The inception dates for Class A shares of each Fund are as follows:
Financial Services Fund 05/31/94, Health Care Fund 08/07/89,
Infrastructure Fund 05/31/94, Resources Fund 05/31/94, and
Telecommunications and Technology Fund 01/27/92.
The standardized returns (which deduct the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and include reinvestment of all dividends and distributions) for the Class B shares for each of the named Funds, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000 were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Financial Services Fund............................. 24.40% 175.75% N/A 187.47%
Health Care Fund.................................... 32.78% 140.46% N/A 261.40%
Infrastructure Fund................................. 20.09% 84.33% N/A 96.11%
Resources Fund...................................... (4.66)% 10.47% N/A 12.01%
Telecommunications and Technology Fund.............. 21.87% 152.28% N/A 248.15%
|
* The inception dates for Class B shares of each Fund are as follows:
Financial Services Fund 05/31/94, Health Care Fund 04/01/93,
Infrastructure Fund 05/31/94, Resources Fund 05/31/94, and
Telecommunications and Technology Fund 04/01/93.
The standardized returns for the Class C shares for each of the named Funds, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Financial Services Fund............................. 28.40% N/A N/A 49.82%
Health Care Fund.................................... 36.77% N/A N/A 40.59%
Infrastructure Fund................................. 23.94% N/A N/A 42.36%
Resources Fund...................................... (0.66)% N/A N/A 18.80%
Telecommunications and Technology Fund.............. 25.83% N/A N/A 67.72%
|
* The inception date for Class C shares of Financial Services Fund, Health Care Fund, Infrastructure Fund, Resources Fund and Telecommunications and Technology Fund is 03/01/99.
The non-standardized returns for the Class A shares of the Consumer Products and Services Fund (not taking sales charges into account), stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................... 5.15% 167.32% N/A 241.33%
|
* The inception date for Class A shares of Consumer Products and Services Fund is 12/30/94.
The non-standardized returns for the Class B shares of Consumer Products and Services Fund (not taking sales charges into account) stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Consumer Products and Services Fund................... 4.57% 160.66% N/A 231.36%
|
* The inception date for Class B shares of Consumer Products and Services Fund is 12/30/94.
Each Fund's investment results will vary from time to time depending upon market conditions, the composition of each Fund's portfolio and operating expenses of each Fund, so that current or past yield or total return should not be considered representative of what an investment in each Fund may earn in any future period. These factors and possible differences in the methods used in calculating investment results should be considered when comparing each Fund's investment results with those published for other investment companies and other investment vehicles. Each Fund's results also should be considered relative to the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
All advertisements of a Fund will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of the Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding the Fund's performance is contained in the Fund's annual report to shareholders, which is available upon request and without charge.
A Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. 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 reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period.
A Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any 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 results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund.
A practice of waiving or reducing fees or reimbursing 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 results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund.
Some or all of the Theme Portfolios may participate in the IPO market, and a significant portion of those Theme Portfolios' returns may be attributable to their investment in IPOs, which have a magnified impact due to the Theme Portfolios' small asset bases. There is no guarantee that as the Theme Portfolios' assets grow, they will continue to invest to the same degree in IPOs or that they will experience substantially similar performance.
Total return and yield figures for the Funds are neither fixed nor guaranteed, and no Fund's principal is insured. Performance quotations reflect historical information and should not be considered representative of a Fund's performance for any period in the future. Performance is a function of a number of factors which can be expected to fluctuate. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. Such publications or media entities may include the following, among others:
Advertising Age Fortune New York Times Barron's Global Finance Pension World Best's Review Hartford Courant Inc. Pensions & Investments Broker World Institutional Investor Personal Investor Business Week Insurance Forum Financial Services Week Changing Times Insurance Week Philadelphia Inquirer Christian Science Monitor Investor's Daily Smart Money Consumer Reports Journal of the American USA Today Economist Society of CLU & ChFC U.S. News & World Report EuroMoney Kiplinger Letter Wall Street Journal FACS of the Week Money Washington Post Financial Planning Mutual Fund Forecaster CNN Financial Product News Mutual Fund Magazine CNBC Financial World Nation's Business PBS Forbes |
The Funds and AIM Distributors may from time to time, in advertisements, sales literature and reports furnished to present or prospective shareholders, compare each Fund with the following, or compare each Fund's performance to performance data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index Moody's Investors Service (publications) Bear Stearns Foreign Bond Index Morgan Stanley Capital International All Country Bond Buyer Index (AC) World Index CDA/Wiesenberger Investment Company Services Morgan Stanley Capital International Emerging (data and mutual fund rankings Latin America Index and comparisons) Morgan Stanley Capital International Emerging CNBC/Financial News Composite Index Markets Latin America Free Index COFI Morningstar, Inc. (data and mutual fund rankings Consumer Price Index and comparisons) Datastream NASDAQ Donoghue's Organization for Economic Cooperation and Dow Jones Industrial Average Development (publications) |
EAFE Index Salomon Brothers Global Telecommunications First Boston High Yield Index Index Fitch IBCA, Inc. (publications) Salomon Brothers World Government Bond Ibbotson Associates International Bond Index Index--Non-U.S. International Bank for Reconstruction and Salomon Brothers World Government Bond Index Development (publications) Standard & Poor's (publications) Index Standard & Poor's 500 Composite Stock Price International Finance Corporation Emerging Stangar Markets Database Wilshire Associates International Financial Statistics World Bank (publications and reports) Lehman Bond Indices The World Bank Publication of Trends in Lipper Inc. (data and mutual fund rankings Developing Countries and comparisons) Worldscope Micropal, Inc. (data and mutual fund rankings and comparisons) |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and diversification is based on sources believed to be reliable but may be subject to revision and has not been independently verified by the Funds or AIM Distributors. Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for the Funds may also include reference to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose (i) the largest holdings in the Fund's portfolio, (ii) certain selling group members and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the Portfolio's area of concentration without national or regional restrictions. The ability of each Theme Portfolio to invest worldwide may allow the portfolio managers to select industries in different economic cycles and varying stages of development, though there is no assurance that the managers will be successful in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of the Portfolio. AIM Distributors believes that there are certain social, political and economic trends that may benefit one or more industries within a Theme Portfolio's area of concentration. Of course, there is no assurance that any of the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and AIM Distributors will quote information including data regarding:
o Trading volume, number of listed companies and the largest companies of the global health care industry
o Expenditures by various countries, regions and age groups on health care
o Population of countries, regions and age groups
o Natality and mortality rates in various regions, countries and age groups
o Life expectancy rates in various regions, countries and age groups
o New health care products and products seeking approval
o Health maintenance organizations (HMOs) and their enrollment growth
o Studies from, but not limited to, the American Medical Association showing the effectiveness of using drugs to cure illness
o Medical technology and devices in use or in development
o Regulatory environment of health care industries
o Consolidation in the health care industries
The information quoted has not been independently verified by a Fund or AIM Distributors and will be based on data provided that is believed to be reliable and accurate from sources including the following:
o Research firms such as Mehta and Isaly which publishes Pharmaceutical Portfolio Recommendations
o OECD and its publications such as the OECD Health Data, as supplemented annually
o Morgan Stanley Capital International stock market industry indices such as Health & Personal Care
o The World Bank and its publications such as The World Development Report, as supplemented annually
o IFC and publications such as the Emerging Stock Markets Factbook
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRIES
The Fund and the Advisor believe that certain market and demographic factors merit an investor's consideration when making a health care investment. Worldwide standards of living and life expectancy have increased at a substantial rate. The Advisor expects this growth, which works to the general benefit of the global health care industry, to continue at a roughly comparable rate in the future, although no assurances can be given in this regard. Moreover, according to the Advisor, the health care industry historically has
proven to be a relatively non-cyclical industry that continues to provide goods and services to the public in periods of economic weakness as well as economic strength.
The Advisor believes that the anticipated increase in the world's elderly population could increase demand for health care products and services. For example, according to data compiled by the Advisor, in Japan the number of people age 65 and older is expected to grow over 100% by the year 2025; in Germany, France and the U.S., the same age group should grow 40%. Similarly, the U.S. Census Bureau predicts the number of Americans 85 and older to double in the next 30 years. From time to time, the Fund and AIM Distributors will quote information including, but not limited to, international data regarding populations, birth rates, mortality rates, life expectancy, health care expenditures, and gross domestic product vs. life expectancy. The information quoted has not been independently verified by the Fund or AIM Distributors and will be based on data that is believed to be reliable and accurate.
TELECOMMUNICATIONS AND TECHNOLOGY FUND
From time to time the Fund and AIM Distributors will quote information including data regarding:
o Increased usage of new technologies such as, but not limited to, cellular and wireless communications in emerging and established countries around the world
o Supply and demand of telephone equipment and services
o Regulatory environment of telecommunications industries
o Revenue, price and usage of telecommunications products and services
o Privatization and/or deregulation of telecommunications companies
The information quoted has not been independently verified by the Fund or AIM Distributors and will be based on data provided that is believed to be reliable and accurate from sources including the following:
o Salomon Brothers World Equity Telecommunications Index, which includes stock market data about the telecommunications industry in established and developing markets
o OECD and other publications from its subsidiaries such as the International Telecommunications Union
o Morgan Stanley Capital International stock market industry indices such as Telecommunications, Broadcasting & Publishing and Data Processing & Reproduction
o International Technology Consultants, a Washington D.C. based firm which publishes reports such as Eastern European & Soviet Telecom Report and Latin American Telecom Report
o Telegeography and other publications
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone industry. The divestiture of the Bell System from American Telephone and Telegraph has produced competing companies in the United States. Such U.S. market-driven competition has, for example, led to lower costs for consumers which in turn led to greater consumer usage and to higher industrywide revenues. The Advisor expects this scenario to continue to benefit such companies in the U.S. and to similarly to be realized by the established
telecommunications companies in established economies, although no assurances can be made in this regard.
CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and AIM Distributors will quote information including data regarding:
o Trading volume, number of listed companies and the largest companies located around the world in the consumer products and services industries
o Expenditures, demand and consumption by various countries, regions, income classes and age groups of consumer products and services
o Population of countries, regions and age groups
o Life expectancy rates in various regions, countries and age groups
o New consumer products and services in the development or manufacturing stages
o Income of various regions, countries and age groups
o Sales and sales growth of consumer products and services companies in their own country and abroad
o Sales, supply and demand of consumer products and services
o Parent Companies and the products and services they distribute
o Regulatory environment of consumer products industries
The information quoted will not be independently verified by the Fund or AIM Distributors and will be based on data provided that is believed to be reliable and accurate from sources including the following:
o Consumer and trade groups
o Fortune magazine and other periodicals
o The World Bank and its publications
o The International Monetary Fund (IMF) and its publications
o IFC and its publications
o OECD and its publications
INFRASTRUCTURE FUND
From time to time the Fund and AIM Distributors may quote information including:
o Supply and demand of telephone equipment and services, electricity, water, transportation, construction materials and other infrastructure-related products and services
o Regulatory environment of infrastructure industries
o Quantity and costs of current and projected infrastructure projects
o Privatization of industries and companies
o New technologies, products and services used in infrastructure industries
o Infrastructure Finance Magazine and other periodicals
FINANCIAL SERVICES FUND
From time to time the Fund and AIM Distributors may quote information including:
o Supply and demand of financial services
o Regulatory environment of financial service industries
o Credit ratings of U.S. and non-U.S. banks
o New technologies, products and services used in the financial services industries
o Consolidation in the financial services industries
RESOURCES FUND
From time to time the Fund and AIM Distributors may quote information including:
o Supply, demand and prices of natural resources
o Regulatory environment of natural resources
o Supply, demand and prices of products manufactured from natural resources
o New technologies, products and services used in the natural resources industries
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued by various entities from "Aaa" to "C." Investment grade ratings are the first four categories: Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. A--Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time 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.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), rates the securities debt of various entities in categories ranging from "AAA" to "D" according to quality. Investment grade ratings are the first four categories: AAA--An obligation rated "AAA" has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA--An obligation rated "AA" differs from the highest rated obligations only in a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A--An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. BBB--An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB, B, CCC, CC, C--Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB--An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. B--An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC--An obligation rated "CCC" is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC--An obligation rated "CC" is currently highly vulnerable to nonpayment. C--The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued. D--An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
NR: Indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of senior short-term debt obligations. This normally will be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from "A-1" for the highest quality obligations to "D" for the lowest. Issues in the "A" category are delineated with numbers 1, 2, and 3 to indicate the relative degree of safety. 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 will be denoted with a plus sign (+) designation. A-2--Capacity for timely payments on issues with this designation is satisfactory; however, the relative degree of safety is not as high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the effects of which preclude satisfactory analysis; if there is no longer available reasonable up-to-date data to permit a judgment to be formed; if a bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa to Caa. 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.
FINANCIAL STATEMENTS
FS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Consumer Products and Services Fund and Board of Trustees of AIM Investment Funds
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Consumer Products and Services Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the Unites States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-1
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-48.45%
AEROSPACE/DEFENSE-1.19%
Boeing Co. (The) 34,500 $ 2,339,531
==============================================================
BANKS (MAJOR REGIONAL)-1.18%
Northern Trust Corp. 27,300 2,330,737
==============================================================
BEVERAGES (NON-ALCOHOLIC)-2.18%
Pepsi Bottling Group, Inc., (The) 54,300 1,880,137
--------------------------------------------------------------
PepsiCo, Inc. 50,000 2,421,875
==============================================================
4,302,012
==============================================================
COMMUNICATIONS EQUIPMENT-1.71%
Cable Design Technologies Corp.(a) 44,700 1,030,894
--------------------------------------------------------------
Corning Inc. 30,500 2,333,250
==============================================================
3,364,144
==============================================================
COMPUTERS (HARDWARE)-1.28%
McDATA Corp.-Class B(a) 30,300 2,525,789
==============================================================
COMPUTERS (PERIPHERALS)-4.04%
Brocade Communications Systems,
Inc.(a) 12,100 2,751,237
--------------------------------------------------------------
EMC Corp.(a) 58,400 5,201,250
==============================================================
7,952,487
==============================================================
COMPUTERS (SOFTWARE &
SERVICES)-2.71%
Adobe Systems Inc. 55,800 4,244,287
--------------------------------------------------------------
Cybear Group(a) 5,211 3,583
--------------------------------------------------------------
i2 Technologies, Inc.(a) 6,400 1,088,000
==============================================================
5,335,870
==============================================================
ELECTRICAL EQUIPMENT-1.24%
General Electric Co. 44,500 2,439,156
==============================================================
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.78%
Arrow Electronics, Inc.(a) 48,000 1,536,000
==============================================================
ELECTRONICS (INSTRUMENTATION)-0.76%
Varian Inc.(a) 48,300 1,488,244
==============================================================
ELECTRONICS (SEMICONDUCTORS)-1.94%
Analog Devices, Inc.(a) 31,200 2,028,000
--------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 31,900 1,796,369
==============================================================
3,824,369
==============================================================
ENTERTAINMENT-1.02%
Walt Disney Co. (The) 56,200 2,012,662
==============================================================
FINANCIAL (DIVERSIFIED)-1.20%
Citigroup Inc. 45,066 2,371,598
==============================================================
|
MARKET
SHARES VALUE
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.50%
Alpharma Inc.-Class A 11,300 $ 438,581
--------------------------------------------------------------
Andrx Group(a) 35,000 2,520,000
==============================================================
2,958,581
==============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.69%
Pfizer Inc. 76,900 3,321,119
==============================================================
HEALTH CARE (MANAGED CARE)-2.96%
UnitedHealth Group Inc. 53,200 5,818,750
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-2.06%
Laboratory Corp. of America
Holdings(a) 10,300 1,389,212
--------------------------------------------------------------
Quest Diagnostics Inc.(a) 27,800 2,675,750
==============================================================
4,064,962
==============================================================
INVESTMENT BANKING/BROKERAGE-2.08%
Lehman Brothers Holdings Inc. 22,800 1,470,600
--------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 32,700 2,626,219
==============================================================
4,096,819
==============================================================
INVESTMENT MANAGEMENT-1.22%
Alliance Capital Management Holding
L.P. 50,000 2,400,000
==============================================================
NATURAL GAS-2.41%
Dynegy Inc.-Class A 102,400 4,742,400
==============================================================
OIL & GAS (DRILLING &
EQUIPMENT)-6.51%
BJ Services Co.(a) 38,200 2,003,113
--------------------------------------------------------------
ENSCO International Inc. 81,300 2,703,225
--------------------------------------------------------------
Global Marine, Inc.(a) 54,600 1,446,900
--------------------------------------------------------------
Marine Drilling Cos., Inc.(a) 81,700 1,950,588
--------------------------------------------------------------
Nabors Industries, Inc.(a) 35,100 1,786,590
--------------------------------------------------------------
Patterson Energy, Inc.(a) 39,900 1,122,188
--------------------------------------------------------------
Schlumberger Ltd. 6,200 471,975
--------------------------------------------------------------
Smith International, Inc.(a) 19,000 1,339,500
==============================================================
12,824,079
==============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-1.15%
Anadarko Petroleum Corp. 35,444 2,270,188
==============================================================
OIL & GAS (REFINING &
MARKETING)-0.58%
Valero Energy Corp. 34,400 1,137,350
==============================================================
POWER PRODUCERS (INDEPENDENT)-1.32%
Calpine Corp.(a) 32,900 2,597,044
==============================================================
RESTAURANTS-0.68%
Brinker International, Inc.(a) 34,000 1,334,500
==============================================================
|
FS-2
MARKET
SHARES VALUE
RETAIL (COMPUTERS &
ELECTRONICS)-1.43%
CDW Computer Centers, Inc.(a) 43,600 $ 2,809,475
==============================================================
SAVINGS & LOAN COMPANIES-0.88%
Washington Mutual, Inc. 39,300 1,729,200
==============================================================
SERVICES (DATA PROCESSING)-0.75%
DST Systems, Inc.(a) 10,300 634,738
--------------------------------------------------------------
Learning Tree International, Inc.(a) 18,600 841,650
==============================================================
1,476,388
==============================================================
Total Domestic Common Stocks
(Cost $76,728,667) 95,403,454
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-39.54%
AUSTRALIA-1.07%
Australia & New Zealand Banking
Group Ltd. (Banks-Major
Regional)(a) 284,700 2,102,933
==============================================================
BELGIUM-0.28%
ICOS Vision Systems Corp. N.V.
(Equipment-Semiconductor)(a) 18,100 541,869
==============================================================
CANADA-2.57%
Anderson Exploration Ltd.
(Oil-Domestic Integrated)(a) 132,300 2,425,457
--------------------------------------------------------------
Bombardier Inc.-Class B
(Aerospace/Defense) 143,700 2,253,398
--------------------------------------------------------------
Dynetek Industries Ltd.
(Manufacturing-Diversified)(a) 76,100 373,699
==============================================================
5,052,554
==============================================================
DENMARK-1.69%
Novo Nordisk A.S.-Class B (Health
Care-Drugs-Generic & Other)(a) 11,200 2,375,533
--------------------------------------------------------------
Vestas Wind Systems A.S.
(Manufacturing-Specialized) 17,700 958,731
==============================================================
3,334,264
==============================================================
FRANCE-8.17%
Alcatel Optronics S.A.
(Communications Equipment)(a) 11,000 654,394
--------------------------------------------------------------
Assurances Generales de France
(Insurance-Multi-Line) 27,200 1,488,872
--------------------------------------------------------------
Aventis S.A.
(Chemicals-Diversified)(a) 35,700 2,575,228
--------------------------------------------------------------
Azeo (Ez-Gaz it Eaux) (Investments) 17,300 1,123,146
--------------------------------------------------------------
Banque Nation de Paris (Banks-Major
Regional), Wts., expiring
07/15/02(b) 5,460 26,180
--------------------------------------------------------------
BNP Paribas (Banks-Major Regional) 21,100 1,819,302
--------------------------------------------------------------
Bouygues Offshore S.A. (Oil &
Gas-Drilling & Equipment) 29,800 1,466,807
--------------------------------------------------------------
Remy Cointreau S.A.
(Beverages-Alcoholic) 32,200 1,076,665
--------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
Care-Drugs- Generic & Other) 43,400 2,283,547
--------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio &
Cable) 30,000 1,637,046
--------------------------------------------------------------
|
MARKET
SHARES VALUE
FRANCE-(CONTINUED)
Total Fina Elf S.A.
(Oil-International Integrated) 13,600 $ 1,945,921
==============================================================
16,097,108
==============================================================
GERMANY-3.20%
Altana A.G. (Health
Care-Drugs-Generic & Other) 17,400 2,111,611
--------------------------------------------------------------
Bayerische Motoren Werke A.G.
(Automobiles)(a) 34,000 1,125,310
--------------------------------------------------------------
Hugo Boss A.G.-Pfd
(Manufacturing-Specialized) 3,900 986,301
--------------------------------------------------------------
Siemens A.G.
(Manufacturing-Diversified) 16,300 2,074,949
==============================================================
6,298,171
==============================================================
IRELAND-1.22%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 46,400 2,409,900
==============================================================
ISRAEL-0.77%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 25,500 1,507,688
==============================================================
ITALY-1.63%
Bulgari S.p.A. (Consumer-Jewelry,
Novelties & Gifts)(a) 103,700 1,220,629
--------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining &
Marketing)(a) 368,000 1,992,494
==============================================================
3,213,123
==============================================================
JAPAN-2.14%
Furukawa Electric Co., Ltd. (The)
(Metal Fabricators) 160,000 4,208,404
==============================================================
NETHERLANDS-4.37%
Heineken N.V. (Beverages-Alcoholic) 35,700 1,938,996
--------------------------------------------------------------
ING Groep N.V. (Insurance Brokers) 31,800 2,183,794
--------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 48,100 2,249,186
--------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil-International Integrated) 37,600 2,230,137
==============================================================
8,602,113
==============================================================
NORWAY-1.35%
Norsk Hydro A.S.A.
(Chemicals-Diversified) 66,900 2,660,742
==============================================================
SWEDEN-0.57%
Swedish Match A.B. (Tobacco) 329,500 1,131,124
==============================================================
SWITZERLAND-4.93%
Nestle S.A. (Foods)(a) 1,040 2,155,455
--------------------------------------------------------------
Novartis A.G. (Health
Care-Diversified) 2,904 4,406,169
--------------------------------------------------------------
Serono S.A.-Class B (Health
Care-Drugs-Generic & Other) 1,935 1,740,886
--------------------------------------------------------------
Straumann A.G. (Health
Care-Specialized Services) 653 1,411,509
==============================================================
9,714,019
==============================================================
UNITED KINGDOM-5.58%
Aggreko PLC (Services-Facilities &
Environmental) 187,700 1,005,259
--------------------------------------------------------------
|
FS-3
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Bunzl PLC (Paper & Forest Products) 195,400 $ 1,117,398
-----------------------------------------------------------------------
Centrica PLC (Oil & Gas-Exploration
& Production) 964,400 3,317,360
-----------------------------------------------------------------------
Shell Transport & Trading Co.
(Oil-International Integrated) 253,700 2,041,781
-----------------------------------------------------------------------
Spirent PLC (Communications
Equipment) 158,000 1,465,362
-----------------------------------------------------------------------
Tesco PLC (Retail-Food Chains) 533,800 2,035,675
=======================================================================
10,982,835
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $72,388,910) 77,856,847
=======================================================================
|
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
PUT OPTIONS
PURCHASED-0.05%
Washington Mutual,
Inc. (Savings &
Loan Companies)
(Cost $73,342) 385 $45 Dec-00 107,078
=======================================================================
|
SHARES
MONEY MARKET FUNDS-6.77%
STIC Liquid Assets Portfolio(c) 6,664,746 6,664,746
-----------------------------------------------------------------------
STIC Prime Portfolio(c) 6,664,746 6,664,746
=======================================================================
Total Money Market Funds
(Cost $13,329,492) 13,329,492
=======================================================================
TOTAL INVESTMENTS-94.81%
(Cost $162,520,411) 186,696,871
=======================================================================
OTHER ASSETS LESS LIABILITIES-5.19% 10,223,630
=======================================================================
NET ASSETS-100.00% $196,920,501
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Ltd. - Limited
Pfd. - Preferred
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-4
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$162,520,411) $186,696,871
------------------------------------------------------------
Foreign currencies, at value (cost $7,945,040) 7,938,488
------------------------------------------------------------
Receivables for:
------------------------------------------------------------
Investments sold 4,053,583
------------------------------------------------------------
Fund shares sold 272,233
------------------------------------------------------------
Dividends 302,831
------------------------------------------------------------
Collateral for securities loaned 5,610,412
------------------------------------------------------------
Other assets 29,931
============================================================
Total assets $204,904,349
============================================================
LIABILITIES:
Payables for:
Investments purchased 1,748,139
------------------------------------------------------------
Fund shares reacquired 227,942
------------------------------------------------------------
Collateral upon return of securities loaned 5,610,412
------------------------------------------------------------
Accrued advisory fees 129,583
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 143,953
------------------------------------------------------------
Accrued trustees' fees 3,295
------------------------------------------------------------
Accrued transfer agent fees 45,845
------------------------------------------------------------
Accrued operating expenses 70,444
============================================================
Total liabilities 7,983,848
============================================================
Net assets applicable to shares outstanding $196,920,501
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 82,692,332
____________________________________________________________
============================================================
Class B $110,664,334
____________________________________________________________
============================================================
Class C $ 3,563,835
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 3,078,176
____________________________________________________________
============================================================
Class B 4,276,551
____________________________________________________________
============================================================
Class C 137,648
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 26.86
------------------------------------------------------------
Offering price per share:
(Net asset value of $26.86 divided by
95.25%) $ 28.20
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 25.88
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 25.89
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$196,505) $ 1,497,717
------------------------------------------------------------
Dividends from affiliated money market funds 633,924
------------------------------------------------------------
Interest 21,592
------------------------------------------------------------
Security lending income 66,393
============================================================
Total investment income 2,219,626
============================================================
EXPENSES:
Advisory fees 2,032,116
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 94,792
------------------------------------------------------------
Distribution fees -- Class A 431,352
------------------------------------------------------------
Distribution fees -- Class B 1,213,920
------------------------------------------------------------
Distribution fees -- Class C 18,599
------------------------------------------------------------
Transfer agent fees 399,263
------------------------------------------------------------
Trustees' fees 15,211
------------------------------------------------------------
Other 173,374
============================================================
Total expenses 4,428,627
============================================================
Less: Expenses reimbursed (6,151)
------------------------------------------------------------
Expenses paid indirectly (8,766)
============================================================
Net expenses 4,413,710
============================================================
Net investment income (loss) (2,194,084)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 27,078,834
------------------------------------------------------------
Foreign currencies (468,568)
============================================================
26,610,266
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (15,821,294)
------------------------------------------------------------
Foreign currencies (81,049)
============================================================
(15,902,343)
============================================================
Net gain on investment securities and foreign
currencies 10,707,923
============================================================
Net increase in net assets resulting from
operations $ 8,513,839
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ (2,194,084) $ (1,748,031)
------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 26,610,266 44,474,962
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (15,902,343) 20,709,969
==========================================================================================
Net increase in net assets resulting from operations 8,513,839 63,436,900
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (13,665,029) (1,486,208)
------------------------------------------------------------------------------------------
Class B (20,642,170) (2,314,110)
------------------------------------------------------------------------------------------
Class C (64,428) --
------------------------------------------------------------------------------------------
Advisor Class* (212,239) (341,039)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 13,348,888 (8,462,976)
------------------------------------------------------------------------------------------
Class B 16,239,334 (14,746,418)
------------------------------------------------------------------------------------------
Class C 3,656,493 209,527
------------------------------------------------------------------------------------------
Advisor Class* 4,771,906 (17,338,191)
==========================================================================================
Net increase in net assets 11,946,594 18,957,485
==========================================================================================
NET ASSETS:
Beginning of year 184,973,907 166,016,422
==========================================================================================
End of year $196,920,501 $184,973,907
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $151,709,567 $104,692,946
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (48,605) --
------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 21,125,724 40,244,803
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 24,133,815 40,036,158
==========================================================================================
$196,920,501 $184,973,907
__________________________________________________________________________________________
==========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of the close of business on February 11, 2000.
See Notes to Financial Statements.
FS-6
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Consumer Products and Services Fund (the "Fund") is a separate series
of AIM Investment Funds (the "Trust"). The Trust is organized as a Delaware
business trust and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end series management investment company
consisting of nine separate series portfolios, each having an unlimited number
of shares of beneficial interest. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. The Fund
formerly offered Advisor Class shares; however, as of the close of business on
February 11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares
were sold without a 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 long-term growth of capital. The Fund
invests substantially all of its investable assets in Global Consumer Products
and Services Portfolio (the "Portfolio"). The Portfolio is organized as a
Delaware business trust which is registered under the 1940 Act as an open-end
management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
October 31, 2000, all of the shares of beneficial interest of the Portfolio were
owned by either the Fund or an affiliated INVESCO entity.
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 and the Portfolio 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 October 31, 2000, undistributed net investment income was increased by
$2,145,479, undistributed net realized gains decreased by $11,145,479 and
paid in capital increased by $9,000,000 as a result of book/tax differences
due to utilization of a portion of the proceeds from redemptions as
distributions for federal income tax purposes, foreign currency transactions
and net operating loss reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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.
FS-7
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. 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 Portfolio
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 Portfolio may enter into a foreign currency contract to attempt to
minimize the risk to the Portfolio from adverse changes in the relationship
between currencies. The Portfolio 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
Portfolio 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.
G. Put Options -- The Portfolio may purchase put options. By purchasing a put
option, the Portfolio obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Portfolio pays an option premium. The option's underlying
instrument may be a security or a futures contract. Put options may be used
by the Portfolio to hedge securities it owns by locking in a minimum price at
which the Portfolio can sell. If security prices fall, the put option could
be exercised to offset all or a portion of the Portfolio's resulting losses.
At the same time, because the maximum the Portfolio has at risk is the cost
of the option, purchasing put options does not eliminate the potential for
the Portfolio to profit from an increase in the value of the securities
hedged.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively. During the year
ended October 31, 2000, AIM reimbursed expenses of $6,151.
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 and the Portfolio. For the year ended October
31, 2000, AIM was paid $50,000 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 October 31, 2000, AFS was
paid $267,569 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $431,352,
$1,213,920 and $18,599, respectively, as compensation under the Plans.
AIM Distributors received commissions of $70,319 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $1,969 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,784 and reductions in custodian fees of $5,982 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $8,766.
FS-8
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $5,500,404 were on
loan to brokers. The loans were secured by cash collateral of $5,610,412
received by the Portfolio. For the year ended October 31, 2000, the Portfolio
received fees of $66,393 for securities lending.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended October 31, 2000 was
$498,299,484 and $505,066,435, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $28,244,600 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,198,111) ========================================================= Net unrealized appreciation of investment securities $24,046,489 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $162,650,382. |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
Sold:
Class A 759,405 $ 22,447,775 487,583 $ 12,807,548
---------------------------------------------------------------------------------------------------------------------
Class B 668,315 19,040,288 423,749 10,940,298
---------------------------------------------------------------------------------------------------------------------
Class C* 141,025 3,973,222 9,183 251,095
---------------------------------------------------------------------------------------------------------------------
Advisor Class** 538 6,033,762 21,722 582,165
=====================================================================================================================
Issued as reinvestment of dividends:
Class A 464,329 12,875,835 59,498 1,416,648
---------------------------------------------------------------------------------------------------------------------
Class B 710,588 19,064,223 91,284 2,126,010
---------------------------------------------------------------------------------------------------------------------
Class C* 1,333 35,784 -- --
---------------------------------------------------------------------------------------------------------------------
Advisor Class** 7,418 212,234 14,024 340,931
=====================================================================================================================
Conversion of Advisor Class shares to Class A shares***
Class A 44,925 1,356,742 -- --
---------------------------------------------------------------------------------------------------------------------
Advisor Class (43,513) (1,356,742) -- --
=====================================================================================================================
Reacquired:
Class A (584,323) (23,331,464) (855,317) (22,687,172)
---------------------------------------------------------------------------------------------------------------------
Class B (764,349) (21,865,177) (1,075,236) (27,812,726)
---------------------------------------------------------------------------------------------------------------------
Class C* (12,455) (352,513) (1,437) (41,568)
---------------------------------------------------------------------------------------------------------------------
Advisor Class** (3,660) (117,348) (638,988) (18,261,287)
=====================================================================================================================
1,389,576 $ 38,016,621 (1,463,935) $(40,338,058)
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class were converted to Class A shares of the fund.
FS-9
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $30.79 $ 22.16 $ 22.19 $ 20.98 $ 14.59
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.19) (0.15) (0.22)
-------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.96 9.38 2.05 2.27 7.13
===================================================================================================================
Total from investment operations 1.74 9.19 1.86 2.12 6.91
===================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
===================================================================================================================
Net asset value, end of period $26.86 $ 30.79 $ 22.16 $ 22.19 $ 20.98
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 5.07% 42.20% 8.66% 10.55% 48.82%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,692 $73,695 $59,880 $62,637 $76,900
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.82%(c) 1.91% 1.93% 1.84% 2.24%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.82%(c) 1.91% 1.95% 1.99% 2.34%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.76)%(c) (0.70)% (0.83)% (0.87)% (1.24)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $86,270,364.
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
2000(a) 1999 1998 1997 1996
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 29.99 $ 21.70 $ 21.86 $ 20.79 $ 14.53
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.36) (0.31) (0.30) (0.24) (0.31)
-------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 9.16 2.03 2.22 7.09
===================================================================================================================
Total from investment operations 1.56 8.85 1.73 1.98 6.78
===================================================================================================================
Less distributions from net realized gains (5.67) (0.56) (1.89) (0.91) (0.52)
===================================================================================================================
Net asset value, end of period $ 25.88 $ 29.99 $ 21.70 $ 21.86 $ 20.79
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 4.53% 41.52% 8.16% 9.95% 48.11%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $110,664 $109,808 $91,613 $93,978 $87,904
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41% 2.43% 2.34% 2.74%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41% 2.45% 2.49% 2.84%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)% (1.33)% (1.37)% (1.74)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 259% 160% 221% 392% 169%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $121,391,977.
FS-10
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
---------------- --------------
Net asset value, beginning of period $29.99 $24.70
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.35) (0.22)
--------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.92 5.51
==================================================================================================
Total from investment operations 1.57 5.29
==================================================================================================
Less distributions from net realized gains (5.67) --
--------------------------------------------------------------------------------------------------
Net asset value, end of period $25.89 $29.99
__________________________________________________________________________________________________
==================================================================================================
Total return(b) 4.56% 21.42%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,564 $ 232
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.32%(c) 2.41%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers 2.32%(c) 2.41%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (1.20)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 259% 160%
__________________________________________________________________________________________________
==================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $1,859,895.
(d) Annualized.
FS-11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Financial Services Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Financial Services Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-12
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-85.53%
BANKS (MAJOR REGIONAL)-13.22%
Bank of New York Co., Inc. (The) 157,000 $ 9,037,312
---------------------------------------------------------------
FleetBoston Financial Corp. 130,000 4,940,000
---------------------------------------------------------------
Mellon Financial Corp. 47,000 2,267,750
---------------------------------------------------------------
PNC Financial Services Group 39,000 2,608,125
---------------------------------------------------------------
State Street Corp. 27,000 3,367,980
---------------------------------------------------------------
Wells Fargo Co. 116,000 5,372,250
===============================================================
27,593,417
===============================================================
BANKS (MONEY CENTER)-3.78%
Bank of America Corp. 23,000 1,105,437
---------------------------------------------------------------
Chase Manhattan Corp. (The) 149,000 6,779,500
===============================================================
7,884,937
===============================================================
BANKS (REGIONAL)-1.96%
Firstar Corp. 121,000 2,382,187
---------------------------------------------------------------
Silicon Valley Bancshares(a) 37,000 1,711,250
===============================================================
4,093,437
===============================================================
COMPUTERS (SOFTWARE & SERVICES)-1.50%
Henry (Jack) & Associates 30,000 1,650,000
---------------------------------------------------------------
Intuit Inc.(a) 24,000 1,474,500
===============================================================
3,124,500
===============================================================
CONSUMER FINANCE-5.86%
Capital One Financial Corp. 78,000 4,923,750
---------------------------------------------------------------
MBNA Corp. 96,000 3,606,000
---------------------------------------------------------------
Providian Financial Corp. 35,600 3,702,400
===============================================================
12,232,150
===============================================================
ELECTRICAL EQUIPMENT-1.55%
General Electric Co. 59,000 3,233,937
===============================================================
FINANCIAL (DIVERSIFIED)-14.96%
American Express Co. 90,000 5,400,000
---------------------------------------------------------------
Associates First Capital
Corp.-Class A 25,000 928,125
---------------------------------------------------------------
Citigroup Inc. 160,666 8,455,048
---------------------------------------------------------------
Fannie Mae 33,500 2,579,500
---------------------------------------------------------------
Freddie Mac 44,000 2,640,000
---------------------------------------------------------------
J.P. Morgan & Co., Inc. 28,000 4,634,000
---------------------------------------------------------------
PMI Group, Inc. (The) 31,500 2,327,062
---------------------------------------------------------------
SEI Investments Co. 47,000 4,265,250
===============================================================
31,228,985
===============================================================
INSURANCE (LIFE/HEALTH)-2.49%
AFLAC, Inc. 59,000 4,310,687
---------------------------------------------------------------
|
MARKET
SHARES VALUE
INSURANCE (LIFE/HEALTH)-(CONTINUED)
Nationwide Financial Services,
Inc.-Class A 18,000 $ 875,250
===============================================================
5,185,937
===============================================================
INSURANCE (MULTI-LINE)-2.99%
American International Group,
Inc. 63,750 6,247,500
===============================================================
INSURANCE (PROPERTY-CASUALTY)-2.14%
Radian Group Inc. 63,000 4,465,125
===============================================================
INSURANCE BROKERS-5.96%
Aon Corp. 123,000 5,096,813
---------------------------------------------------------------
Marsh & McLennan Cos., Inc. 56,200 7,348,150
===============================================================
12,444,963
===============================================================
INVESTMENT BANKING/BROKERAGE-15.14%
Goldman Sachs Group, Inc. (The) 43,000 4,291,938
---------------------------------------------------------------
Legg Mason, Inc. 72,000 3,739,500
---------------------------------------------------------------
Lehman Brothers Holdings, Inc. 105,200 6,785,400
---------------------------------------------------------------
Merrill Lynch & Co., Inc. 54,000 3,780,000
---------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 69,200 5,557,623
---------------------------------------------------------------
Schwab (Charles) Corp. (The) 75,300 2,644,913
---------------------------------------------------------------
TD Waterhouse Group, Inc.(a) 147,000 2,434,688
---------------------------------------------------------------
Waddell & Reed Financial,
Inc.-Class A 74,000 2,358,750
===============================================================
31,592,812
===============================================================
INVESTMENT MANAGEMENT-7.64%
Affiliated Managers Group,
Inc.(a) 21,000 1,262,625
---------------------------------------------------------------
Alliance Capital Management
Holding L.P. 45,000 2,160,000
---------------------------------------------------------------
Investors Financial Services
Corp. 111,000 7,957,313
---------------------------------------------------------------
Stilwell Financial, Inc. 101,700 4,557,431
===============================================================
15,937,369
===============================================================
SAVINGS & LOAN COMPANIES-1.69%
Golden West Financial Corp. 63,000 3,531,938
===============================================================
SERVICES (DATA PROCESSING)-4.65%
Concord EFS, Inc.(a) 134,000 5,535,875
---------------------------------------------------------------
First Data Corp. 83,000 4,160,375
===============================================================
9,696,250
===============================================================
Total Domestic Common Stocks
(Cost $131,621,239) 178,493,257
===============================================================
FOREIGN STOCKS-8.32%
BERMUDA-1.15%
ACE Ltd.
(Insurance-Property-Casualty) 61,000 2,394,250
===============================================================
CANADA-0.81%
AGF Management Ltd.-Class B
(Investment Management) 101,000 1,679,696
===============================================================
|
FS-13
MARKET
SHARES VALUE
FOREIGN STOCKS-(CONTINUED)
FRANCE-1.56%
Assurances Generales de France
(Insurance-Multi-Line) 28,700 $ 1,570,975
---------------------------------------------------------------
BNP Paribas (Banks-Major
Regional) 7,500 646,671
---------------------------------------------------------------
Societe Generale-Class A
(Banks-Major Regional) 18,200 1,033,299
===============================================================
3,250,945
===============================================================
GERMANY-0.30%
Tecis Holding A.G.
(Computers-Software & Services) 8,600 621,823
===============================================================
HONG KONG-1.19%
Dah Sing Financial Group
(Banks-Regional) 580,800 2,494,781
===============================================================
JAPAN-0.76%
Nikko Securities Co., Ltd. (The)
(Investment Banking/Brokerage) 94,000 811,511
---------------------------------------------------------------
Nomura Securities Co., Ltd.
(Investment Banking/Brokerage) 37,000 784,998
===============================================================
1,596,509
===============================================================
MEXICO-0.72%
Grupo Financiero Banamex Accival,
S.A. de C.V. (Banacci)
(Financial-Diversified)(a) 966,000 1,501,230
===============================================================
|
MARKET
SHARES VALUE
NETHERLANDS-0.36%
Aegon N.V.
(Insurance-Life/Health) 18,526 $ 747,987
===============================================================
SINGAPORE-0.82%
DBS Group Holdings Ltd.
(Banks-Money Center) 146,040 1,721,248
===============================================================
SWITZERLAND-0.22%
Julius Baer Holding A.G.-Class B
(Banks-Major Regional) 95 470,428
===============================================================
UNITED KINGDOM-0.43%
Royal Bank of Scotland Group PLC
(Banks-Major Regional) 39,600 889,145
===============================================================
Total Foreign Stocks (Cost
$14,601,545) 17,368,042
===============================================================
MONEY MARKET FUNDS-7.60%
STIC Liquid Assets Portfolio(b) 7,926,160 7,926,160
---------------------------------------------------------------
STIC Prime Portfolio(b) 7,926,160 7,926,160
===============================================================
Total Money Market Funds (Cost
$15,852,320) 15,852,320
===============================================================
TOTAL INVESTMENTS-101.45% (Cost $162,075,104) 211,713,619
---------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(1.45%) (3,033,418)
---------------------------------------------------------------
NET ASSETS-100.00% $ 208,680,201
_______________________________________________________________
===============================================================
|
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-14
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$162,075,104) $211,713,619
------------------------------------------------------------
Receivables for:
Investments sold 1,392,553
------------------------------------------------------------
Fund shares sold 2,114,208
------------------------------------------------------------
Dividends 254,728
------------------------------------------------------------
Collateral for securities loaned 82,365
------------------------------------------------------------
Other assets 24,315
============================================================
Total assets $215,581,788
============================================================
LIABILITIES:
Payables for:
Investments purchased 6,009,453
------------------------------------------------------------
Fund shares reacquired 247,962
------------------------------------------------------------
Collateral upon return of securities loaned 82,365
------------------------------------------------------------
Accrued advisory fees 222,630
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 144,076
------------------------------------------------------------
Accrued trustees' fees 916
------------------------------------------------------------
Accrued transfer agent fees 42,714
------------------------------------------------------------
Accrued operating expenses 147,236
============================================================
Total liabilities 6,901,587
============================================================
Net assets applicable to shares outstanding $208,680,201
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 95,393,307
____________________________________________________________
============================================================
Class B $ 92,342,864
____________________________________________________________
============================================================
Class C $ 20,944,030
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 3,838,859
____________________________________________________________
============================================================
Class B 3,825,860
____________________________________________________________
============================================================
Class C 867,729
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 24.85
------------------------------------------------------------
Offering price per share:
(Net asset value of $24.85 divided by
95.25%) $ 26.09
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 24.14
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 24.14
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$22,386) $ 1,332,092
------------------------------------------------------------
Dividends from affiliated money market funds 690,406
------------------------------------------------------------
Interest 1,441
------------------------------------------------------------
Security lending income 13,796
============================================================
Total investment income 2,037,735
============================================================
EXPENSES:
Advisory fees 1,192,263
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 27,220
------------------------------------------------------------
Distribution fees -- Class A 270,409
------------------------------------------------------------
Distribution fees -- Class B 601,612
------------------------------------------------------------
Distribution fees -- Class C 76,274
------------------------------------------------------------
Transfer agent fees 301,421
------------------------------------------------------------
Trustees' fees 9,675
------------------------------------------------------------
Other 251,024
============================================================
Total expenses 2,779,898
============================================================
Less: Expense reimbursement (2,650)
------------------------------------------------------------
Expenses paid indirectly (1,819)
============================================================
Net expenses 2,775,429
============================================================
Net investment income (loss) (737,694)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 3,538,391
------------------------------------------------------------
Foreign currencies (41,849)
------------------------------------------------------------
Option contracts written 31,268
============================================================
3,527,810
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 31,447,967
------------------------------------------------------------
Foreign currencies (9,885)
============================================================
31,438,082
============================================================
Net gain from investment securities, foreign
currencies and option contracts 34,965,892
============================================================
Net increase in net assets resulting from
operations $34,228,198
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-15
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ (737,694) $ (280,309)
------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 3,527,810 18,854,118
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 31,438,082 8,883,185
==========================================================================================
Net increase in net assets resulting from operations 34,228,198 27,456,994
==========================================================================================
Distributions to shareholders from net investment income:
Class A (343,444) (27,914)
------------------------------------------------------------------------------------------
Class B (299,755) --
------------------------------------------------------------------------------------------
Class C (16,237) --
------------------------------------------------------------------------------------------
Advisor Class* (29,048) (62,446)
------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (5,350,283) (50,561)
------------------------------------------------------------------------------------------
Class B (8,341,879) (88,384)
------------------------------------------------------------------------------------------
Class C (287,630) --
------------------------------------------------------------------------------------------
Advisor Class* (226,554) (16,133)
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 54,920,598 (6,952,812)
------------------------------------------------------------------------------------------
Class B 34,809,580 (14,361,940)
------------------------------------------------------------------------------------------
Class C 18,134,821 578,307
------------------------------------------------------------------------------------------
Advisor Class* (431,451) (11,056,810)
==========================================================================================
Net increase (decrease) in net assets 126,766,916 (4,581,699)
==========================================================================================
NET ASSETS:
Beginning of year 81,913,285 86,494,984
==========================================================================================
End of year $208,680,201 $ 81,913,285
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $156,893,899 $ 46,550,387
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) 17,702 736,025
------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 2,141,329 16,437,684
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 49,627,271 18,189,189
==========================================================================================
$208,680,201 $ 81,913,285
__________________________________________________________________________________________
==========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of the close of business on February 11, 2000.
See Notes to Financial Statements.
FS-16
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Financial Services Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of nine separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 long-term growth of capital. At a meeting
held on May 23 and 24, 2000, the Board of Trustees approved a restructuring of
the Fund to eliminate the master-feeder structure. The Fund, which had invested
substantially all of its investable assets in the Global Financial Services
Portfolio (the "Portfolio"), a Delaware business trust, would now invest
directly in the securities in which the Portfolio had invested. The
restructuring of the Fund was approved by Shareholders of the Fund at a meeting
held on September 1, 2000 and was completed on September 8, 2000.
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 October 31, 2000, undistributed net investment income was increased by
$707,855, undistributed net realized gains decreased by $3,617,819 and paid
in capital increased by $2,909,964 as a result of book/tax differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, foreign currency transactions, net operating
loss and other reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and 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.
FS-17
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. 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.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively. During the year
ended October 31, 2000, AIM reimbursed expenses of $2,650.
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 October 31, 2000, AIM was
paid $50,000 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 October 31, 2000, AFS was
paid $17,089 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
0.50% 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-18
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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $270,409, $601,612
and $76,274, respectively, as compensation under the Plans.
AIM Distributors received commissions of $133,801 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $10,205 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $1,717 and reductions in custodian fees of $102 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,819.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly and failed to return the securities.
At October 31, 2000, securities with an aggregate value of $80,750 were on
loan to brokers. The loans were secured by cash collateral of $82,365 received
by the Fund. For the year ended October 31, 2000, the Fund received fees of
$13,796 for securities lending.
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 October 31, 2000 was
$131,748,172 and $46,041,929, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $49,594,650 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (183,390) ========================================================= Net unrealized appreciation of investment securities $49,411,260 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $162,302,359. |
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of year -- $ --
---------------------------------------------------------
Written 280 157,233
---------------------------------------------------------
Closed (280) (157,233)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
|
FS-19
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 3,708,161 $ 84,155,054 833,262 $ 17,299,042
----------------------------------------------------------------------------------------------------------------------
Class B 2,343,916 50,065,435 676,623 13,852,370
----------------------------------------------------------------------------------------------------------------------
Class C* 910,841 19,615,087 32,543 712,656
----------------------------------------------------------------------------------------------------------------------
Advisor Class** 70,059 1,508,705 27,443 605,576
======================================================================================================================
Issued as reinvestment of dividends:
Class A 273,338 5,297,291 4,035 73,215
----------------------------------------------------------------------------------------------------------------------
Class B 424,196 8,021,011 4,616 82,070
----------------------------------------------------------------------------------------------------------------------
Class C* 11,109 210,474 -- --
----------------------------------------------------------------------------------------------------------------------
Advisor Class** 12,981 253,124 4,287 78,579
======================================================================================================================
Conversion of Advisor Class shares to Class A shares***:
Class A 105,329 2,017,059 -- --
----------------------------------------------------------------------------------------------------------------------
Advisor Class** (104,619) (2,017,059) -- --
======================================================================================================================
Reacquired:
Class A (1,582,015) (36,548,806) (1,170,739) (24,325,069)
----------------------------------------------------------------------------------------------------------------------
Class B (1,131,468) (23,276,866) (1,411,988) (28,296,380)
----------------------------------------------------------------------------------------------------------------------
Class C* (80,911) (1,690,740) (5,853) (134,349)
----------------------------------------------------------------------------------------------------------------------
Advisor Class** (8,213) (176,221) (537,683) (11,740,965)
======================================================================================================================
4,952,704 $107,433,548 (1,543,454) $(31,793,255)
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
FS-20
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $23.23 $17.05 $17.22 $14.20 $11.92
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.07) (0.02) 0.07 0.04 0.05
-----------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.87 6.25 0.37 3.97 2.36
=================================================================================================================
Total from investment operations 5.80 6.23 0.44 4.01 2.41
=================================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.02) (0.01) -- (0.12)
-----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) (0.03) (0.60) (0.99) (0.01)
=================================================================================================================
Total distributions (4.18) (0.05) (0.61) (0.99) (0.13)
=================================================================================================================
Net asset value, end of period $24.85 $23.23 $17.05 $17.22 $14.20
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) 30.06% 36.62% 2.53% 29.91% 20.21%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $95,393 $30,987 $28,433 $29,639 $7,302
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.00%(c) 1.99% 1.97% 2.29% 2.32%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.00%(c) 2.12% 1.99% 2.36% 3.39%
=================================================================================================================
Ratio of net investment income (loss) to average net assets (0.33)%(c) (0.08)% 0.37% 0.23% 0.41%
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 41% 107% 111% 91% 103%
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $54,081,791.
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $22.67 $16.71 $16.97 $14.06 $11.83
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.12) (0.02) (0.04) (0.01)
-----------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.72 6.11 0.37 3.94 2.34
=================================================================================================================
Total from investment operations 5.54 5.99 0.35 3.90 2.33
=================================================================================================================
Less distributions:
Dividends from net investment income (0.14) -- (0.01) -- (0.09)
-----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) (0.03) (0.60) (0.99) (0.01)
=================================================================================================================
Total distributions (4.07) (0.03) (0.61) (0.99) (0.10)
=================================================================================================================
Net asset value, end of period $24.14 $22.67 $16.71 $16.97 $14.06
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) 29.40% 35.91% 2.08% 29.13% 19.81%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $92,343 $49,619 $48,785 $47,585 $9,886
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.50%(c) 2.49% 2.47% 2.79% 2.82%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.50%(c) 2.62% 2.49% 2.86% 3.89%
=================================================================================================================
Ratio of net investment income (loss) to average net assets (0.83)%(c) (0.58)% (0.13)% (0.27)% (0.09)%
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 41% 107% 111% 91% 103%
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $60,161,247.
FS-21
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- -------------
Net asset value, beginning of period $ 22.67 $19.58
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.18) (0.08)
------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 5.72 3.17
==========================================================================================
Total from investment operations 5.54 3.09
==========================================================================================
Less distributions:
Dividends from net investment income (0.14) --
------------------------------------------------------------------------------------------
Distributions from net realized gains (3.93) --
==========================================================================================
Total distributions (4.07) --
==========================================================================================
Net asset value, end of period $ 24.14 $22.67
__________________________________________________________________________________________
==========================================================================================
Total return(b) 29.40% 15.78%
__________________________________________________________________________________________
==========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,944 $ 605
__________________________________________________________________________________________
==========================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.50%(c) 2.49%(d)
------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.50%(c) 2.62%(d)
==========================================================================================
Ratio of net investment income (loss) to average net assets (0.83)%(c) (0.58)%(d)
__________________________________________________________________________________________
==========================================================================================
Portfolio turnover rate 41% 107%
__________________________________________________________________________________________
==========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $7,627,355.
(d) Annualized.
FS-22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Health Care Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Health Care Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-23
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-94.23%
BIOTECHNOLOGY-4.69%
Amgen Inc.(a) 500,000 $ 28,968,750
==============================================================
DISTRIBUTORS (FOOD & HEALTH)-11.49%
AmeriSource Health Corp.-Class A(a) 1,550,000 67,328,125
--------------------------------------------------------------
Owens & Minor, Inc. Holding Co. 240,000 3,630,000
==============================================================
70,958,125
==============================================================
ELECTRONICS (INSTRUMENTATION)-1.31%
Varian Inc.(a) 263,000 8,103,687
==============================================================
EQUIPMENT (SEMICONDUCTOR)-5.57%
Varian Semiconductor Equipment
Associates, Inc.(a) 1,495,000 34,385,000
==============================================================
HEALTH CARE (DRUGS-GENERIC &
OTHER)-7.29%
ICN Pharmaceuticals, Inc. 1,183,000 45,027,937
==============================================================
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-5.77%
Pfizer Inc. 825,000 35,629,687
==============================================================
HEALTH CARE (HOSPITAL MANAGEMENT)-35.98%
Community Health Systems(a) 625,000 17,617,188
--------------------------------------------------------------
HCA-Healthcare Corp. (The) 860,000 34,346,250
--------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 1,900,000 37,643,750
--------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 90,000 3,487,500
--------------------------------------------------------------
Province Healthcare Co.(a) 280,000 11,795,000
--------------------------------------------------------------
Quorum Health Group, Inc.(a) 2,232,000 29,853,000
--------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,030,000 40,491,875
--------------------------------------------------------------
Triad Hospitals, Inc.(a) 575,000 15,956,250
--------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 370,000 31,033,750
==============================================================
222,224,563
==============================================================
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-9.49%
INAMED Corp.(a) 750,000 21,000,000
--------------------------------------------------------------
Sunrise Medical, Inc.(a) 25,000 232,813
--------------------------------------------------------------
Syncor International Corp.(a) 1,150,000 29,540,625
--------------------------------------------------------------
Varian Medical Systems, Inc.(a) 160,000 7,820,000
==============================================================
58,593,438
==============================================================
HEALTH CARE (SPECIALIZED
SERVICES)-12.25%
HEALTHSOUTH Corp.(a) 3,500,000 42,000,000
--------------------------------------------------------------
Lincare Holdings, Inc.(a) 800,000 33,650,000
==============================================================
75,650,000
==============================================================
|
MARKET
SHARES VALUE
INSURANCE (MULTI-LINE)-0.39%
CIGNA Corp. 20,000 $ 2,439,000
==============================================================
Total Domestic Common Stocks
(Cost $406,492,847) 581,980,187
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-2.37%
HEALTH CARE (DRUGS-GENERIC & OTHER)
FRANCE-0.03%
Sanofi-Synthelabo S.A. 3,000 157,849
==============================================================
GERMANY-0.49%
Altana A.G. 25,000 3,033,924
==============================================================
ISRAEL-1.72%
Teva Pharmaceutical Industries
Ltd.-ADR 180,000 10,642,500
==============================================================
JAPAN-0.13%
Banyu Pharmaceutical Co., Ltd. 3,000 64,336
--------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd. 4,000 67,892
--------------------------------------------------------------
Daiichi Pharmaceutical Co., Ltd. 3,000 85,231
--------------------------------------------------------------
Eisai Co., Ltd. 5,000 153,966
--------------------------------------------------------------
Kissei Pharmaceutical Co., Ltd. 2,000 36,640
--------------------------------------------------------------
Kyowa Hakko Kogyo Co., Ltd. 5,000 40,003
--------------------------------------------------------------
Rohto Pharmaceutical Co., Ltd. 8,000 107,043
--------------------------------------------------------------
Shionogi & Co., Ltd. 3,000 58,562
--------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd. 2,000 57,554
--------------------------------------------------------------
Takeda Chemical Industries Ltd. 1,000 65,894
--------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd. 2,000 90,547
==============================================================
827,668
==============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$6,716,874) 14,661,941
==============================================================
MONEY MARKET FUNDS-3.23%
STIC Liquid Assets Portfolio(b) 9,969,269 9,969,269
--------------------------------------------------------------
STIC Prime Portfolio(b) 9,969,269 9,969,269
==============================================================
Total Money Market Funds
(Cost $19,938,538) 19,938,538
==============================================================
TOTAL INVESTMENTS-99.83%
(Cost $433,148,259) 616,580,666
==============================================================
OTHER ASSETS LESS LIABILITIES-0.17% 1,064,439
==============================================================
NET ASSETS-100.00% $617,645,105
______________________________________________________________
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-24
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$433,148,259) $616,580,666
------------------------------------------------------------
Receivables for:
Investments sold 3,871,774
------------------------------------------------------------
Fund shares sold 5,674,309
------------------------------------------------------------
Dividends 237,527
------------------------------------------------------------
Other assets 19,660
============================================================
Total assets 626,383,936
============================================================
LIABILITIES:
Payables for:
Investments purchased 6,813,688
------------------------------------------------------------
Fund shares reacquired 806,710
------------------------------------------------------------
Accrued advisory fees 506,704
------------------------------------------------------------
Accrued administrative services fees 10,723
------------------------------------------------------------
Accrued distribution fees 383,300
------------------------------------------------------------
Accrued trustees' fees 1,050
------------------------------------------------------------
Accrued transfer agent fees 108,916
------------------------------------------------------------
Accrued operating expenses 107,740
============================================================
Total liabilities 8,738,831
============================================================
Net assets applicable to shares outstanding $617,645,105
____________________________________________________________
============================================================
NET ASSETS:
Class A $460,444,944
____________________________________________________________
============================================================
Class B $144,861,414
____________________________________________________________
============================================================
Class C $ 12,338,747
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 15,286,551
____________________________________________________________
============================================================
Class B 5,078,111
____________________________________________________________
============================================================
Class C 432,454
____________________________________________________________
============================================================
Class A :
Net asset value and redemption price per
share $ 30.12
------------------------------------------------------------
Offering price per share:
(Net asset value of $30.12 divided
by 95.25%) $ 31.62
____________________________________________________________
============================================================
Class B :
Net asset value and offering price per share $ 28.53
____________________________________________________________
============================================================
Class C :
Net asset value and offering price per share $ 28.53
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$17,713) $ 2,451,685
------------------------------------------------------------
Dividends from affiliated money market funds 1,989,453
------------------------------------------------------------
Interest 2,131
------------------------------------------------------------
Security lending income 31,096
============================================================
Total investment income 4,474,365
============================================================
EXPENSES:
Advisory fees 4,963,633
------------------------------------------------------------
Administrative services fees 117,295
------------------------------------------------------------
Custodian fees 69,740
------------------------------------------------------------
Distribution fees -- Class A 1,943,859
------------------------------------------------------------
Distribution fees -- Class B 1,142,815
------------------------------------------------------------
Distribution fees -- Class C 60,160
------------------------------------------------------------
Transfer agent fees 954,967
------------------------------------------------------------
Trustees' fees 18,474
------------------------------------------------------------
Other 157,242
============================================================
Total expenses 9,428,185
============================================================
Less: Expenses paid indirectly (6,784)
------------------------------------------------------------
Net expenses 9,421,401
============================================================
Net investment income (loss) (4,947,036)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 78,710,304
------------------------------------------------------------
Foreign currencies (757,392)
------------------------------------------------------------
Option contracts written 293,495
============================================================
78,246,407
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 93,768,872
------------------------------------------------------------
Foreign currencies (3,563)
------------------------------------------------------------
Option contracts written (870,781)
============================================================
92,894,528
============================================================
Net gain from investment securities, foreign
currencies and option contracts 171,140,935
============================================================
Net increase in net assets resulting from
operations $166,193,899
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-25
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ (4,947,036) $ (4,551,421)
------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 78,246,407 44,733,785
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 92,894,528 45,885,756
==========================================================================================
Net increase in net assets resulting from operations 166,193,899 86,068,120
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (33,324,503) --
------------------------------------------------------------------------------------------
Class B (9,919,856) --
------------------------------------------------------------------------------------------
Class C (162,378) --
------------------------------------------------------------------------------------------
Advisor Class* (84,346) --
------------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,141,881 (66,396,665)
------------------------------------------------------------------------------------------
Class B 14,704,535 (15,601,954)
------------------------------------------------------------------------------------------
Class C 9,136,876 1,345,583
------------------------------------------------------------------------------------------
Advisor Class* (710,294) (6,483,138)
==========================================================================================
Net increase (decrease) in net assets 154,975,814 (1,068,054)
==========================================================================================
NET ASSETS:
Beginning of year 462,669,291 463,737,345
==========================================================================================
End of year $617,645,105 $462,669,291
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $364,662,375 $329,089,377
------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 69,554,552 43,046,264
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 183,428,178 90,533,650
==========================================================================================
$617,645,105 $462,669,291
__________________________________________________________________________________________
==========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of the close of business on February 11, 2000.
See Notes to Financial Statements.
FS-26
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Health Care Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of nine
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 long-term growth of capital.
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 October 31, 2000, undistributed net investment income was increased by
$4,947,036, undistributed net realized gains decreased by $8,247,036 and paid
in capital increased by $3,300,000 as a result of book/tax differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, foreign currency transactions, net operating
loss and other reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and 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.
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
FS-27
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.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively.
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 October 31, 2000, AIM was
paid $117,295 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 October 31, 2000, AFS was
paid $592,507 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $1,943,859,
$1,142,815 and $60,160, respectively, as compensation under the Plans.
AIM Distributors received commissions of $97,946 from sales of the Class A
shares of the Fund during the year ended October 31,
FS-28
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 October 31, 2000, AIM Distributors received $3,020 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $6,784 under expense an offset arrangement which resulted in a reduction of the Fund's total expenses of $6,784.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, there were no securities on loan to brokers. For the year
ended October 31, 2000, the Fund received fees of $31,096 for securities
lending.
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 October 31, 2000 was
$1,164,844,307 and $1,170,212,123, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $192,344,728 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (8,920,735) ========================================================= Net unrealized appreciation of investment securities $183,423,993 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $433,156,673. |
FS-29
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS
----------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------- -------------
Beginning of year 19,050 $ 7,216,093
--------------------------------------------------------------------------------------------
Written 63,070 28,566,772
--------------------------------------------------------------------------------------------
Closed (61,964) (26,521,246)
--------------------------------------------------------------------------------------------
Exercised (7,270) (6,107,642)
--------------------------------------------------------------------------------------------
Expired (12,886) (3,153,977)
============================================================================================
End of year -- $ --
____________________________________________________________________________________________
============================================================================================
|
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- -------------
Sold:
Class A 2,265,037 $ 61,242,852 6,319,231 $ 143,915,406
------------------------------------------------------------------------------------------------------------------------
Class B 1,557,713 38,869,448 691,366 16,088,681
------------------------------------------------------------------------------------------------------------------------
Class C* 775,066 19,232,447 58,588 1,413,024
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 12,143 310,037 18,009 438,450
------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,402,570 30,940,689 -- --
------------------------------------------------------------------------------------------------------------------------
Class B 437,951 9,188,203 -- --
------------------------------------------------------------------------------------------------------------------------
Class C* 6,991 146,741 -- --
------------------------------------------------------------------------------------------------------------------------
Advisor Class** 3,706 84,344 -- --
------------------------------------------------------------------------------------------------------------------------
Conversion of Advisor Class shares to Class A shares***:
Class A 44,266 1,041,571 --
------------------------------------------------------------------------------------------------------------------------
Advisor Class** (42,881) (1,041,571) -- --
------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (3,330,391) (84,083,231) (9,158,822) (210,312,070)
------------------------------------------------------------------------------------------------------------------------
Class B (1,400,658) (33,353,116) (1,386,892) (31,690,636)
------------------------------------------------------------------------------------------------------------------------
Class C* (405,278) (10,242,312) (2,913) (67,441)
------------------------------------------------------------------------------------------------------------------------
Advisor Class** (2,513) (63,104) (274,593) (6,921,588)
========================================================================================================================
1,323,722 $ 32,272,998 (3,736,026) $ (87,136,174)
________________________________________________________________________________________________________________________
========================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000. *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
FS-30
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 24.00 $ 20.15 $ 27.98 $ 23.60 $ 21.84
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.22) (0.19) (0.21) (0.25) (0.17)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.62 4.04 (0.91) 6.48 4.79
======================================================================================================================
Total from investment operations 8.40 3.85 (1.12) 6.23 4.62
======================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
======================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
======================================================================================================================
Net asset value, end of period $ 30.12 $ 24.00 $ 20.15 $ 27.98 $ 23.60
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) 38.49% 19.11% (4.71)% 28.36% 23.14%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $460,445 $357,747 $357,534 $472,083 $467,861
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.73%(c) 1.82% 1.84% 1.80% 1.84%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.85)%(c) (0.81)% (0.98)% (1.03)% (0.75)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charge.
(c) Ratios are based on average daily net assets of $388,771,812.
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 22.96 $ 19.37 $ 27.27 $ 23.15 $ 21.56
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.30) (0.30) (0.37) (0.27)
-----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 3.89 (0.89) 6.34 4.72
=======================================================================================================================
Total from investment operations 7.85 3.59 (1.19) 5.97 4.45
=======================================================================================================================
Less distributions:
Distributions from net realized gains (2.28) -- (6.70) (1.85) (2.86)
-----------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- (0.01) -- --
=======================================================================================================================
Total distributions (2.28) -- (6.71) (1.85) (2.86)
=======================================================================================================================
Net asset value, end of period $ 28.53 $ 22.96 $ 19.37 $ 27.27 $ 23.15
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 37.78% 18.53% (5.20)% 27.75% 22.59%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $144,861 $102,916 $100,311 $147,440 $107,622
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33% 2.34% 2.30% 2.34%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)% (1.48)% (1.53)% (1.25)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 242% 123% 187% 149% 157%
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $114,281,453.
FS-31
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- --------------
Net asset value, beginning of period $ 22.96 $22.50
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.34) (0.21)
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 8.19 0.67
=============================================================================================
Total from investment operations 7.85 0.46
=============================================================================================
Less distributions from net realized gains (2.28) --
=============================================================================================
Net asset value, end of period $ 28.53 $22.96
_____________________________________________________________________________________________
=============================================================================================
Total return(b) 37.77% 2.04%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,339 $1,278
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets 2.23%(c) 2.33%(d)
_____________________________________________________________________________________________
=============================================================================================
Ratio of net investment income (loss) to average net assets (1.35)%(c) (1.32)%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 242% 123%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $6,015,947.
(d) Annualized.
FS-32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Infrastructure Fund
and Board of Trustees of AIM Investment Funds
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Infrastructure Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-33
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC STOCKS & OTHER EQUITY
INTERESTS-64.37%
AEROSPACE/DEFENSE-2.04%
General Dynamics Corp. 9,000 $ 644,062
--------------------------------------------------------------
Northrop Grumman Corp. 5,300 445,200
==============================================================
1,089,262
==============================================================
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.09%
Entravision Communications
Corp.-Class A(a) 13,500 238,781
--------------------------------------------------------------
General Motors Corp.-Class H(a) 18,500 599,400
--------------------------------------------------------------
Univision Communications Inc.-Class
A(a) 7,400 283,050
==============================================================
1,121,231
==============================================================
COMMUNICATIONS EQUIPMENT-3.82%
Aether Systems, Inc.(a) 5,200 419,250
--------------------------------------------------------------
Corning Inc. 5,100 390,150
--------------------------------------------------------------
Efficient Networks, Inc.(a) 7,700 323,039
--------------------------------------------------------------
JDS Uniphase Corp.(a) 3,700 301,087
--------------------------------------------------------------
Redback Networks Inc.(a) 3,700 393,819
--------------------------------------------------------------
WJ Communications, Inc.(a) 14,500 217,500
==============================================================
2,044,845
==============================================================
COMPUTERS (HARDWARE)-1.73%
Sun Microsystems, Inc.(a) 3,600 399,150
--------------------------------------------------------------
Sycamore Networks, Inc.(a) 8,300 524,975
==============================================================
924,125
==============================================================
COMPUTERS (NETWORKING)-7.66%
Cisco Systems, Inc.(a) 35,968 1,937,776
--------------------------------------------------------------
Juniper Networks, Inc.(a) 9,000 1,755,000
--------------------------------------------------------------
VeriSign, Inc.(a) 3,100 409,200
==============================================================
4,101,976
==============================================================
COMPUTERS (PERIPHERALS)-1.96%
Brocade Communications Systems,
Inc.(a) 2,700 613,912
--------------------------------------------------------------
EMC Corp.(a) 4,900 436,406
==============================================================
1,050,318
==============================================================
COMPUTERS (SOFTWARE & SERVICES)-7.46%
Ariba, Inc.(a) 4,900 619,237
--------------------------------------------------------------
BEA Systems, Inc.(a) 9,300 667,275
--------------------------------------------------------------
i2 Technologies, Inc.(a) 5,300 901,000
--------------------------------------------------------------
Oracle Corp.(a) 13,400 442,200
--------------------------------------------------------------
StorageNetworks, Inc.(a) 6,400 406,000
--------------------------------------------------------------
VERITAS Software Corp.(a) 6,800 958,906
==============================================================
3,994,618
==============================================================
ELECTRIC COMPANIES-5.76%
FPL Group, Inc. 16,000 1,056,000
--------------------------------------------------------------
Montana Power Co. (The) 21,200 598,900
--------------------------------------------------------------
Pinnacle West Capital Corp. 21,000 912,188
--------------------------------------------------------------
SEI Trust I-Series A, $3.13 Conv.
Pfd. 3,700 225,006
--------------------------------------------------------------
|
MARKET
SHARES VALUE
ELECTRIC COMPANIES-(CONTINUED)
Southern Energy, Inc.(a) 10,600 $ 288,850
==============================================================
3,080,944
==============================================================
ELECTRICAL EQUIPMENT-2.90%
Active Power, Inc.(a) 14,000 533,750
--------------------------------------------------------------
Capstone Turbine Corp.(a) 14,100 782,550
--------------------------------------------------------------
General Electric Co. 4,300 235,694
==============================================================
1,551,994
==============================================================
ELECTRONICS (DEFENSE)-0.93%
Raytheon Co.-Class B 14,600 499,138
==============================================================
ELECTRONICS (INSTRUMENTATION)-0.68%
Proton Energy Systems, Inc.(a) 13,700 366,475
==============================================================
ELECTRONICS (SEMICONDUCTORS)-1.43%
Analog Devices, Inc.(a) 5,000 325,000
--------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 6,300 440,606
==============================================================
765,606
==============================================================
ENGINEERING & CONSTRUCTION-0.64%
Quanta Services, Inc.(a) 11,000 341,688
==============================================================
NATURAL GAS-9.80%
Dynegy Inc.-Class A 10,700 495,544
--------------------------------------------------------------
El Paso Energy Corp. 13,000 814,938
--------------------------------------------------------------
Enron Corp. 45,800 3,758,463
--------------------------------------------------------------
TNPC, Inc.(a) 10,700 177,888
==============================================================
5,246,833
==============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-0.62%
Apache Corp. 6,000 331,875
==============================================================
POWER PRODUCERS (INDEPENDENT)-4.30%
AES Corp. (The)(a) 29,976 1,693,644
--------------------------------------------------------------
Calpine Capital Trust III-$2.50 Conv.
Pfd. (Acquired 08/03/00; Cost
$550,000)(b) 11,000 610,500
==============================================================
2,304,144
==============================================================
SERVICES (COMMERCIAL &
CONSUMER)-0.77%
Convergys Corp.(a) 9,500 413,844
==============================================================
TELECOMMUNICATIONS
(CELLULAR/WIRELESS)-2.90%
Level 3 Communications, Inc.(a) 6,000 286,125
--------------------------------------------------------------
Phone.com, Inc.(a) 10,900 1,008,931
--------------------------------------------------------------
Western Wireless Corp.-Class A(a) 5,400 256,500
==============================================================
1,551,556
==============================================================
TELEPHONE-6.88%
Broadwing Inc.(a) 11,700 330,525
--------------------------------------------------------------
Qwest Communications International
Inc.(a) 6,600 320,925
--------------------------------------------------------------
SBC Communications Inc. 32,000 1,846,000
--------------------------------------------------------------
|
FS-34
MARKET
SHARES VALUE
TELEPHONE-6.88%-(CONTINUED)
Verizon Communications 20,500 $ 1,185,156
==============================================================
3,682,606
==============================================================
Total Domestic Stocks & Other
Equity Interests (Cost
$22,242,544) 34,463,078
==============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-30.03%
BERMUDA-0.12%
Global Crossing Ltd., $17.50 Conv.
Pfd.
(Telecommunications-Cellular/Wireless)
(Acquired 12/09/99, Cost
$100,000)(b) 400 63,600
==============================================================
BRAZIL-0.76%
Companhia Paranaense de
Energia-Copel-ADR (Electric
Companies) 45,000 407,812
==============================================================
CANADA-0.94%
Nortel Networks Corp. (Communications
Equipment) 6,600 300,300
--------------------------------------------------------------
Stuart Energy Systems (Engineering &
Construction)(a) 13,300 201,159
==============================================================
501,459
==============================================================
FINLAND-1.92%
Nokia Oyj-ADR (Communications
Equipment) 24,000 1,026,000
==============================================================
FRANCE-2.72%
Suez Lyonnaise des Eaux S.A.
(Manufacturing-Diversified) 3,650 556,944
--------------------------------------------------------------
Total Fina Elf S.A.
(Oil-International Integrated) 1,700 243,240
--------------------------------------------------------------
Vivendi S.A.
(Manufacturing-Diversified) 9,100 654,114
==============================================================
1,454,298
==============================================================
GERMANY-0.79%
E.On A.G.
(Manufacturing-Diversified)(a) 8,320 422,940
==============================================================
ISRAEL-0.74%
Check Point Software Technologies
Ltd. (Computers-Software &
Services)(a) 2,500 395,937
==============================================================
ITALY-3.09%
ACEA S.p.A. (Water Utilities) 72,800 966,266
--------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 126,300 687,053
==============================================================
1,653,319
==============================================================
|
MARKET
SHARES VALUE
JAPAN-2.58%
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long Distance) 30 $ 273,015
--------------------------------------------------------------
NTT DoCoMo, Inc.
(Telecommunications-Cellular/
Wireless) 45 1,109,380
==============================================================
1,382,395
==============================================================
NETHERLANDS-1.10%
Versatel Telecom International N.V.
(Telecommunications-Long
Distance)(a) 30,000 591,933
==============================================================
SOUTH KOREA-0.92%
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 31,200 493,350
==============================================================
SPAIN-3.43%
Endesa S.A. (Electric Companies) 11,600 189,011
--------------------------------------------------------------
Endesa S.A.-ADR (Electric Companies) 39,600 660,825
--------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 22,700 432,870
--------------------------------------------------------------
Union Electrica Fenosa, S.A.
(Electric Companies) 30,000 554,763
==============================================================
1,837,469
==============================================================
UNITED KINGDOM-10.92%
Bookham Technology PLC
(Communications Equipment)(a) 15,400 507,157
--------------------------------------------------------------
COLT Telecom Group PLC (Telephone)(a) 15,800 504,507
--------------------------------------------------------------
Jazztel PLC-ADR (Telephone)(a) 11,800 208,713
--------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 95,060 824,371
--------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-Cellular/Wireless) 913,891 3,803,513
==============================================================
5,848,261
==============================================================
Total Foreign Stocks & Other
Equity
Interests (Cost $10,143,907) 16,078,773
==============================================================
MONEY MARKET FUNDS-5.41%
STIC Liquid Assets Portfolio(c) 1,447,370 1,447,370
--------------------------------------------------------------
STIC Prime Portfolio(c) 1,447,370 1,447,370
==============================================================
Total Money Market Funds
(Cost $2,894,740) 2,894,740
==============================================================
TOTAL INVESTMENTS-99.81% (Cost
$35,281,191) 53,436,591
==============================================================
OTHER ASSETS LESS LIABILITIES-0.19% 99,061
==============================================================
NET ASSETS-100.00% $53,535,652
______________________________________________________________
==============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ltd. - Limited
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) 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 aggregate market value of these securities at 10/31/00
was $674,100 which represents 1.26% of the Fund's net assets.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-35
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost $35,281,191) $53,436,591
------------------------------------------------------------
Foreign currencies, at value (cost $195,633) 197,544
------------------------------------------------------------
Receivables for:
Investments sold 156,625
------------------------------------------------------------
Fund shares sold 19,187
------------------------------------------------------------
Dividends 87,502
------------------------------------------------------------
Collateral for securities loaned 2,374,729
------------------------------------------------------------
Other assets 7,362
============================================================
Total assets $56,279,540
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 181,744
------------------------------------------------------------
Collateral upon return of securities loaned 2,374,729
------------------------------------------------------------
Accrued advisory fees 21,144
------------------------------------------------------------
Accrued administrative services fees 4,235
------------------------------------------------------------
Accrued distribution fees 37,768
------------------------------------------------------------
Accrued trustees' fees 888
------------------------------------------------------------
Accrued transfer agent fees 15,920
------------------------------------------------------------
Accrued operating expenses 107,460
============================================================
Total liabilities 2,743,888
============================================================
Net assets applicable to shares outstanding $53,535,652
____________________________________________________________
============================================================
NET ASSETS:
Class A $24,745,356
____________________________________________________________
============================================================
Class B $28,378,220
____________________________________________________________
============================================================
Class C $ 412,076
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,343,110
____________________________________________________________
============================================================
Class B 1,590,458
____________________________________________________________
============================================================
Class C 23,128
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 18.42
------------------------------------------------------------
Offering price per share:
(Net asset value of $18.42 divided by
95.25%) $ 19.34
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 17.84
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 17.82
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$34,576) $ 451,954
------------------------------------------------------------
Dividends from affiliated money market funds 200,113
------------------------------------------------------------
Interest 21,916
------------------------------------------------------------
Security lending income 33,273
============================================================
Total investment income 707,256
============================================================
EXPENSES:
Advisory fees 551,358
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 28,631
------------------------------------------------------------
Distribution fees -- Class A 127,803
------------------------------------------------------------
Distribution fees -- Class B 307,927
------------------------------------------------------------
Distribution fees -- Class C 1,909
------------------------------------------------------------
Transfer agent fees 155,887
------------------------------------------------------------
Trustees' fees 8,845
------------------------------------------------------------
Other 172,656
============================================================
Total expenses 1,405,016
============================================================
Less: Fees waived (116,307)
------------------------------------------------------------
Expenses paid indirectly (1,396)
============================================================
Net expenses 1,287,313
============================================================
Net investment income (loss) (580,057)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 10,147,564
------------------------------------------------------------
Foreign currencies (66,282)
------------------------------------------------------------
Futures contracts (38,703)
------------------------------------------------------------
Option contracts written 38,001
============================================================
10,080,580
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 1,683,622
------------------------------------------------------------
Foreign currencies (3,494)
============================================================
1,680,128
============================================================
Net gain on investment securities, foreign
currencies, futures contracts and option
contracts 11,760,708
============================================================
Net increase in net assets resulting from
operations $11,180,651
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-36
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
----------- ------------
OPERATIONS:
Net investment income (loss) $ (580,057) $ (65,857)
-----------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures contracts and option contracts 10,080,580 5,560,967
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and futures contracts 1,680,128 5,993,037
=========================================================================================
Net increase in net assets resulting from operations 11,180,651 11,488,147
=========================================================================================
Distributions to shareholders from net investment income:
Class A -- (90,183)
-----------------------------------------------------------------------------------------
Advisor Class* -- (56,937)
-----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (2,273,919) (1,403,586)
-----------------------------------------------------------------------------------------
Class B (2,931,748) (1,925,203)
-----------------------------------------------------------------------------------------
Class C (1,316) --
-----------------------------------------------------------------------------------------
Advisor Class* (2,002) (392,100)
-----------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,980,892 (6,581,799)
-----------------------------------------------------------------------------------------
Class B 30,946 (11,163,548)
-----------------------------------------------------------------------------------------
Class C 450,664 14,334
-----------------------------------------------------------------------------------------
Advisor Class* (22,973) (7,642,305)
=========================================================================================
Net increase (decrease) in net assets 8,411,195 (17,753,180)
=========================================================================================
NET ASSETS:
Beginning of year 45,124,457 62,877,637
=========================================================================================
End of year $53,535,652 $ 45,124,457
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $27,414,002 $ 22,848,512
-----------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures contracts and
option contracts 7,972,318 5,806,741
-----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 18,149,332 16,469,204
=========================================================================================
$53,535,652 $ 45,124,457
_________________________________________________________________________________________
=========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of the close of business on February 11, 2000.
See Notes to Financial Statements.
FS-37
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Infrastructure Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of nine separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 long-term growth of capital. At a meeting
held on May 23 and 24, 2000, the Board of Trustees approved a restructuring of
the Fund to eliminate the master-feeder structure. The Fund, which had invested
substantially all of its investable assets in the Global Infrastructure
Portfolio (the "Portfolio"), a Delaware business trust, would now invest
directly in the securities in which the Portfolio had invested. The
restructuring of the Fund was approved by Shareholders of the Fund at a meeting
held on September 1, 2000 and was completed on September 8, 2000.
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 -- Securities, including restricted securities, are
valued according to the following policy. 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 October 31, 2000, undistributed net investment income was increased by
$580,057, undistributed net realized gains decreased by $2,706,018 and paid
in capital increased by $2,125,961 as a result of book/tax differences due to
utilization of a portion of the proceeds from redemptions as distributions
for federal income tax purposes, foreign currency transactions and net
operating loss reclassifications. Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions -- Distributions from income and 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.
FS-38
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. 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.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. 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.
I. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively. During the year
ended October 31, 2000, AIM waived fees of $116,307.
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-39
the Fund. For the year ended October 31, 2000, AIM was paid $50,000 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 October 31, 2000, AFS was
paid $103,999 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $127,803, $307,927
and $1,909, respectively, as compensation under the Plans.
AIM Distributors received commissions of $9,122 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $6,965 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $654 and reductions in custodian fees of $742 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $1,396.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $2,328,166 were on
loan to brokers. The loans were secured by cash collateral of $2,374,729
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $33,273 for securities lending.
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 October 31, 2000 was
$34,698,925 and $39,280,658, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 19,709,582 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,554,182) ========================================================= Net unrealized appreciation of investment securities $ 18,155,400 _________________________________________________________ ========================================================= Investments have the same cost for tax and financial statement purposes. |
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF CONTRACTS
PREMIUMS RECEIVED
--------- ---------
Beginning of year -- $ --
---------------------------------------------------------
Written 135 53,593
---------------------------------------------------------
Closed (135) (53,593)
=========================================================
End of year -- $ --
_________________________________________________________
=========================================================
|
FS-40
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ---------- ------------
Sold:
Class A 661,981 $ 12,809,797 162,299 $ 2,474,900
--------------------------------------------------------------------------------------------------------------------
Class B 222,164 4,334,670 80,398 1,180,744
--------------------------------------------------------------------------------------------------------------------
Class C* 32,764 654,226 976 14,334
--------------------------------------------------------------------------------------------------------------------
Advisor Class** 1 15 29,602 453,399
====================================================================================================================
Issued as reinvestment of dividends:
Class A 128,271 2,153,369 102,312 1,428,280
--------------------------------------------------------------------------------------------------------------------
Class B 164,254 2,682,268 126,907 1,737,353
--------------------------------------------------------------------------------------------------------------------
Class C* 81 1,316 -- --
--------------------------------------------------------------------------------------------------------------------
Advisor Class** 51 875 32,402 459,131
====================================================================================================================
Issued in connection with acquisitions:***
Class A 1,119 23,863 -- --
--------------------------------------------------------------------------------------------------------------------
Advisor Class (1,094) (23,863) -- --
====================================================================================================================
Reacquired:
Class A (670,570) (13,006,137) (701,304) (10,484,979)
--------------------------------------------------------------------------------------------------------------------
Class B (372,887) (6,985,992) (963,484) (14,081,645)
--------------------------------------------------------------------------------------------------------------------
Class C* (10,693) (204,878) -- --
--------------------------------------------------------------------------------------------------------------------
Advisor Class** -- -- (544,836) (8,554,835)
====================================================================================================================
155,442 $ 2,439,529 (1,674,728) $(25,373,318)
____________________________________________________________________________________________________________________
====================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $16.33 $ 14.18 $15.01 $14.42 $ 12.11
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) -- 0.07 (0.01) (0.03)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.16 3.07 (0.79) 1.32 2.34
===================================================================================================================
Total from investment operations 4.01 3.07 (0.72) 1.31 2.31
===================================================================================================================
Less distributions:
Dividends from net investment income -- (0.07) -- -- --
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.92) (0.85) (0.11) (0.72) --
===================================================================================================================
Total distributions (1.92) (0.92) (0.11) (0.72) --
===================================================================================================================
Net asset value, end of period $18.42 $ 16.33 $14.18 $15.01 $ 14.42
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 25.71% 22.72% (4.82)% 9.38% 19.08%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,745 $19,958 $23,531 $38,281 $38,397
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 2.00% 1.99% 2.00% 2.14%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.21%(c) 2.22% 2.23% 2.08% 2.25%
-------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (0.75)%(c) 0.09% 0.52% (0.09)% (0.19)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 66% 49% 96% 41% 41%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $25,566,123.
FS-41
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 15.94 $ 13.87 $ 14.75 $ 14.24 $ 12.03
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24) (0.06) -- (0.09) (0.09)
-----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 4.06 2.98 (0.77) 1.32 2.30
=================================================================================================================
Total from investment operations 3.82 2.92 (0.77) 1.23 2.21
=================================================================================================================
Less distributions from net realized gains (1.92) (0.85) (0.11) (0.72) --
=================================================================================================================
Net asset value, end of period $ 17.84 $ 15.94 $ 13.87 $ 14.75 $ 14.24
_________________________________________________________________________________________________________________
=================================================================================================================
Total return(b) 25.09% 22.03% (5.31)% 8.83% 18.37%
_________________________________________________________________________________________________________________
=================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $28,378 $25,134 $32,349 $57,199 $53,678
_________________________________________________________________________________________________________________
=================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.49% 2.50% 2.64%
-----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.71%(c) 2.72% 2.73% 2.58% 2.75%
=================================================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (0.41)% 0.02% (0.59)% (0.69)%
_________________________________________________________________________________________________________________
=================================================================================================================
Portfolio turnover rate 66% 49% 96% 41% 41%
_________________________________________________________________________________________________________________
=================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $30,792,736.
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- -------------
Net asset value, beginning of period $15.94 $13.99
------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.24) (0.03)
------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 4.04 1.98
==========================================================================================
Total from investment operations 3.80 1.95
==========================================================================================
Less distributions from net realized gains (1.92) --
==========================================================================================
Net asset value, end of period $17.82 $15.94
__________________________________________________________________________________________
==========================================================================================
Total return(b) 24.94% 13.94%
__________________________________________________________________________________________
==========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 412 $ 16
__________________________________________________________________________________________
==========================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50%(d)
------------------------------------------------------------------------------------------
Without fee waivers 2.71%(c) 2.72%(d)
==========================================================================================
Ratio of net investment income (loss) to average net assets (1.25)%(c) (0.41)%(d)
__________________________________________________________________________________________
==========================================================================================
Portfolio turnover rate 66% 49%
__________________________________________________________________________________________
==========================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $190,872.
(d) Annualized.
FS-42
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Resources Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Resources Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-43
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-65.67%
AUTO PARTS & EQUIPMENT-1.16%
IMPCO Technologies, Inc.(a) 15,800 $ 311,062
=============================================================
CHEMICALS-1.59%
Du Pont (E. I.) de Nemours & Co. 4,669 211,856
-------------------------------------------------------------
Solutia Inc. 16,800 214,200
=============================================================
426,056
=============================================================
ELECTRIC COMPANIES-2.62%
Avista Corp. 25,000 560,937
-------------------------------------------------------------
Southern Energy, Inc.(a) 5,200 141,700
=============================================================
702,637
=============================================================
ELECTRICAL EQUIPMENT-3.52%
Active Power, Inc.(a) 6,300 240,187
-------------------------------------------------------------
Capstone Turbine Corp.(a) 3,600 199,800
-------------------------------------------------------------
Electric Fuel Corp.(a) 55,000 501,875
=============================================================
941,862
=============================================================
ELECTRONICS (INSTRUMENTATION)-2.33%
Hydrogencis Corp.(a) 8,800 106,150
-------------------------------------------------------------
Proton Energy Systems, Inc.(a) 19,400 518,950
=============================================================
625,100
=============================================================
NATURAL GAS-15.46%
Dynegy Inc.-Class A 25,000 1,157,812
-------------------------------------------------------------
El Paso Energy Corp. 10,000 626,875
-------------------------------------------------------------
Enron Corp. 19,700 1,616,631
-------------------------------------------------------------
Equitable Resources, Inc. 8,500 493,000
-------------------------------------------------------------
TNPC, Inc.(a) 15,000 249,375
=============================================================
4,143,693
=============================================================
OIL & GAS (DRILLING & EQUIPMENT)-7.60%
BJ Services Co.(a) 12,400 650,225
-------------------------------------------------------------
Chiles Offshore, Inc.(a) 13,000 208,000
-------------------------------------------------------------
Cooper Cameron Corp.(a) 7,800 425,100
-------------------------------------------------------------
Oceaneering International, Inc.(a) 15,500 217,969
-------------------------------------------------------------
RPC, Inc. 5,200 64,675
-------------------------------------------------------------
Schlumberger Ltd. 5,500 418,688
-------------------------------------------------------------
Transocean Sedco Forex Inc. 952 50,456
=============================================================
2,035,113
=============================================================
OIL & GAS (EXPLORATION &
PRODUCTION)-20.07%
Anadarko Petroleum Corp. 15,000 960,750
-------------------------------------------------------------
Apache Corp. 15,000 829,688
-------------------------------------------------------------
Barrett Resources Corp.(a) 15,600 567,450
-------------------------------------------------------------
BP Prudhoe Bay Royalty Trust 100,000 1,206,250
-------------------------------------------------------------
|
MARKET
SHARES VALUE
OIL & GAS (EXPLORATION &
PRODUCTION)-(CONTINUED)
Cross Timbers Oil Co. 30,000 $ 564,375
-------------------------------------------------------------
EOG Resources, Inc. 21,300 838,688
-------------------------------------------------------------
Triton Energy Ltd.(a) 13,400 412,050
=============================================================
5,379,251
=============================================================
OIL & GAS (REFINING & MARKETING)-1.85%
Valero Energy Corp. 15,000 495,938
=============================================================
OIL (DOMESTIC INTEGRATED)-2.87%
Conoco Inc.-Class B 28,326 770,113
=============================================================
OIL (INTERNATIONAL INTEGRATED)-5.89%
Chevron Corp. 10,000 821,250
-------------------------------------------------------------
Exxon Mobil Corp. 8,492 757,380
=============================================================
1,578,630
=============================================================
PAPER & FOREST PRODUCTS-0.71%
International Paper Co. 5,200 190,450
=============================================================
Total Domestic Common Stocks (Cost
$16,236,311) 17,599,905
=============================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-30.01%
BELGIUM-1.16%
Solvay S.A. (Chemicals-Diversified) 6,100 310,606
=============================================================
CANADA-19.92%
Alberta Energy Co. Ltd. (Oil &
Gas-Exploration & Production) 20,000 736,594
-------------------------------------------------------------
Anderson Exploration Ltd.
(Oil-Domestic Integrated)(a) 30,000 549,990
-------------------------------------------------------------
Baytex Energy Ltd. (Oil &
Gas-Exploration & Production)(a) 30,000 225,889
-------------------------------------------------------------
Cypress Energy Inc.-Class A (Oil &
Gas-Exploration & Production)(a) 75,000 356,020
-------------------------------------------------------------
European Goldfields Ltd. (Metals
Mining)(a) 44,000 50,416
-------------------------------------------------------------
Nexen Inc. (Oil & Gas-Exploration &
Production) 17,700 424,740
-------------------------------------------------------------
Petro-Canada (Oil-Domestic Integrated) 10,000 209,520
-------------------------------------------------------------
Placer Dome Inc. (Gold & Precious
Metals Mining) 64,700 531,203
-------------------------------------------------------------
Stuart Energy Systems (Engineering &
Construction)(a) 55,000 831,860
-------------------------------------------------------------
Talisman Energy Inc. (Oil &
Gas-Exploration & Production)(a) 35,000 1,098,835
-------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) 14,500 322,792
=============================================================
5,337,859
=============================================================
DENMARK-2.30%
Vestas Wind Systems A.S.
(Manufacturing-Specialized) 11,400 617,488
=============================================================
|
FS-44
MARKET
SHARES VALUE
FRANCE-3.74%
Air Liquide S.A.
(Chemicals-Specialty)(a) 3,960 $ 468,139
-------------------------------------------------------------
Bouygues Offshore S.A.-ADR (Oil &
Gas-Drilling & Equipment) 21,700 534,362
=============================================================
1,002,501
=============================================================
IRELAND-1.12%
Jefferson Smurfit Group PLC-ADR
(Containers & Packaging-Paper) 16,500 299,063
=============================================================
UNITED KINGDOM-1.77%
Enterprise Oil PLC (Oil &
Gas-Exploration & Production) 60,000 474,608
=============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$7,854,729) 8,042,125
=============================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS-4.39%
STIC Liquid Assets Portfolio(b) 588,613 $ 588,613
-------------------------------------------------------------
STIC Prime Portfolio(b) 588,613 588,613
=============================================================
Total Money Market Funds (Cost
$1,177,226) 1,177,226
=============================================================
TOTAL INVESTMENTS-100.07% (Cost
$25,268,266) 26,819,256
=============================================================
LIABILITIES LESS OTHER ASSETS-(0.07%) (19,161)
=============================================================
NET ASSETS-100.00% $26,800,095
_____________________________________________________________
=============================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-45
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost $25,268,266) $26,819,256
------------------------------------------------------------
Foreign currencies, at value (cost $227,873) 228,354
------------------------------------------------------------
Receivables for:
Fund shares sold 2,094
------------------------------------------------------------
Dividends 15,263
------------------------------------------------------------
Collateral for securities loaned 326,069
------------------------------------------------------------
Other assets 8,648
============================================================
Total assets $27,399,684
============================================================
LIABILITIES:
Payables for:
Investments purchased 105,600
------------------------------------------------------------
Fund shares reacquired 76,704
------------------------------------------------------------
Collateral upon return of securities loaned 326,069
------------------------------------------------------------
Accrued advisory fees 1,600
------------------------------------------------------------
Accrued administrative services fees 4,098
------------------------------------------------------------
Accrued distribution fees 19,441
------------------------------------------------------------
Accrued trustees' fees 742
------------------------------------------------------------
Accrued transfer agent fees 13,920
------------------------------------------------------------
Accrued operating expenses 51,415
============================================================
Total liabilities 599,589
============================================================
Net assets applicable to shares outstanding $26,800,095
____________________________________________________________
============================================================
NET ASSETS:
Class A $12,637,530
____________________________________________________________
============================================================
Class B $13,709,666
____________________________________________________________
============================================================
Class C $ 452,899
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 1,033,899
____________________________________________________________
============================================================
Class B 1,154,463
____________________________________________________________
============================================================
Class C 38,132
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 12.22
------------------------------------------------------------
Offering price per share:
(Net asset value of $12.22 divided by
95.25%) $ 12.83
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 11.88
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 11.88
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$20,402) $ 538,824
-----------------------------------------------------------
Dividends from affiliated money market funds 112,419
-----------------------------------------------------------
Interest 1,520
-----------------------------------------------------------
Security lending income 13,297
===========================================================
Total investment income 666,060
===========================================================
EXPENSES:
Advisory fees 296,957
-----------------------------------------------------------
Administrative services fees 50,000
-----------------------------------------------------------
Custodian fees 13,478
-----------------------------------------------------------
Distribution fees -- Class A 69,673
-----------------------------------------------------------
Distribution fees -- Class B 163,259
-----------------------------------------------------------
Distribution fees -- Class C 2,711
-----------------------------------------------------------
Transfer agent fees 154,921
-----------------------------------------------------------
Professional fees 100,080
-----------------------------------------------------------
Trustees' fees 5,512
-----------------------------------------------------------
Other 81,185
===========================================================
Total expenses 937,776
===========================================================
Less: Fees waived (242,924)
-----------------------------------------------------------
Expenses paid indirectly (510)
===========================================================
Net expenses 694,342
===========================================================
Net investment income (loss) (28,282)
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (359,827)
-----------------------------------------------------------
Foreign currencies (80,004)
===========================================================
(439,831)
===========================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 603,678
-----------------------------------------------------------
Foreign currencies (630)
===========================================================
603,048
===========================================================
Net gain from investment securities and foreign
currencies 163,217
===========================================================
Net increase in net assets resulting from
operations $ 134,935
___________________________________________________________
===========================================================
|
See Notes to Financial Statements.
FS-46
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ (28,282) $ (15,497)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (439,831) (1,210,414)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 603,048 5,873,517
==========================================================================================
Net increase in net assets resulting from operations 134,935 4,647,606
==========================================================================================
Share transactions-net:
Class A (3,338,400) (5,463,882)
------------------------------------------------------------------------------------------
Class B (6,401,000) (11,256,193)
------------------------------------------------------------------------------------------
Class C 428,516 43,424
------------------------------------------------------------------------------------------
Advisor Class* (22,444) (5,519,490)
==========================================================================================
Net increase (decrease) in net assets (9,198,393) (17,548,535)
==========================================================================================
NET ASSETS:
Beginning of year 35,998,488 53,547,023
==========================================================================================
End of year $ 26,800,095 $ 35,998,488
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 48,851,091 $ 58,323,182
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (23,601,065) (23,271,715)
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 1,550,069 947,021
==========================================================================================
$ 26,800,095 $ 35,998,488
__________________________________________________________________________________________
==========================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of close of business on February 11, 2000.
See Notes to Financial Statements.
FS-47
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Resources Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of nine
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 long-term growth of capital. The Fund
invests substantially all of its investable assets in Global Resources Portfolio
(the "Portfolio"). The Portfolio is organized as a Delaware business trust which
is registered under the 1940 Act as an open-end management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
October 31, 2000, all of the shares of beneficial interest of the Portfolio were
owned by either the Fund or an affiliated INVESCO entity.
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 and the Portfolio 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 October 31, 2000, undistributed net investment income was increased by
$28,282, undistributed net realized gains (losses) increased by $110,481 and
paid-in capital decreased by $138,763 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions -- Distributions from income and 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
FS-48
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 $23,578,846 as of October 31,
2000, which may be carried forward to offset future taxable gains, if any,
which expires, 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 Portfolio may enter into a foreign currency contract to attempt to
minimize the risk to the Portfolio from adverse changes in the relationship
between currencies. The Portfolio 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
Portfolio 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.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively. During the year
ended October 31, 2000, AIM waived fees of $242,924.
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 and the Portfolio. For the year ended October
31, 2000, AIM was paid $50,000 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 October 31, 2000, AFS was
paid $101,769 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $69,673, $163,259
and $2,711, respectively, as compensation under the Plans.
AIM Distributors received commissions of $4,984 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $516 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $400 and reductions in custodian fees of $110 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $510.
NOTE 4-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 October 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
FS-49
line. The commitment fee is allocated among the funds based on their respective average net assets for the period.
NOTE 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $319,675 were on
loan to brokers. The loans were secured by cash collateral of $326,069 received
by the Portfolio. For the year ended October 31, 2000, the Portfolio received
fees of $13,297 for securities lending.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended October 31, 2000 was
$29,894,843 and $38,725,160, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 3,174,505 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,645,733) ========================================================= Net unrealized appreciation of investment securities $ 1,528,772 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $25,290,484 |
FS-50
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
Sold:
Class A 434,021 $ 5,508,796 1,483,872 $ 16,786,501
---------------------------------------------------------------------------------------------------------------------
Class B 255,733 3,154,314 623,453 7,240,416
---------------------------------------------------------------------------------------------------------------------
Class C* 77,757 964,884 10,161 124,881
---------------------------------------------------------------------------------------------------------------------
Advisor Class** 1,495 269,584 40,141 464,770
=====================================================================================================================
Conversion of Advisor Class shares to Class A shares***:
Class A 16,352 194,590 -- --
---------------------------------------------------------------------------------------------------------------------
Advisor Class** (16,069) (194,590) -- --
=====================================================================================================================
Reacquired:
Class A (708,505) (9,041,786) (1,968,466) (22,250,382)
---------------------------------------------------------------------------------------------------------------------
Class B (792,579) (9,555,314) (1,629,584) (18,496,610)
---------------------------------------------------------------------------------------------------------------------
Class C* (43,052) (536,368) (6,734) (81,457)
---------------------------------------------------------------------------------------------------------------------
Advisor Class** (7,719) (97,438) (477,178) (5,984,260)
=====================================================================================================================
(782,566) $(9,333,328) (1,924,335) $(22,196,141)
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $ 12.12 $ 10.95 $ 20.65 $ 17.43 $ 11.44
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 0.02 (0.11) (0.25) (0.24)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.08 1.15 (8.91) 4.08 6.28
===================================================================================================================
Total from investment operations 0.10 1.17 (9.02) 3.83 6.04
===================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.19) -- (0.04)
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) (0.61) (0.01)
===================================================================================================================
Total distributions -- -- (0.68) (0.61) (0.05)
===================================================================================================================
Net asset value, end of period $ 12.22 $ 12.12 $ 10.95 $ 20.65 $ 17.43
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 0.74% 10.68% (45.02)% 22.64% 53.04%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,638 $15,664 $19,463 $69,975 $48,729
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.00%(c) 2.00% 1.98% 2.03% 2.20%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.80%(c) 2.30% 2.29% 2.13% 2.30%
===================================================================================================================
Ratio of net investment income (loss) to average net assets 0.18%(c) 0.19% (0.75)% (1.41)% (1.55)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 105% 123% 201% 321% 94%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include sales charges.
(c) Ratios are based on average daily net assets of $13,934,536.
FS-51
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
------- ------- ------- ------- -------
Net asset value, beginning of period $11.84 $10.75 $20.37 $17.29 $ 11.36
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.04) (0.18) (0.33) (0.31)
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.08 1.13 (8.76) 4.02 6.25
===================================================================================================================
Total from investment operations 0.04 1.09 (8.94) 3.69 5.94
===================================================================================================================
Less distributions:
Dividends from net investment income -- -- (0.19) -- --
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.49) (0.61) (0.01)
===================================================================================================================
Total distributions -- -- (0.68) (0.61) (0.01)
===================================================================================================================
Net asset value, end of period $11.88 $11.84 $10.75 $20.37 $ 17.29
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 0.34% 10.14% (45.25)% 21.99% 52.39%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $13,710 $20,019 $28,996 $86,812 $57,749
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50% 2.48% 2.53% 2.70%
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 3.30%(c) 2.80% 2.79% 2.63% 2.80%
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.32)%(c) (0.31)% (1.25)% (1.91)% (2.05)%
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 105% 123% 201% 321% 94%
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $16,325,863.
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999(a)
----------- -------------
Net asset value, beginning of period $11.84 $10.00
--------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.03)
--------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.08 1.87
============================================================================================
Total from investment operations 0.04 1.84
============================================================================================
Net asset value, end of period $11.88 $11.84
____________________________________________________________________________________________
============================================================================================
Total return(b) 0.34% 18.40%
____________________________________________________________________________________________
============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 453 $ 41
____________________________________________________________________________________________
============================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.50%(c) 2.50%(d)
--------------------------------------------------------------------------------------------
Without fee waivers 3.30%(c) 2.80%(d)
============================================================================================
Ratio of net investment income (loss) to average net assets (0.32)%(c) (0.31)%(d)
____________________________________________________________________________________________
============================================================================================
Portfolio turnover rate 105% 123%
____________________________________________________________________________________________
============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $271,111.
(d) Annualized.
FS-52
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Telecommunications and Technology Fund and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Global Telecommunications and Technology Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-53
SCHEDULE OF INVESTMENTS
October 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS-86.95%
BIOTECHNOLOGY-5.95%
Amgen Inc.(a) 342,000 $ 19,814,625
---------------------------------------------------------------
PE Corp-Celera Genomics Group(a) 150,000 10,125,000
---------------------------------------------------------------
Cephalon, Inc.(a) 394,000 21,128,250
---------------------------------------------------------------
Ciphergen Biosystems, Inc.(a) 147,300 4,566,300
---------------------------------------------------------------
Human Genome Sciences, Inc.(a) 250,000 22,097,656
---------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 248,000 48,639,000
---------------------------------------------------------------
Incyte Genomics, Inc.(a) 1,098,500 40,232,562
---------------------------------------------------------------
Millennium Pharmaceuticals,
Inc.(a) 200,000 14,512,500
===============================================================
181,115,893
===============================================================
COMMUNICATIONS EQUIPMENT-14.91%
CIENA Corp.(a) 1,000,000 105,125,000
---------------------------------------------------------------
Corning Inc. 1,611,000 123,241,500
---------------------------------------------------------------
Finisar Corp.(a) 900,000 25,931,250
---------------------------------------------------------------
JDS Uniphase Corp.(a) 1,221,000 99,358,875
---------------------------------------------------------------
Redback Networks Inc.(a) 350,000 37,253,125
---------------------------------------------------------------
Scientific-Atlanta, Inc. 464,000 31,755,000
---------------------------------------------------------------
Sunrise Telecom Inc.(a) 388,400 9,661,450
---------------------------------------------------------------
Turnstone Systems, Inc.(a) 1,000,000 21,250,000
===============================================================
453,576,200
===============================================================
COMPUTERS (HARDWARE)-6.26%
Handspring, Inc.(a) 500,000 36,156,250
---------------------------------------------------------------
McDATA Corp.-Class B(a) 245,000 20,423,047
---------------------------------------------------------------
Palm, Inc.(a) 1,300,000 69,631,250
---------------------------------------------------------------
Sun Microsystems, Inc.(a) 580,000 64,307,500
===============================================================
190,518,047
===============================================================
COMPUTERS (NETWORKING)-11.77%
Cisco Systems, Inc.(a) 1,900,000 102,362,500
---------------------------------------------------------------
Emulex Corp.(a) 130,000 19,093,750
---------------------------------------------------------------
Exodus Communications, Inc.(a) 857,500 28,779,844
---------------------------------------------------------------
Juniper Networks, Inc.(a) 850,000 165,750,000
---------------------------------------------------------------
VeriSign, Inc.(a) 320,000 42,240,000
===============================================================
358,226,094
===============================================================
COMPUTERS (PERIPHERALS)-12.24%
Brocade Communications Systems,
Inc.(a) 770,000 175,078,750
---------------------------------------------------------------
EMC Corp.(a) 900,000 80,156,250
---------------------------------------------------------------
Network Appliance, Inc.(a) 925,000 110,075,000
---------------------------------------------------------------
SanDisk Corp.(a) 133,000 7,146,672
===============================================================
372,456,672
===============================================================
COMPUTERS (SOFTWARE & SERVICES)-15.85%
Ariba, Inc.(a) 403,000 50,929,125
---------------------------------------------------------------
|
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Art Technology Group, Inc.(a) 200,000 $ 12,550,000
---------------------------------------------------------------
BEA Systems, Inc.(a) 500,000 35,875,000
---------------------------------------------------------------
Blue Martini Software, Inc.(a) 262,700 9,884,087
---------------------------------------------------------------
i2 Technologies, Inc.(a) 136,000 23,120,000
---------------------------------------------------------------
Inktomi Corp.(a) 400,000 25,375,000
---------------------------------------------------------------
Oracle Corp.(a) 2,600,000 85,800,000
---------------------------------------------------------------
Siebel Systems, Inc.(a) 1,000,000 104,937,500
---------------------------------------------------------------
StorageNetworks, Inc.(a) 100,000 6,343,750
---------------------------------------------------------------
VERITAS Software Corp.(a) 727,800 102,631,172
---------------------------------------------------------------
WatchGuard Technologies, Inc.(a) 500,000 25,000,000
===============================================================
482,445,634
===============================================================
ELECTRICAL EQUIPMENT-0.22%
Stratos Lightwave, Inc.(a) 255,500 6,754,781
===============================================================
ELECTRONICS (INSTRUMENTATION)-1.13%
Alpha Industries, Inc.(a) 300,000 11,962,500
---------------------------------------------------------------
Newport Corp. 195,000 22,269,609
===============================================================
34,232,109
===============================================================
ELECTRONICS (SEMICONDUCTORS)-12.81%
Analog Devices, Inc.(a) 540,000 35,100,000
---------------------------------------------------------------
Applied Micro Circuits Corp.(a) 2,000,000 152,875,000
---------------------------------------------------------------
GlobeSpan, Inc.(a) 322,000 24,773,875
---------------------------------------------------------------
SDL, Inc.(a) 500,000 129,625,000
---------------------------------------------------------------
TranSwitch Corp.(a) 181,800 10,498,950
---------------------------------------------------------------
Triquint Semiconductor, Inc.(a) 965,800 37,002,213
===============================================================
389,875,038
===============================================================
EQUIPMENT (SEMICONDUCTOR)-2.82%
Broadcom Corp.-Class A(a) 386,100 85,858,988
===============================================================
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.61%
Genentech, Inc.(a) 224,000 18,480,000
===============================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.96%
PE Corp-PE Biosystems Group 250,000 29,250,000
===============================================================
SERVICES (DATA PROCESSING)-0.39%
Paychex, Inc. 210,200 11,915,713
===============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.03%
Phone.com, Inc.(a) 340,000 31,471,250
===============================================================
Total Domestic Common Stocks
(Cost $2,011,888,892) 2,646,176,419
===============================================================
|
FS-54
MARKET
SHARES VALUE
FOREIGN STOCKS-9.50%
BERMUDA-0.70%
TyCom, Ltd. (Communications
Equipment)(a) 631,200 $ 21,145,200
===============================================================
CANADA-2.80%
Nortel Networks Corp.
(Communications Equipment) 384,008 17,373,766
---------------------------------------------------------------
PMC-Sierra, Inc.
(Electronics-Semiconductors)(a) 400,000 67,800,000
===============================================================
85,173,766
===============================================================
HONG KONG-1.20%
China Mobile Ltd.
(Telecommunications-
Cellular/Wireless)(a) 5,700,000 36,543,146
===============================================================
ISRAEL-0.74%
Check Point Software Technologies
Ltd. (Computers-Software &
Services)(a) 142,300 22,536,763
===============================================================
JAPAN-2.20%
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long
Distance) 2,001 18,210,081
---------------------------------------------------------------
NTT DoCoMo, Inc.
(Telecommunications-
Cellular/Wireless) 1,760 43,389,085
---------------------------------------------------------------
Softbank Corp. (Computers-Software
& Services) 90,000 5,402,557
===============================================================
67,001,723
===============================================================
|
MARKET
SHARES VALUE
SPAIN-0.66%
Telefonica S.A. (Telephone)(a) 1,058,409 $ 20,182,976
===============================================================
UNITED KINGDOM-1.20%
Vodafone Group PLC
(Telecommunications-
Cellular/Wireless) 8,754,003 36,433,193
===============================================================
Total Foreign Stocks
(Cost $141,309,176) 289,016,767
===============================================================
MONEY MARKET FUNDS-2.84%
STIC Liquid Assets Portfolio(b) 43,161,491 43,161,491
---------------------------------------------------------------
STIC Prime Portfolio(b) 43,161,491 43,161,491
===============================================================
Total Money Market Funds (Cost
$86,322,982) 86,322,982
===============================================================
TOTAL INVESTMENTS-99.29% (Cost
$2,239,521,050) 3,021,516,168
===============================================================
OTHER ASSETS LESS LIABILITIES-0.71% 21,660,320
===============================================================
NET ASSETS-100.00% $3,043,176,488
_______________________________________________________________
===============================================================
|
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
FS-55
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (Cost
$2,239,521,050) $3,021,516,168
-------------------------------------------------------------
Foreign currencies, at value (Cost
$17,659,876) 17,683,076
-------------------------------------------------------------
Receivables for:
Investments sold 18,787,376
-------------------------------------------------------------
Fund shares sold 6,152,844
-------------------------------------------------------------
Dividends 736,891
-------------------------------------------------------------
Collateral for securities loaned 266,427,893
-------------------------------------------------------------
Other assets 59,290
=============================================================
Total assets $3,331,363,538
=============================================================
LIABILITIES:
Payables for:
Investments purchased 10,705,737
-------------------------------------------------------------
Fund shares reacquired 5,041,200
-------------------------------------------------------------
Collateral upon return of securities loaned 266,427,893
-------------------------------------------------------------
Accrued advisory fees 2,503,768
-------------------------------------------------------------
Accrued administrative services fees 17,277
-------------------------------------------------------------
Accrued distribution fees 2,315,581
-------------------------------------------------------------
Accrued trustees' fees 5,562
-------------------------------------------------------------
Accrued transfer agent fees 789,774
-------------------------------------------------------------
Accrued operating expenses 380,258
=============================================================
Total liabilities 288,187,050
=============================================================
Net assets applicable to shares outstanding $3,043,176,488
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $1,513,595,156
_____________________________________________________________
=============================================================
Class B $1,414,914,649
_____________________________________________________________
=============================================================
Class C $ 114,666,683
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 49,453,461
_____________________________________________________________
=============================================================
Class B 48,513,942
_____________________________________________________________
=============================================================
Class C 3,932,626
_____________________________________________________________
=============================================================
Class A:
-------------------------------------------------------------
Net asset value and redemption price per
share $ 30.61
-------------------------------------------------------------
Offering price per share:
(Net asset value of $30.61 divided by
95.25%) $ 32.14
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 29.17
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 29.16
_____________________________________________________________
=============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$222,447) $ 48,231,809
------------------------------------------------------------
Dividends from affiliated money market funds 7,821,554
------------------------------------------------------------
Interest 68,831
------------------------------------------------------------
Security lending income 1,737,797
============================================================
Total investment income 57,859,991
============================================================
EXPENSES:
Advisory fees 29,880,111
------------------------------------------------------------
Administrative services fees 202,100
------------------------------------------------------------
Custodian fees 688,091
------------------------------------------------------------
Distribution fees -- Class A 8,206,803
------------------------------------------------------------
Distribution fees -- Class B 15,064,977
------------------------------------------------------------
Distribution fees -- Class C 878,420
------------------------------------------------------------
Transfer agent fees 5,525,139
------------------------------------------------------------
Trustees' fees 59,400
------------------------------------------------------------
Other 366,990
============================================================
Total expenses 60,872,031
============================================================
Less: Expenses paid indirectly (133,680)
------------------------------------------------------------
Net expenses 60,738,351
============================================================
Net investment income (loss) (2,878,360)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
------------------------------------------------------------
Net realized gain (loss) from:
Investment securities 420,256,806
------------------------------------------------------------
Foreign currencies (3,463,153)
------------------------------------------------------------
Option contracts written 2,354,362
============================================================
419,148,015
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (13,360,812)
------------------------------------------------------------
Foreign currencies (201,016)
============================================================
(13,561,828)
============================================================
Net gain on investment securities, foreign
currencies and option contracts 405,586,187
============================================================
Net increase in net assets resulting from
operations $402,707,827
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-56
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (2,878,360) $ (21,958,347)
----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 419,148,015 299,698,355
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (13,561,828) 537,434,434
==============================================================================================
Net increase in net assets resulting from operations 402,707,827 815,174,442
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (122,942,635) (23,149,236)
----------------------------------------------------------------------------------------------
Class B (112,289,611) (21,143,550)
----------------------------------------------------------------------------------------------
Class C (2,428,890) --
----------------------------------------------------------------------------------------------
Advisor Class* (257,983) (150,968)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 376,834,670 (101,952,900)
----------------------------------------------------------------------------------------------
Class B 447,353,903 (72,208,921)
----------------------------------------------------------------------------------------------
Class C 121,591,284 11,141,603
----------------------------------------------------------------------------------------------
Advisor Class* (2,868,709) (5,609,698)
==============================================================================================
Net increase in net assets 1,107,699,856 602,100,772
==============================================================================================
NET ASSETS:
Beginning of year 1,935,476,632 1,333,375,860
==============================================================================================
End of year $3,043,176,488 $1,935,476,632
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,873,542,848 $ 863,973,212
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) -- 5,534
----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 387,652,541 275,954,959
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 781,981,099 795,542,927
==============================================================================================
$3,043,176,488 $1,935,476,632
______________________________________________________________________________________________
==============================================================================================
* Advisor Class shares were converted to Class A shares effective as of the close of business
on February 11, 2000.
|
See Notes to Financial Statements.
FS-57
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Telecommunications and Technology Fund (the "Fund") is a separate
series of AIM Investment Funds (the "Trust"). The Trust is organized as a
Delaware business trust and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end series management investment
company consisting of nine separate series portfolios, each having an unlimited
number of shares of beneficial interest. The Fund currently offers three
different classes of shares: Class A shares, Class B shares and Class C shares.
The Fund formerly offered Advisor Class shares; however, as of the close of
business on February 11, 2000 the Advisor Class shares were converted to Class A
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. Advisor
Class shares were sold without a 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 long-term growth of
capital.
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 October 31, 2000, undistributed net investment income was increased by
$2,872,826, undistributed net realized gains decreased by $69,531,314 and
paid in capital increased by $66,658,488 as a result of book/tax differences
due to utilization of a portion of the proceeds from redemptions as
distributions for federal income tax purposes, foreign currency transactions
and net operating loss reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and 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.
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
FS-58
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.
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
The Fund pays AIM investment management and administration fees at an annual
rate of 0.975% on the first $500 million of the Fund's average daily net assets,
plus 0.95% on the next $500 million of the Fund's average daily net assets, plus
0.925% on the next $500 million of the Fund's average daily net assets, plus
0.90% on the Fund's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit total annual operating expenses (excluding
interest, taxes, dividend expense on short sales, extraordinary items and
increases in expenses due to offset arrangements, if any) for Class A, Class B
and Class C shares to 2.00%, 2.50% and 2.50%, respectively.
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 October 31, 2000, AIM was
paid $202,100 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 October 31, 2000, AFS was
paid $3,251,404 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
0.50% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $8,206,803,
$15,064,977 and $878,420, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,575,107 from sales of the Class A
shares of the Fund during the year ended October 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
FS-59
October 31, 2000, AIM Distributors received $99,517 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $43,852 and reductions in custodian fees of $89,828 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $133,680.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to not less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, securities with an aggregate value of $261,203,817 were
on loan to brokers. The loans were secured by cash collateral of $266,427,893
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $1,737,797 for securities lending.
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 October 31, 2000 was
$4,037,708,251 and $3,385,749,431, respectively.
The amount of unrealized appreciation (depreciation)of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 881,084,993 --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (101,792,957) ========================================================= Net unrealized appreciation of investment securities $ 779,292,036 _________________________________________________________ ========================================================= Cost of investments for tax purposes is $2,242,224,132. |
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
Sold:
Class A 15,814,510 $ 575,875,480 42,637,825 $ 826,757,794
-------------------------------------------------------------------------------------------------------------------------
Class B 17,939,437 618,630,557 6,195,698 131,627,637
-------------------------------------------------------------------------------------------------------------------------
Class C* 4,043,413 141,415,869 544,069 12,490,317
-------------------------------------------------------------------------------------------------------------------------
Advisor Class** 92,071 3,241,706 664,975 14,200,299
=========================================================================================================================
Issued as reinvestment of dividends:
Class A 3,700,530 113,714,341 1,233,567 21,142,757
-------------------------------------------------------------------------------------------------------------------------
Class B 3,497,829 102,890,796 1,176,293 19,479,129
-------------------------------------------------------------------------------------------------------------------------
Class C* 70,053 2,060,345 -- --
-------------------------------------------------------------------------------------------------------------------------
Advisor Class** 7,925 250,992 8,588 150,375
=========================================================================================================================
Conversion of Advisor Class shares to Class A shares***
Class A 157,592 6,147,658 -- --
-------------------------------------------------------------------------------------------------------------------------
Advisor Class (152,813) (6,147,658) -- --
=========================================================================================================================
Reacquired:
Class A (8,920,012) (318,902,809) (49,011,051) (949,853,451)
-------------------------------------------------------------------------------------------------------------------------
Class B (8,251,217) (274,167,450) (11,052,108) (223,315,687)
-------------------------------------------------------------------------------------------------------------------------
Class C* (666,660) (21,884,930) (58,249) (1,348,714)
-------------------------------------------------------------------------------------------------------------------------
Advisor Class** (6,114) (213,749) (900,945) (19,960,372)
=========================================================================================================================
27,326,544 $ 942,911,148 (8,561,338) $(168,629,916)
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
FS-60
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the year ended October 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
Beginning of year -- $ --
--------------------------------------------------------------------------------------
Written 6,250 5,281,438
--------------------------------------------------------------------------------------
Closed (5,250) (4,026,952)
--------------------------------------------------------------------------------------
Expired (1,000) (1,254,486)
======================================================================================
End of year -- $ --
______________________________________________________________________________________
======================================================================================
|
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 26.44 $ 16.28 $ 18.04 $ 16.69 $ 16.42
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.06(b) (0.25) (0.17) (0.17) (0.13)
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 7.23 10.97 (0.39) 2.93 1.22
======================================================================================================================
Total from investment operations 7.29 10.72 (0.56) 2.76 1.09
======================================================================================================================
Less distributions from net realized gains (3.12) (0.56) (1.20) (1.41) (0.82)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.61 $ 26.44 $ 16.28 $ 18.04 $ 16.69
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(c) 27.52% 67.63% (3.16)% 17.70% 7.00%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,513,595 $1,023,124 $713,904 $910,801 $1,204,428
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets 1.63%(d) 1.77% 1.88% 1.84% 1.79%
======================================================================================================================
Ratio of net investment income (loss) to average net assets 0.16%(d) (1.11)% (0.93)% (1.06)% (0.89)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 111% 122% 75% 35% 37%
______________________________________________________________________________________________________________________
======================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Net investment income per share reflects dividend income recognized from the
spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c)Does not include sales charges.
(d)Ratios are based on average daily net assets of $1,641,360,557.
FS-61
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
---------- -------- -------- -------- ----------
Net asset value, beginning of period $ 25.43 $ 15.76 $ 17.58 $ 16.37 $ 16.20
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11)(b) (0.35) (0.25) (0.25) (0.23)
--------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 6.97 10.58 (0.37) 2.87 1.22
==========================================================================================================================
Total from investment operations 6.86 10.23 (0.62) 2.62 0.99
==========================================================================================================================
Less distributions from net realized gains (3.12) (0.56) (1.20) (1.41) (0.82)
==========================================================================================================================
Net asset value, end of period $ 29.17 $ 25.43 $ 15.76 $ 17.58 $ 16.37
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(c) 26.87% 66.84% (3.67)% 17.15% 6.46%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,414,915 $898,400 $614,715 $805,535 $1,007,654
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets 2.13%(d) 2.28% 2.38% 2.34% 2.29%
==========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.34)%(d) (1.62)% (1.43)% (1.56)% (1.39)%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate 111% 122% 75% 35% 37%
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Net investment income per share reflects dividend income recognized from the
spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c)Does not include contingent deferred sales charges.
(d)Ratios are based on average daily net assets of $1,506,497,660.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED)
OCTOBER 31, TO OCTOBER 31,
2000(a) 1999
----------- --------------
Net asset value, beginning of period $ 25.43 $ 19.23
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(b) (0.11)(b) (0.11)
-------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 6.96 6.31
===========================================================================================
Total from investment operations 6.85 6.20
===========================================================================================
Less distributions from net realized gains (3.12) --
===========================================================================================
Net asset value, end of period $ 29.16 $ 25.43
___________________________________________________________________________________________
===========================================================================================
Total return(c) 26.83% 32.24%
___________________________________________________________________________________________
===========================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $114,667 $12,352
___________________________________________________________________________________________
===========================================================================================
Ratio of expenses to average net assets 2.13%(d) 2.28%(e)
===========================================================================================
Ratio of net investment income (loss) to average net assets (0.34)%(d) (1.62)%(e)
___________________________________________________________________________________________
===========================================================================================
Portfolio turnover rate 111% 122%
___________________________________________________________________________________________
===========================================================================================
|
(a)Calculated using average shares outstanding.
(b)Net investment income per share reflects dividend income recognized from the
spin-off of Nortel Networks Corp. from BCE, Inc. of $0.49 per share.
(c)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(d)Ratios are based on average daily net assets of $87,842,049.
(e)Annualized.
FS-62
AIM STRATEGIC INCOME FUND
AIM Strategic Income Fund primarily seeks to provide high current income and, secondarily, seeks growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MARCH 1, 2001
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--
|
-------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 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 primary investment objective is high current income, and its secondary investment objective is growth of capital.
The fund seeks to meet these objectives by investing primarily in debt securities, including mortgage-backed and asset-backed securities, of issuers in the United States and developed and developing countries, i.e., those that are in the initial stages of their industrial cycles. The securities of issuers in developing countries may consist substantially of "Brady Bonds" and other sovereign debt securities issued by governments of such countries and traded in the markets of developed countries or groups of developed countries without regard to ratings. Brady Bonds are debt restructurings that provide for the exchange of cash and loans for newly issued bonds.
The fund normally invests at least 35% of its total assets in U.S. and foreign debt and other fixed income securities that are either rated at least investment grade by Moody's Investors Service, Inc. or Standard & Poor's (rated in the four highest ratings categories by Moody's or S&P), or the fund's portfolio managers, believe to be of comparable quality. The fund may invest up to 65% of its total assets in debt securities that are rated below investment grade by such agencies or that the fund's portfolio managers believe to be of comparable quality, i.e., "junk bonds." The fund may also invest up to 35% of its total assets in equity securities. The fund may invest a significant portion of its assets in the securities of U.S. issuers.
The portfolio managers allocate assets among securities of countries and in currency denominations that are expected to provide the most attractive opportunities for meeting the fund's investment objectives. The portfolio managers consider fundamental economic strength, credit quality, and currency and interest rate trends in emphasizing various country, geographic, and industry sectors within the fund. Further, the portfolio managers select particular issuers based on additional economic criteria such as yield, maturity, issue classification, and quality characteristics. Currency investments are based on factors such as relative inflation, interest rate levels and trends, growth rate forecasts, balance of payments status, and economic policies. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund is non-diversified. With respect to 50% of its assets, it is permitted to invest more than 5% of its assets in the securities of only one issuer.
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 (U.S. dollars, foreign currencies or multinational currency units), money market instruments, shares of affiliated money market funds, or high-quality debt securities. As a result, the fund may not achieve its investment objectives.
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 capital 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. When interest rates rise, bond prices fall; the longer a bond's duration, the more sensitive it is to this risk. The fund could also lose money if any debt securities that the fund holds are downgraded or go into default.
Mortgage-backed and asset-backed securities are subject to different risks from bonds and, as a result, may respond to changes in interest rates differently. If interest rates fall, people refinance or pay off their mortgages ahead of time, which may cause mortgage-backed securities to lose value. If interest rates rise, many people may refinance or prepay their mortgages at a slower-than-expected rate. This may effectively lengthen the life of mortgage-backed securities, which may cause the securities to be more sensitive to changes in interest rates.
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the price of securities issued by foreign companies and governments located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Sovereign debt securities of developing country governments are generally lower-quality debt securities. Sovereign debt securities are subject to the additional risk that, under some political, diplomatic, social, or economic circumstances, some developing countries that issue lower-quality debt securities may be unable or unwilling to make principal or interest repayments as they come due.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of 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.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. Thus, the value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
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
----------- -------
1991 ....................................... 15.78%
1992 ....................................... 1.27%
1993 ....................................... 43.95%
1994 ....................................... (20.85)%
1995 ....................................... 17.05%
1996 ....................................... 21.03%
1997 ....................................... 6.94%
1998 ....................................... (1.81)%
1999 ....................................... (0.47)%
2000 ....................................... (4.24)%
|
During the periods shown in the bar chart, the highest quarterly return was 11.43% (quarter ended December 31, 1993) and the lowest quarterly return was -18.16% (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, 2000) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE --------------------------------------------------------------------------------------- Class A (8.75)% 2.90% 6.08% 6.30% 03/29/88 Class B (9.22) 2.93 -- 5.29 10/22/92 Class C (5.78) -- -- (2.17) 03/01/99 Lehman Aggregate Bond Index(1) 11.63 6.46 7.96 8.38(2) 03/31/88(2) --------------------------------------------------------------------------------------- |
(1) The Lehman 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 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 0.73% 0.73% 0.73% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses 0.49 0.49 0.49 Total Annual Fund Operating Expenses 1.57 2.22 2.22 Fee Waivers(2) 0.51 0.51 0.51 Net Expenses 1.06 1.71 1.71 ------------------------------------------------------- |
(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) Fee waiver has been restated to reflect current agreement. The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) on Class A, Class B and Class C shares to 1.05%, 1.70% and 1.70%, 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 costs of investing in different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived or expenses reimbursed, 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 $627 $947 $1,290 $2,254
Class B 725 994 1,390 2,391
Class C 325 694 1,190 2,554
----------------------------------------------
|
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------
Class A $627 $947 $1,290 $2,254
Class B 225 694 1,190 2,391
Class C 225 694 1,190 2,554
----------------------------------------------
|
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and 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 130 investment portfolios, including the fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 2000, the advisor received compensation of 0.37% 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.
- Scott W. Johnson, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 1989.
SALES CHARGES
Purchases of Class A shares of AIM Strategic 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 income.
DIVIDENDS
The fund generally declares 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 PricewaterhouseCoopers 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 OCTOBER 31,
------------------------------------------------------
2000(a) 1999 1998(a) 1997 1996(a)
------- ------- -------- -------- --------
Net asset value, beginning of period $ 10.13 $ 10.80 $ 12.00 $ 11.76 $ 10.32
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.77 0.68 0.91(b) 0.74 0.89
--------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (0.99) (0.66) (1.27) 0.34 1.44
========================================================================================================
Total from investment operations (0.22) 0.02 (0.36) 1.08 2.33
========================================================================================================
Less distributions:
Distributions from net investment income (0.52) (0.65) (0.65) (0.78) (0.82)
--------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.06) (0.07)
--------------------------------------------------------------------------------------------------------
Returns of capital (0.22) (0.04) (0.19) -- --
========================================================================================================
Total distributions (0.74) (0.69) (0.84) (0.84) (0.89)
========================================================================================================
Net asset value, end of period $ 9.17 $ 10.13 $ 10.80 $ 12.00 $ 11.76
________________________________________________________________________________________________________
========================================================================================================
Total return(c) (2.35)% 0.06% (3.41)% 9.40% 23.00%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,865 $68,675 $102,280 $138,715 $185,126
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.21%(d) 1.41% 1.56% 1.44% 1.40%
--------------------------------------------------------------------------------------------------------
Without fee waivers 1.57%(d) 1.41% 1.56% 1.44% 1.40%
________________________________________________________________________________________________________
========================================================================================================
Ratio of net investment income to average net
assets 7.84%(d) 6.44% 7.73% 6.18% 8.09%
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate 309% 235% 306% 149% 177%
________________________________________________________________________________________________________
========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from the conversion of Vnesheconombank loan agreements of $0.11 per share.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $58,649,641.
CLASS B
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
2000(a) 1999 1998(a) 1997 1996(a)
------- -------- -------- -------- --------
Net asset value, beginning of period $ 10.15 $ 10.81 12.01 $ 11.77 $ 10.33
----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.71 0.62 0.84(b) 0.67 0.82
----------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.01) (0.66) (1.28) 0.33 1.44
================================================================================================================
Total from investment operations (0.30) (0.04) (0.44) 1.00 2.26
================================================================================================================
Less distributions:
Dividends from net investment income (0.45) (0.58) (0.57) (0.71) (0.75)
----------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.05) (0.07)
================================================================================================================
Returns of capital (0.22) (0.04) (0.19) -- --
================================================================================================================
Total distributions (0.67) (0.62) (0.76) (0.76) (0.82)
================================================================================================================
Net asset value, end of period $ 9.18 $ 10.15 $ 10.81 $ 12.01 $ 11.77
________________________________________________________________________________________________________________
================================================================================================================
Total return(c) (3.11)% (0.52)% (4.04)% 8.70% 22.15%
________________________________________________________________________________________________________________
================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $76,680 $118,904 $188,660 $281,376 $333,178
________________________________________________________________________________________________________________
================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(d) 2.07% 2.21% 2.09% 2.05%
----------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(d) 2.07% 2.21% 2.09% 2.05%
________________________________________________________________________________________________________________
================================================================================================================
Ratio of net investment income to average net assets 7.18%(d) 5.78% 7.08% 5.53% 7.44%
________________________________________________________________________________________________________________
================================================================================================================
Portfolio turnover rate 309% 235% 306% 149% 177%
________________________________________________________________________________________________________________
================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from the conversion of Vnesheconombank loan agreements of $0.11 per share
(c) Does not include contingent deferred sales charges.
(c) Ratios are based on average daily net assets of $95,145,091.
CLASS C
-----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999
----------- --------------
Net asset value, beginning of period $10.14 $10.78
---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.70 0.33
---------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.00) (0.63)
=============================================================================================
Total from investment operations (0.30) (0.30)
=============================================================================================
Less distributions:
Dividends from net investment income (0.45) (0.31)
---------------------------------------------------------------------------------------------
Returns of capital (0.22) (0.03)
=============================================================================================
Total distributions (0.67) (0.34)
=============================================================================================
Net asset value, end of period $ 9.17 $10.14
_____________________________________________________________________________________________
=============================================================================================
Total return(b) (3.12)% (1.80)%
_____________________________________________________________________________________________
=============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 484 $ 251
_____________________________________________________________________________________________
=============================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 2.07%(d)
---------------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.07%(d)
_____________________________________________________________________________________________
=============================================================================================
Ratio of net investment income to average net assets 7.18%(c) 5.78%(d)
_____________________________________________________________________________________________
=============================================================================================
Portfolio turnover rate 309% 235%
_____________________________________________________________________________________________
=============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $410,715.
(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
|
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares.
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
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
ON THE INTERNET: You can send us a
request by e-mail or
download prospectuses,
annual or semiannual
reports via our website:
http://www.aimfunds.com
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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 SINC-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
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CLASS A, CLASS B AND CLASS C SHARES OF
AIM STRATEGIC INCOME FUND
(SERIES PORTFOLIO OF
AIM INVESTMENT FUNDS)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUND, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
AIM DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 2001
RELATING TO AIM STRATEGIC INCOME FUND PROSPECTUS DATED MARCH 1, 2001
TABLE OF CONTENTS
Page
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INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUND................................................................................1
The Trust and Its Shares.................................................................................1
INVESTMENT STRATEGIES AND RISKS...................................................................................2
Investment Objectives....................................................................................2
Investment Strategies....................................................................................3
Selection of Debt Investments............................................................................3
Selection of Equity Investments..........................................................................4
Selection of Investments and Asset Allocation............................................................4
Investment In Emerging Markets...........................................................................5
Sovereign Debt...........................................................................................6
Brady Bonds..............................................................................................7
Loan Participations and Assignments......................................................................7
Mortgage-Backed and Asset-Backed Securities..............................................................8
When-Issued and Forward Commitment Securities............................................................8
Temporary Defensive Strategies...........................................................................9
Equity-Linked Derivatives................................................................................9
Investments in Other Investment Companies................................................................9
Samurai and Yankee Bonds.................................................................................9
Warrants or Rights......................................................................................10
Lending of Portfolio Securities.........................................................................10
Commercial Bank Obligations.............................................................................10
Repurchase Agreements...................................................................................10
Borrowing, Reverse Repurchase Agreements and "Roll" Transactions........................................11
Zero Coupon Securities..................................................................................12
Synthetic Security Positions............................................................................12
Swaps, Caps, Floors, and Collars........................................................................13
Indexed Commercial Paper................................................................................13
Other Indexed Securities................................................................................13
Short Sales.............................................................................................14
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................14
Options, Futures, and Forward Currency Transactions.....................................................14
Special Risks of Options, Futures and Currency Strategies...............................................15
Writing Call Options....................................................................................16
Writing Put Options.....................................................................................17
Purchasing Put Options..................................................................................17
Purchasing Call Options.................................................................................18
Index Options...........................................................................................19
Interest Rate, Currency and Stock Index Futures Contracts...............................................20
Options on Futures Contracts............................................................................22
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................23
Forward Contracts.......................................................................................23
Foreign Currency Strategies--Special Considerations.....................................................24
Cover...................................................................................................25
Interest Rate and Currency Swaps........................................................................25
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RISK FACTORS.....................................................................................................25
Non-Diversified Classification..........................................................................25
Illiquid Securities.....................................................................................26
Foreign Securities......................................................................................27
Mortgage-Backed and Asset-Backed Securities.............................................................31
Lower Quality Debt Securities...........................................................................32
INVESTMENT LIMITATIONS...........................................................................................33
EXECUTION OF PORTFOLIO TRANSACTIONS..............................................................................35
Portfolio Trading and Turnover..........................................................................36
MANAGEMENT.......................................................................................................37
Trustees and Executive Officers.........................................................................37
Investment Management and Administration Services.......................................................38
Expenses of the Fund....................................................................................41
THE DISTRIBUTION PLANS...........................................................................................41
The Class A and C Plan..................................................................................41
The Class B Plan........................................................................................42
Both Plans..............................................................................................42
THE DISTRIBUTOR..................................................................................................46
SALES CHARGES AND DEALER CONCESSIONS.............................................................................48
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................50
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................54
HOW TO PURCHASE AND REDEEM SHARES................................................................................56
Backup Withholding......................................................................................57
NET ASSET VALUE DETERMINATION....................................................................................58
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................59
Reinvestment of Dividends and Distributions.............................................................59
Tax Matters.............................................................................................59
Taxation of the Fund....................................................................................60
Taxation of Certain Investment Activities...............................................................60
Taxation of the Funds' Shareholders.....................................................................62
Exchange and Reinstatement Privileges and Wash Sales....................................................63
SHAREHOLDER INFORMATION..........................................................................................63
MISCELLANEOUS INFORMATION........................................................................................66
Charges for Certain Account Information.................................................................66
Custodian and Transfer Agent............................................................................66
Independent Accountants.................................................................................66
Legal Matters...........................................................................................66
Shareholder Liability...................................................................................66
Control Persons and Principal Holders of Securities.....................................................67
INVESTMENT RESULTS...............................................................................................68
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Total Return Quotations.................................................................................68
Non-Standardized Returns................................................................................69
Yield Quotations........................................................................................70
Performance Information.................................................................................70
APPENDIX.........................................................................................................74
Description of Bond Ratings.............................................................................74
Description of Commercial Paper Ratings.................................................................75
Absence of Rating.......................................................................................75
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
This Statement of Additional Information relates to the Class A, Class B and Class C shares of AIM Strategic Income Fund (the "Fund"). The Fund is a non-diversified series of AIM Investment Funds (the "Trust"), a registered open-end management investment company organized as a Delaware business trust.
AIM Advisors, Inc. ("AIM") serves as the investment manager of and administrator for the Fund.
The Trust is a series mutual fund. The rules and regulations of the Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information for the Strategic Income Fund is included in a Prospectus dated March 1, 2001. Additional copies of the Prospectus and this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Fund's shares, AIM Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739 or by calling (800) 347-4246. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Fund. Some of the information required to be in this Statement of Additional Information is also included in the 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 TRUST AND ITS SHARES
The Trust was organized as a Delaware business trust on May 7, 1998,
and previously operated under the name G.T. Investment Funds, Inc., which was
organized as a Maryland corporation on October 29, 1987. The Trust was
reorganized on September 8, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of the following portfolios: AIM Developing Markets
Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial
Services Fund, AIM Global Health Care Fund, AIM Global Infrastructure Fund, AIM
Global Resources Fund, AIM Global Telecommunications and Technology Fund
(formerly AIM Global Telecommunications Fund), AIM Latin American Growth Fund,
and AIM Strategic Income Fund. Each of these funds has three separate classes:
Class A, Class B and Class C shares. The Board is authorized to establish
additional series of shares, or additional classes of shares of any fund, at any
time. All historical financial and other information contained in this Statement
of Additional Information for periods prior to September 8, 1998, is that of the
series of AIM Investment Funds, Inc.
The term "majority of the outstanding shares" of the Trust, of a particular fund or of a particular class of a fund means, respectively, the vote of the lesser of (a) 67% or more of the shares of the Trust, such fund or such class present at a meeting of the Trust's shareholders, if the holders of more than 50% of the outstanding shares of the Trust, such fund or such class are present or represented by proxy, or (b) more than 50% of the outstanding shares of the Trust, such fund or such class.
Class A, Class B and Class C shares of the Fund have equal rights and privileges. Each share of a particular class is entitled to one vote, to participate equally in dividends and distributions declared by the Trust's Board of Trustees with respect to the class of the Fund and, upon liquidation of the Fund, to participate proportionately in the net assets of the Fund allocable to such class remaining after satisfaction of outstanding liabilities of the Fund allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion and exchange rights as set forth in the Prospectus and this Statement of Additional Information. Fractional shares have proportionately the same rights, including voting rights, as are provided for a full share. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights.
Shareholders of the funds do not have cumulative voting rights, and therefore the holders of more than 50% of the outstanding shares of all funds voting together for election of trustees may elect all of the members of the Board of Trustees of the Trust. In such event, the remaining holders cannot elect any trustees of the Trust.
From time to time, the Trust may establish other funds, each corresponding to a distinct investment portfolio and a distinct series of the Trust's shares of beneficial interest. Shares of each fund are entitled to one vote per share (with proportional voting for fractional shares) and are freely transferable. Shareholders have no preemptive rights.
Class A shares, Class B shares and Class C shares of the Fund represent interests in that Fund's assets and have identical voting, dividend, liquidation and other rights on the same terms and conditions, except that each class of shares bears differing class-specific expenses, is subject to differing sales loads, conversion features and exchange privileges, and has exclusive voting rights on matters pertaining to that class' distribution plan (although Class A shareholders and Class B shareholders of a given Fund must approve any material increase in fees payable with respect to the Class A shares of the Fund under the Class A and C Plan). On any matter submitted to a vote of shareholders, shares of the Fund will be voted by the Fund's shareholders individually when the matter affects the specific interest of the Fund only, such as approval of its investment management arrangements. In addition, shares of particular classes of the Fund may vote on matters affecting only those Classes. The shares of the Fund and of the Trust's other series will be voted in the aggregate on other matters, such as the election of Trustees and ratification of the selection of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as required under the Investment Company Act of 1940, as amended ("1940 Act"). A Trustee may be removed at any meeting of the shareholders of the Trust by a vote of the shareholders owning at least two-thirds of the outstanding shares. Any Trustee may call a special meeting of shareholders for any purpose. Furthermore, Trustees shall promptly call a meeting of shareholders solely for the purpose of removing one or more Trustees when requested in writing to do so by shareholders holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may issue an unlimited number of shares of the Fund. Each share of the Fund represents an interest in the Fund only, has a par value of $0.01 per share, represents an equal proportionate interest in the Fund with other shares of the Fund and is entitled to such dividends and distributions out of the income earned and gain realized on the assets belonging to the Fund as may be declared by the Board of Trustees. Each share of the Fund is equal in earnings, assets and voting privileges except that each class normally has exclusive voting rights with respect to its distribution plan and bears the expenses, if any, related to the distribution of its shares.
INVESTMENT STRATEGIES AND RISKS
The following discussion of investment policies supplements the discussion of the investment objectives and policies set forth in the Prospectus under the heading "Investment Objective and Strategies" and "Principal Risks of Investing in the Fund."
INVESTMENT OBJECTIVES
The Fund's investment objectives may not be changed without the approval of a majority of the Fund's outstanding voting securities. If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is made, a later change in percentage ownership of a security or kind of securities resulting from changing market values or a similar type of event will not be considered a violation of the Fund's investment policies or restrictions.
The Fund primarily seeks high current income and secondarily growth of capital.
In addition to the primary investment policies set forth in the Fund's Prospectus, the Fund may engage in other types of investments, as described below.
INVESTMENT STRATEGIES
The Fund's investments in debt securities of issuers in: (1) the United States; (2) developed foreign countries; and (3) emerging markets. The Fund selects debt securities from those issued by governments, their agencies and instrumentalities; central banks; and commercial banks and other corporate entities. Debt securities in which the Fund may invest include bonds, notes, debentures, and other similar instruments including mortgage-backed and asset-backed securities of foreign issuers as well as domestic issuers. Under normal market conditions, the Fund will invest at least 35% of its total assets in U.S. and foreign debt and other fixed income securities that, at the time of purchase, are either rated at least investment grade by Moody's or S&P or, if not rated, are determined by AIM to be of comparable quality. Up to 65% of the Fund's total assets may be invested in debt securities that, at the time of purchase are either rated below investment grade by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or, if not rated, are determined by AIM to be of comparable quality. Such securities involve a high degree of risk and are predominantly speculative. They are the equivalent of high yield, high risk bonds, commonly known as "junk bonds." The Fund may also invest in securities that are in default as to payment of principal and/or interest. The Fund may invest up to 35% of its total assets in equity securities (including convertible securities). AIM anticipates investing in equity securities when market conditions appear to present opportunities favorable for capital appreciation due to such factors as improved corporate earnings or favorable interest rates.
The Fund's investments in emerging market securities may consist substantially of Brady Bonds and other sovereign debt securities issued by emerging market governments that are traded in the markets of developed countries or groups of developed countries. AIM may invest in debt securities of emerging market issuers that it determines to be suitable investments for the Fund without regard to ratings. Currently, the substantial majority of emerging market debt securities are considered to have a credit quality below investment grade. The Fund also may invest in below-investment grade debt securities of corporate issuers in the United States and in developed foreign countries, subject to the overall 65% limitation.
SELECTION OF DEBT INVESTMENTS
In determining the appropriate distribution of investments among various countries and geographic regions for the Fund, AIM ordinarily considers the following factors: prospects for relative economic growth among the different countries in which the Fund may invest; expected levels of inflation; government policies influencing business conditions; the outlook for currency relationships; and the range of the individual investment opportunities available to international investors.
In evaluating debt securities considered for the Fund, AIM analyzes their yield, maturity, issue classification and quality characteristics, coupled with expectations regarding local and world economies, movements in the general level and term of interest rates, currency values, political developments, and variations in the supply of funds available for investment in the world bond market relative to the demands placed upon it. There are no limitations on the maximum or minimum maturities of the debt securities considered by the Fund or on the average weighted maturity of the debt portion of the Fund's portfolio. Should the rating of a debt security be revised while such security is owned by the Fund, AIM will evaluate what action, if any, is appropriate with respect to such security.
The Fund may invest in the following types of money market instruments
(i.e., debt instruments with less than 12 months remaining until maturity)
denominated in U.S. dollars or other currencies: (a) obligations issued or
guaranteed by the U.S. or foreign governments, their agencies, instrumentalities
or municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a particular country if it (a) is incorporated under the laws of or has its principal office in that country, or (b) it normally derives 50% or more of its total revenue from business in that country. However, these are not absolute requirements, and certain companies incorporated in a particular country and considered by AIM to be located in that country may have substantial off-shore operations or subsidiaries and/or export sales exceeding in size the assets or sales in that country.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION
AIM allocates the assets of the Fund in securities of issuers in countries and in currency denominations where the combination of fixed income market returns, the price appreciation potential of fixed income securities and currency exchange rate movements will present opportunities primarily for high current income and secondarily for capital appreciation. In so doing, AIM intends to take full advantage of the different yield, risk and return characteristics that investment in the fixed income markets of different countries can provide for U.S. investors. The Fund invests in debt obligations allocated among diverse markets and denominated in various currencies, including U.S. dollars, or in multinational currency units such as Euros. The Fund is designed for investors who wish to accept the risks entailed in such investments, which are different from those associated with a portfolio consisting entirely of securities of U.S. issuers denominated in U.S. dollars. The Fund may purchase securities that are issued by the government or a company or financial institution of one country but denominated in the currency of another country (or a multinational currency unit). Fundamental economic strength, credit quality and currency and interest rate trends are the principal determinants of the emphasis given to various country, geographic and industry sectors within the Fund. Securities held by the Fund may be invested in without limitation as to maturity.
AIM selects securities of particular issuers on the basis of the views as to the best values then currently available in the marketplace. Such values are a function of yield, maturity, issue classification and quality characteristics, coupled with expectations regarding the local and world economies, movements in the general level and term of interest rates, currency values, political developments and variations in the supply of funds available for investment in the world bond market relative to the demands placed upon it.
AIM generally evaluates currencies on the basis of fundamental economic criteria (e.g., relative inflation, interest rate levels and trends, growth rate forecasts, balance of payments status and economic policies) as well as technical and political data. AIM may seek to protect the Fund against such negative currency movements through the use of sophisticated investment techniques.
According to AIM, as of the date of this Statement of Additional Information, more than 50% of the value of all outstanding government debt obligations throughout the world is represented by obligations denominated in currencies other than the U.S. dollar. Moreover, from time to time, the debt securities of issuers located outside the United States have substantially outperformed the debt obligations of U.S. issuers. Accordingly, AIM believes that the Fund's policy of investing in debt securities throughout the world may enable the achievement of results superior to those produced by mutual funds with similar objectives to those of the funds that invest solely in debt securities of U.S. Issuers.
In addition to the factors listed in the Prospectus, AIM's view on what securities constitute the best values are also a function of expectations regarding the local and world economies, movements in the general level and term of interest rates, currency values, political developments, and variations in the supply of funds available for investment in the world bond market relative to the demands placed upon it.
INVESTMENT IN EMERGING MARKETS
The Fund may invest up to 65% of its assets in debt securities of issuers in emerging markets. The Fund does not consider the following countries to be emerging markets: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom, and United States.
Emerging markets debt securities generally are considered to have a credit quality below investment grade. Lower quality securities involve a high degree of risk and are predominantly speculative. These debt securities are the equivalent of high yield, high risk bonds, commonly known as "junk bonds." Many emerging market debt securities are not rated by U.S. ratings agencies such as Moody's and S&P. The Fund's ability to achieve its investment objectives are thus more dependent on AIM's credit analysis. The Fund may invest in securities that are in default as to payment of principal and/or interest.
The Fund considers "emerging markets" to consist of all countries determined by AIM to have developing or emerging economies and markets. These countries generally include every country in the world except the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe. The Fund will consider investment in the following emerging markets:
Algeria India Poland Argentina Indonesia Portugal Bolivia Israel Republic of Slovakia Botswana Ivory Coast Russia Brazil Jamaica Singapore Bulgaria Jordan Slovenia Chile Kazakhstan South Africa China Kenya South Korea Columbia Lebanon Sri Lanka Costa Rica Malaysia Swaziland Cyprus Mauritius Taiwan Czech Republic Mexico Thailand Dominican Republic Morocco Turkey Ecuador Nicaragua Ukraine Egypt Nigeria Uruguay El Salvador Oman Venezuela Finland Pakistan Zambia Ghana Panama Zimbabwe Greece Paraguay Hong Kong Peru Hungary Philippines |
The Fund will not be invested in all such markets at all times. Moreover, investing in some of those markets currently may not be desirable or feasible, due to the lack of adequate custody arrangements, overly burdensome repatriation requirements and similar restrictions, the lack of organized and liquid securities markets, unacceptable political risks or for other reasons.
As used in the Prospectus and the Statement of Additional Information, an issuer in an emerging market is an entity: (i) for which the principal securities trading market is an emerging market, as defined
above; (ii) that (alone or on a consolidated basis) derives 50% or more of its total revenue from either goods produced, sales made or services performed in emerging markets; or (iii) organized under the laws of, or with a principal office in, an emerging market.
When determining what countries constitute emerging markets, AIM will consider data, analysis, and classification of countries published or disseminated by the International Bank for Reconstruction and Development (commonly known as the World Bank) and the International Finance Corporation.
SOVEREIGN DEBT
The Fund may invest in sovereign debt securities of emerging market governments, including Brady Bonds. Investments in such securities involve special risks. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt obligations and in turn a Fund's net asset value, to a greater extent than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy toward principal international lenders and the political constraints to which a sovereign debtor may be subject. Emerging market governments could default on their sovereign debt. Such sovereign debtors also may be dependent on expected disbursements from foreign governments, multilateral agencies and other entities abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a sovereign debtor's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due, may result in the cancellation of such third parties' commitments to lend funds to the sovereign debtor, which may further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the countries issuing sovereign debt could adversely affect the Fund's investments. Emerging markets are faced with social and political issues and some of them have experienced high rates of inflation in recent years and have extensive internal debt. Among other effects, high inflation and internal debt service requirements may adversely affect the cost and availability of future domestic sovereign borrowing to finance governmental programs, and may have other adverse social, political and economic consequences. Political changes or a deterioration of a country's domestic economy or balance of trade may affect the willingness of countries to service their sovereign debt. Although AIM intends to manage the Fund in a manner that will minimize the exposure to such risks, there can be no assurance that adverse political changes will not cause the Fund to suffer a loss of interest or principal on any of its holdings.
In recent years, some of the emerging market countries in which the Fund expects to invest have encountered difficulties in servicing their sovereign debt obligations. Some of these countries have withheld payments of interest and/or principal of sovereign debt. These difficulties have also led to agreements to restructure external debt obligations--in particular, commercial bank loans, typically by rescheduling principal payments, reducing interest rates and extending new credits to finance interest payments on existing debt. In the future, holders of emerging market sovereign debt securities may be requested to participate in similar rescheduling of such debt. Certain emerging market countries are among the largest debtors in commercial banks and foreign governments. Currently, Brazil, Mexico and Argentina are the largest debtors among developing countries. At times certain emerging market countries have declared moratoria on the payment of principal and interest on external debt; such a moratorium is currently in effect in certain emerging market countries. There is no bankruptcy proceeding by which a creditor may collect in whole or in part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their sovereign debt securities is likely to be influenced strongly by a country's balance of trade and its access to trade and other international credits. A country whose exports are concentrated in a few commodities could be vulnerable to a decline in the international prices of one or more of such commodities. Increased protectionism on the part of a country's trading partners could also adversely affect its exports. Such events could diminish a country's trade account surplus, if any. To the extent that a country receives payment for its exports in currencies other than hard currencies, its ability to make hard currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which the Fund may invest involve great risk. As noted above, sovereign debt obligations issued by emerging market governments generally are deemed to be the equivalent in terms of quality to securities rated below investment grade by Moody's and S&P. Such securities are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. Some of such securities, with respect to which the issuer currently may not be paying interest or may be in payment default, may be comparable to securities rated D by S&P or C by Moody's. The Fund may have difficulty disposing of and valuing certain sovereign debt obligations because there may be a limited trading market for such securities. Because there is no liquid secondary market for many of these securities, the Fund anticipates that such securities could be sold only to a limited number of dealers or institutional investors.
BRADY BONDS
The Fund may invest in "Brady Bonds," which are debt restructurings that provide for the exchange of cash and loans for newly issued bonds. Brady Bonds have been issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru, Philippines, Poland, Uruguay, Venezuela and Vietnam and are expected to be issued by other emerging market countries. As of the date of this Statement of Additional Information, the Fund is not aware of the occurrence of any payment defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds do not have a long payment history. In addition, Brady Bonds are often rated below investment grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate per bonds or floating rate discount bonds, are collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the bonds. Interest payments on such bonds generally are collateralized by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of rolling interest payments or, in the case of floating rate bonds, initially is equal to at least one year's rolling interest payments based on the applicable interest rate at the time of issuance and is adjusted at regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS
The Fund may invest in fixed and floating rate loans ("Loans") arranged through private negotiations between a foreign entity and one or more financial institutions ("Lenders"). The majority of the Fund's investments in Loans in emerging markets is expected to be in the form of participations in Loans ("Participations") and assignment of portions of Loans from third parties ("Assignments"). Participations typically will result in the Fund having a contractual relationship only with the Lender, not with the borrower government. The Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan ("Loan Agreement"), nor any rights or set off against the borrowers, and the Fund may not directly benefit from any collateral supporting the Loan in which it has purchased any Participations. As a result, the Fund will assume the credit risk of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund may be treated as a general creditor of the Lender and may not benefit from any set off between the Lender and the borrower. The Fund will acquire Participations only if the Lender interpositioned between the Fund and the borrower is determined by AIM to be creditworthy. When the Fund purchases Assignments from Lenders, the Fund will acquire direct rights against the borrower on the Loan. However, since Assignments are arranged through private negotiations between potential assignees and assignors, the rights and obligations acquired by the Fund as the purchaser of an Assignment may differ from, and be more limited than, those held by the assigning Lender.
The liquidity of Assignments and Participations is limited and the Fund anticipates that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market could have an adverse impact on the value of such securities and on the Fund's ability to dispose of particular Assignments or Participations when necessary to meet the Fund's respective liquidity needs or in response to a specific economic event, such as a deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for Assignments and Participations also may make it more difficult for the Fund to assign a value to those securities for purposes of valuing the Fund's portfolio and calculating the portfolio's net asset value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
The Fund may invest in mortgage-backed and asset-backed securities of U.S. and foreign issuers, including privately issued mortgage-backed and asset-backed securities. Mortgage-backed securities represent direct or indirect interests in pools of underlying mortgage loans that are secured by real property. Investors typically receive payments out of the interest on and principal of the underlying mortgages. Asset-backed securities are similar to mortgage-backed securities, except that the underlying assets are other financial assets or financial receivables, such as motor vehicle installment sales contracts, home equity loans, leases of various types of real and personal property, and receivables from credit cards. Any mortgage-backed and asset-backed securities purchased by the Fund will be subject to the same rating requirements that apply to its other investments.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
The Fund may purchase debt securities on a "when-issued" basis and may purchase or sell such securities on a "forward commitment" basis in order to hedge against anticipated changes in interest rates and prices. The price, which is generally expressed in yield terms, is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. When-issued securities and forward commitments may be sold prior to the settlement date, but the Fund will purchase or sell when-issued securities and forward commitments only with the intention of actually receiving or delivering the securities, as the case may be. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery of the securities. If the Fund disposes of the right to acquire a when-issued security prior to its acquisition or disposes of its right to deliver or receive against a forward commitment, it may incur a gain or loss. At the time the Fund enters into a transaction on a when-issued or forward commitment basis, the Fund will segregate cash or liquid securities equal to the value of the when-issued or forward commitment securities with its custodian and will mark to market daily such assets. There is a risk that the securities may not be delivered and that the Fund may incur a loss.
The Fund may also sell securities on a "when, as and if issued" basis for hedging purposes. Under such a transaction, the Fund is required to deliver at a future date a security it does not presently hold, but which it has a right to receive if the security is issued. Issuance of the security may not occur, in which case the Fund would have no obligation to the other party, and would not receive payment for the sale. Selling securities on a "when, as and if issued" basis may reduce risk of loss to the extent that such a sale wholly or partially offsets unfavorable price movements on the investments being hedged. However, such sales also limit the amount the Fund can receive if the "when, as and if issued" security is in fact issued.
TEMPORARY DEFENSIVE STRATEGIES
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 (U.S. dollars, foreign currencies or multinational currency units such as Euros), money market instruments, or high-quality debt securities. The Fund may also invest up to 25% of its total assets in money market investment companies advised by AIM or its affiliates ("Affiliated Money Market Funds") for these purposes. In addition, for temporary defensive purposes, most or all of the Fund's investments may be made in the United States and denominated in U.S. dollars. To the extent the Fund employs a temporary defensive strategy, it will not be invested so as to achieve directly its investment objectives.
EQUITY-LINKED DERIVATIVES
The Fund may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investments in other investment companies. See "Investments in Other Investment Companies."
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Fund presently may be made only by acquiring shares of other investment companies (including investment vehicles or companies advised by AIM or its affiliates) with local governmental approval to invest in those countries. At such time as direct investment in these countries is allowed, the Fund anticipates investing directly in these markets.
The Fund may invest in other investment companies to the extent permitted by the 1940 Act, and the 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: (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 in Affiliated Money Market Funds, provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the Fund.
SAMURAI AND YANKEE BONDS
The Fund may invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"), and may invest in dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee bonds"). It is the policy of the Fund to invest in Samurai or Yankee bond issues only after taking into account considerations of quality and liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other securities or separately and provide the Fund with the right to purchase at a later date other securities of the issuer. Warrants are securities permitting, but not obligating, their holder to subscribe for other securities or commodities. Warrants do not carry with them the right to dividends or voting rights with respect to the securities that they entitle their holder to purchase, and they do not represent any rights in the assets of the issuer. As a result, warrants may be considered more speculative than certain other types of investments. In addition, the value of a warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans of portfolio securities amounting to not more than 30% of its total assets. Securities loans are made to broker/dealers or institutional investors pursuant to agreements requiring that the loans continuously be secured by collateral consisting of cash, U.S. government securities or certain irrevocable letters of credit equal to at least the value of the borrowed securities, plus any accrued interest or such other collateral as permitted by the Fund's investment program and regulatory agencies, and as approved by the Board, "marked to market" on a daily basis. The collateral for such loans, if received in cash, may be held in investment vehicles with investment objectives and policies similar to those of money market funds or limited duration income funds (longer maturities than may be held by money market funds), advised by the Advisor or its affiliates or by unaffiliated advisors. The Fund may pay a fee to the Advisor of such investment vehicles for its services. The Fund may pay reasonable administrative and custodial fees in connection with loans of its securities. While the securities loan is outstanding, the Fund will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. The Fund will have a right to call each loan and obtain the securities within the stated settlement period. The Fund will not have the right to vote equity securities while they are lent, but it may call in a loan in anticipation of any important vote. Loans will be made only to firms deemed by AIM to be of good standing and will not be made unless, in the judgment of AIM, the consideration to be earned from such loans would justify the risk. The risks in lending portfolio securities, as with other extension of secured credit, consist of possible delays in receiving additional collateral or in recovery of the loaned securities and possible loss of rights in the collateral should the borrower fail financially.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank obligations, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations, however, may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject the Fund to investment risks that are different in some respects from those of investments in obligations of domestic issuers. Although the Fund typically will acquire obligations issued and supported by the credit of U.S. or foreign banks having total assets at the time of purchase in excess of $1 billion, this $1 billion figure is not an investment policy or restriction of the Fund. For the purposes of calculation with respect to the $1 billion figure, the assets of a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund buys a security from a bank or recognized securities dealer and simultaneously commits to resell that security to the bank or dealer at an agreed upon price, date and market rate of interest unrelated to the coupon rate or maturity of the purchased security. Although repurchase agreements carry certain risks not associated with direct investments in securities, including possible decline in the market value of the underlying securities and delays and costs to the Fund
if the other party to the repurchase agreement becomes bankrupt, the Fund intends to enter into repurchase agreements only with banks and broker/dealers believed by AIM to present minimal credit risks in accordance with guidelines approved by the Trust's Board of Trustees. AIM reviews and monitors the creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times in an amount at least equal to the repurchase price plus accrued interest. To the extent that the proceeds from any sale of such collateral upon a default in the obligation to repurchase were less than the repurchase price, the Fund would suffer a loss. If the financial institution which is party to the repurchase agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or other liquidation proceedings there may be restrictions on the Fund's ability to sell the collateral and the Fund could suffer a loss. However, with respect to financial institutions whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions under such Code that would allow the immediate resale of such collateral. The Fund will not enter into a repurchase agreement with a maturity of more than seven days if, as a result, more than 15% of the value of the Fund's total assets would be invested in such repurchase agreements and other illiquid investments and securities for which no readily available market exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e., the Fund's total assets at all times will equal at least 300% of the amount of outstanding borrowings. If market fluctuations in the value of the Fund's holdings or other factors cause the ratio of the Fund's total assets to outstanding borrowings to fall below 300%, within three days (excluding Sundays and holidays) of such event the Fund may be required to sell portfolio securities to restore the 300% asset coverage, even though from an investment standpoint such sales might be disadvantageous. The Fund may borrow up to 5% of its total assets for temporary or emergency purposes other than to meet redemptions. Any borrowing by the Fund may cause greater fluctuation in the value of its shares than would be the case if the Fund did not borrow.
The Fund's fundamental investment limitations permit it to borrow money for leveraging purposes. The Fund, however, currently is prohibited, pursuant to a non-fundamental investment policy, from borrowing money in order to purchase securities. Nevertheless, this policy may be changed in the future by a vote of a majority of the Trust's Board of Trustees. The Fund will borrow for investment purposes only when AIM believes that such borrowings will benefit the Fund after taking into account considerations such as the costs of the borrowing and the likely investment returns on the securities purchased with the borrowed monies. When the income and gains on securities purchased with the proceeds of borrowings exceed the costs of such borrowings, the Fund's earnings or net asset value will increase faster than otherwise would be the case; conversely, if such income and gains fail to exceed such costs, the Fund's earnings or net asset value would decline faster than would otherwise be the case. The Fund expects that some of its borrowings may be made on a secured basis.
The Fund may enter into reverse repurchase agreements. A reverse repurchase agreement is a borrowing transaction in which the Fund transfers possession of a security to another party, such as a bank or broker/dealer, in return for cash, and agrees to repurchase the security in the future at an agreed upon price, which includes an interest component. The Fund also may engage in "roll" borrowing transactions which involve the Fund's sale of Government National Mortgage Association certificates or other securities together with a commitment (for which the Fund may receive a fee) to purchase similar, but not identical, securities at a future date. The Fund will segregate liquid assets in an amount sufficient to cover its obligations under "roll" transactions and reverse repurchase agreements with broker/dealers. No segregation is required for reverse repurchase agreements with banks.
Reverse repurchase agreements involve the risk that the market value of the securities regained in lieu of sale by the Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine
whether to enforce the portfolio's obligation to repurchase the securities, and the portfolio's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision.
The Fund also may enter into "dollar rolls," in which the Fund sells fixed income securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund would forego principal and interest paid on such securities. The Fund would be compensated by the difference between the current sales price and the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and will be deducted from the Fund's assets for purposes of calculating compliance with the Fund's borrowing limitations.
ZERO COUPON SECURITIES
The Fund may invest in certain zero coupon securities that are "stripped" U.S. Treasury notes and bonds. The Fund also may invest in zero coupon and other deep discount securities issued by foreign governments and domestic and foreign corporations, including certain Brady Bonds and other foreign debt and in payment-in-kind securities. Zero coupon securities pay no interest to holders prior to maturity, and payment-in-kind securities pay interest in the form of additional securities. However, a portion of the original issue discount on zero coupon securities and the "interest" on payment-in-kind securities will be included in the Fund's income. Accordingly, for the Fund to continue to qualify for tax treatment as a regulated investment company and to avoid a certain excise tax (see "Dividends, Distributions and Tax Matters" below), it may be required to distribute an amount that is greater than its share of the total amount of cash it actually receives. These distributions must be made from the Fund's cash assets or, if necessary, from the proceeds of sales of portfolio securities. The Fund will not be able to purchase additional income-producing securities with cash used to make such distributions, and its current income ultimately may be reduced as a result. Zero coupon and payment-in-kind securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS
The Fund may utilize combinations of futures on bonds and forward currency contracts to create investment positions that have substantially the same characteristics as bonds of the same type as those on which the futures contracts are written. Investment positions of this type are generally referred to as "synthetic securities." For example, in order to establish a synthetic security position for the Fund that is comparable to owning a Japanese government bond, AIM might purchase futures contracts on Japanese governmental bonds in the desired principal amount and purchase forward currency contracts for Japanese Yen in an amount equal to the then current purchase price for such bonds in the Japanese cash market, with each contract having approximately the same delivery date. AIM might roll over the futures and forward currency contract positions before taking delivery in order to continue the Fund's investment position, or AIM might close out those positions, thus effectively selling the synthetic security. Further, the amount of each contract might be adjusted in response to market conditions and the forward currency contract might be changed in amount or eliminated in order to hedge against currency fluctuations.
AIM would create synthetic security positions for the Fund when they believe that they can obtain a better yield or achieve cost savings in comparison to purchasing actual bonds or when comparable bonds are not readily available in the market. Synthetic security positions are subject to the risk that changes in the value of purchased futures contracts may differ from changes in the value of the bonds that might otherwise have been purchased in the cash market. Also, while AIM believes that the cost of creating synthetic security positions generally will be materially lower than the cost of acquiring comparable bonds in the cash market, the Fund will incur transaction costs in connection with each purchase of a futures or forward currency contract. The use of futures contracts and forward currency contracts to create synthetic security positions
also is subject to substantially the same risks as those that exist when these instruments are used in connection with hedging strategies. See "Options, Futures and Currency Strategies," below.
SWAPS, CAPS, FLOORS, AND COLLARS
The Fund may enter into interest rate, currency and index swaps, and purchase or sell related caps, floors and collars and other derivative instruments. The Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio, to protect against currency fluctuations, as a technique for managing its portfolios' duration (i.e., price sensitivity to changes in interest rates) or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. The Fund intends to use these transactions as hedges, and neither will sell interest rate caps or floors if it does not own securities or other instruments providing an income stream roughly equivalent to what the Fund may be obligated to pay.
Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest (for example, an exchange of floating rate payments for fixed rate payments) with respect to a notional amount of principal. A currency swap is an agreement to exchange cash flows on a notional amount leased on changes in the values of the reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional principal amount from the party selling the cap to the extent that a specified index exceeds a predetermined interest rate. The purchase of an interest rate floor entitles the purchaser to receive payments on a notional principal amount from the party selling the floor to the extent that a specified index falls below a predetermined interest rate or amount. A collar is a combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates or values.
INDEXED COMMERCIAL PAPER
The Fund may invest without limitation in commercial paper which is indexed to certain specific foreign currency exchange rates. The terms of such commercial paper provide that its principal amount is adjusted upwards or downwards (but not below zero) at maturity to reflect changes in the exchange rate between two currencies while the obligation is outstanding. The Fund will purchase such commercial paper with the currency in which it is denominated and, at maturity, will receive interest and principal payments thereon in that currency, but the amount of principal payable by the issuer at maturity will change in proportion to the change (if any) in the exchange rate between the two specified currencies between the date the instrument is issued and the date the instrument matures. While such commercial paper entails the risk of loss of principal, the potential for realizing gains as a result of changes in foreign currency exchange rates enables the Fund to hedge against a decline in the U.S. dollar value of investments denominated in foreign currencies while seeking to provide an attractive money market rate of return. The Fund will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES
The Fund may invest in certain other indexed securities, which are securities whose prices are indexed to the prices of other securities, securities indices, currencies, precious metals or other commodities, or other financial indicators. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific instrument or statistic. The performance of indexed securities depends to a great extent on the performance of the security, currency, or other instrument to which they are indexed, and may also be influenced by interest rate changes in the United States and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security, and their values may decline substantially if the issuer's creditworthiness deteriorates. Indexed securities may be more volatile than the underlying instruments. New forms of indexed securities continue to be developed. The Fund may invest in such securities to the extent consistent with their respective investment objectives.
SHORT SALES
The Fund may make short sales of securities, although it has no current intention of doing so. A short sale is a transaction in which the Fund sells a security in anticipation that the market price of that security will decline. The Fund may make short sales as a form of hedging to offset potential declines in long positions in securities it owns, or anticipates acquiring, and in order to maintain portfolio flexibility. The Fund only may make short sales "against the box." In this type of short sale, at the time of the sale, the Fund owns the security it has sold short or has the immediate and unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and does not receive the proceeds from the sale. To make delivery to the purchaser, the executing broker borrows the securities being sold short on behalf of the seller. The seller 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. To secure its obligation to deliver securities sold short, the Fund will deposit in a separate account with its custodian an equal amount of the securities sold short or securities convertible into or exchangeable for such securities at no cost. The Fund could close out a short position by purchasing and delivering an equal amount of the securities sold short, rather than by delivering securities already held by the Fund, because the Fund might want to continue to receive interest and dividend payments on securities in its portfolio that are convertible into the securities sold short.
The Fund might make a short sale "against the box" in order to hedge against market risks when AIM 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. In such case, any future losses in the 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 in the long position are reduced will depend upon the amount of the securities sold short relative to the amount of the securities the Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the investment values or conversion premiums of such securities. There will be certain additional transaction costs associated with short sales "against the box," but the Fund will endeavor to offset these costs with income from the investment of the cash proceeds of short sales.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
OPTIONS, FUTURES, AND FORWARD CURRENCY TRANSACTIONS
The Fund may use forward currency contracts, futures contracts, options on securities, options on currencies, options on indices and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with the 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). The Fund may enter into such instruments up to the full value of its portfolio assets.
To attempt to hedge against adverse movements in exchange rates between currencies, the Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date. Such contracts may involve the purchase or sale of a foreign currency against the U.S. dollar, or may involve two foreign currencies. The Fund may enter into forward currency contracts either with respect to specific transactions or with respect to the Fund's portfolio positions. The Fund also may purchase and sell put and call options on currencies, futures contracts on currencies and options on such futures contracts to hedge the Fund's portfolio against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and debt securities to hedge against the risk of fluctuations in the prices of securities held by the Fund or that AIM intends to include in the Fund's portfolio. The Fund also may purchase and sell put and call options on stock indices to hedge against overall fluctuations in the securities markets or in a specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options or write call options on such futures contracts to protect against a general market or a specific market sector decline that could adversely affect the Fund's portfolio. The Fund also may purchase index futures contracts and purchase call options or write put options on such contracts to hedge against a general market or market sector advance and thereby attempt to lessen the cost of future securities acquisitions. Similarly, the Fund may use interest rate futures contracts and options thereon to hedge the debt portion of its portfolio against changes in the general level of interest rates.
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
Although the Fund is authorized to enter into options, futures and forward currency transactions, it might not enter into any such transactions. The use of options, futures contracts and forward currency contracts ("Forward Contracts") involves special considerations and risks, as described below. Risks pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon AIM's ability to predict movements of the overall securities and currency markets, which requires different skills than predicting changes in the prices of individual securities. While AIM is experienced in the use of these instruments, there can be no assurance that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation, between price movements of an instrument and price movements of the investments being hedged. For example, if the value of an instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which the hedging instrument is traded. The effectiveness of hedges using hedging instruments on indices will depend on the degree of correlation between price movements in the index and price movements in the investments being hedged.
(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. For example, if the Fund entered into a short hedge because AIM projected a decline in the price of a security in the Fund's portfolio, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the hedging instrument. Moreover, if the price of the hedging instrument declined by more than the increase in the price of the security, the Fund could suffer a loss. In either such case, the Fund would have been in a better position had it not hedged at all.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract or option thereon at any particular time.
(5) As described below, the 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 (i.e., instruments other than purchased options). If the 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. The Fund's ability to close out a position in an instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the other party to the transaction ("contra party") to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies. Call options generally will be written on securities and currencies that, in the opinion of AIM are not expected to make any major price moves in the near future but that, over the long term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or currency 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 the writer of a call option continues, he may be assigned an exercise notice, requiring him to deliver the underlying security or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which the writer effects a closing purchase transaction by purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of investment considerations consistent with the Fund's investment objectives. When writing a call option, the Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security or currency above the exercise price, and retains the risk of loss should the price of the security or currency decline. Unlike one who owns securities or currencies not subject to an option, the Fund has no control over when it may be required to sell the underlying securities or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that the Fund has written expires, the Fund 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 or currency during the option period. If the call option is exercised, the Fund will realize a gain or loss from the sale of the underlying security or currency, which will be increased or offset by the premium received. The Fund does not consider a security or currency covered by a call option to be "pledged" as that term is used in the Fund's fundamental investment policies that limit the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and the Fund will be obligated to sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to constitute the market value of an option. The premium the Fund will receive from writing a call option will reflect, among other things, the current market price of the underlying investment, the relationship of the exercise price to such market price, the historical price volatility of the underlying investment, and the length of the option period. In determining whether a particular call option should be written, AIM will consider the reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those options.
Closing transactions will be effected in order to realize a profit on an outstanding call option, to prevent an underlying security or currency from being called, or to permit the sale of the underlying security or currency. Furthermore, effecting a closing transaction will permit the Fund to write another call option on the underlying security or currency with either a different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options and in entering into closing purchase contracts. Transaction costs relating to options activity normally are higher than those applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current market values of the underlying securities or currencies at the time the options are written. From time to time, the Fund may purchase an underlying security or currency for delivery in accordance with the exercise of an option, rather than delivering such security or currency from its portfolio. In such cases, additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more, respectively, than the premium received from writing the option. Because increases in the market price of a call option generally will reflect increases in the market price of the underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put option gives the purchaser of the option the right to sell, and the writer (seller) the obligation to buy, the underlying security or currency at the exercise price at anytime until (American Style) or on (European Style) the expiration date. The operation of put options in other respects, including their related risks and rewards, is substantially identical to that of call options.
The Fund generally would write put options in circumstances where AIM wishes to purchase the underlying security or currency for the Fund's portfolio at a price lower than the current market price of the security or currency. In such event, the 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. Since the Fund also would receive interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be used to enhance current return during periods of market uncertainty. The risk in such a transaction would be that the market price of the underlying security or currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Fund will be obligated to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the holder of a put option, the Fund would have the right to sell the underlying security or currency at the exercise price at any time until (American Style) or on (European Style) the expiration date. The Fund may enter into closing sale transactions with respect to such options, exercise them or permit them to expire.
The Fund may purchase a put option on an underlying security or currency ("protective put") owned by the Fund as a hedging technique in order to protect against an anticipated decline in the value of the security or currency. Such hedge protection is provided only during the life of the put option when the Fund, as the holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any decline in the underlying security's market price or currency's exchange value. The premium paid for the put option and any transaction costs would reduce any profit otherwise available for distribution when the security or currency eventually is sold.
The Fund also may purchase put options at a time when the Fund does not own the underlying security or currency. By purchasing put options on a security or currency it does not own, the Fund seeks to benefit from a decline in the market price of the underlying security or currency. If the put option is not sold when it has remaining value, and if the market price of the underlying security or currency remains equal to or greater than the exercise price during the life of the put option, the Fund will lose its entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of the underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the holder of a call option, the Fund would have the right to purchase the underlying security or currency at the exercise price at any time until (American Style) or on (European Style) the expiration date. The Fund may enter into closing sale transactions with respect to such options, exercise them or permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the underlying security or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable the Fund to acquire the security or currency at the exercise price of the call option plus the premium paid. At times, the net cost of acquiring the security or currency in this manner may be less than the cost of acquiring the security or currency directly. This technique also may be useful to the Fund in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. 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 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.
The Fund also may purchase call options on underlying securities or currencies it owns to avoid realizing losses that would result in a reduction of the Fund's current return. For example, where the Fund has written a call option on an underlying security or currency having a current market value below the price at which it purchased the security or currency, an increase in the market price could result in the exercise of the call option written by the Fund and the realization of a loss on the underlying security or currency. Accordingly, the Fund could purchase a call option on the same underlying security or currency, which could be exercised to fulfill the Fund's delivery obligations under its written call (if it is exercised). This strategy could allow the Fund to avoid selling the portfolio security or currency at a time when it has an unrealized loss; however, the Fund would have to pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using Forward Contracts by purchasing put or call options on currencies. A put option gives the Fund as purchaser the right (but not the obligation) to sell a specified amount of currency at the exercise price at any time until (American Style) or on (European Style) the expiration of the option. A call option gives the Fund as purchaser the right (but not the obligation) to purchase a specified amount of currency at the exercise price at any time until (American Style) or on (European Style) the expiration of the option. The Fund might purchase a currency put option, for example, to protect itself against a decline in the dollar value of a currency in which it holds or anticipates holding securities. If the currency's value should decline against the dollar, the loss in currency value should be offset, in whole or in part, by an increase in the value of the put. If the value of the currency instead should rise against the dollar, any gain to the Fund would be reduced by the premium it had paid for the put option. A currency call option might be purchased, for example, in anticipation of, or to protect against, a rise in the value against the dollar of a currency in which the Fund anticipates purchasing securities.
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. The Fund will not purchase an OTC option unless the Fund 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 the 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.
The staff of the SEC considers purchased OTC options to be illiquid securities. The Fund may also sell OTC options and, in connection therewith, segregate assets or cover its obligations with respect to OTC options written by the Fund. 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.
The Fund's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. The Fund intends to purchase or write only those exchange-traded options for which there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the contra party or by a transaction in the secondary market if any such market exists. Although the Fund will enter into OTC options only with contra parties that are expected to be capable of entering into closing transactions with the Fund, 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 extent of insolvency of the contra party, the Fund might be unable to close out an OTC option position at any time prior to its expiration.
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 sector generally) rather than on price movements in individual securities or futures contracts. When the Fund writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Fund an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference. When the Fund buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When the Fund buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Fund's exercise of the put, to deliver to the Fund an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When the Fund writes a put on an index, it receives a premium and the purchaser has the right, prior to the expiration date, to require the Fund to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when the Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. The Fund can offset some of the risk of writing a call index option 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 vary from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the "timing risk" inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, the Fund, as the call writer, will not know that it has been assigned until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as common stock, because there the writer's obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date; and by the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its securities portfolio. This "timing risk" is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.
If the Fund purchases an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Fund will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, including futures contracts on indices of debt and equity securities, ("Futures" or "Futures Contracts") as a hedge against changes in prevailing levels of interest rates, currency exchange rates or stock prices in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by the Fund. The Fund's hedging may include sales of Futures as an offset against the effect of expected increases in interest rates or decreases in currency exchange rates, and purchases of Futures as an offset against the effect of expected declines in interest rates or increases in currency exchange rates.
The Fund only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading Commission ("CFTC"). Futures are exchanged in London at the London International Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be used to reduce the Fund's exposure to interest rate and currency exchange rate fluctuations, the Fund may be able to hedge exposure more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (debt security or currency) for a specified price at a designated date, time and place. An index Futures Contract 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 index value at the close of trading on the contract and the price at which the Futures Contract is originally struck; no physical delivery of the securities 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for financial instruments or currencies, Futures Contracts usually are closed out before the delivery date. Closing out an open Futures Contract sale or purchase is effected by entering into an offsetting Futures Contract purchase or sale, respectively, for the same aggregate amount of the identical financial instrument or currency and the same delivery date. If the offsetting purchase price is less than the original sale price, the Fund realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, the Fund realizes a gain; if it is less, the Fund realizes a loss. The transaction costs also must be included in these calculations. There can be no assurance, however, that the Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If the Fund is not able to enter into an offsetting transaction, the Fund will continue to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising from the sale of one Futures Contract of September Deutschemarks on an exchange may be fulfilled at any time before delivery under the Futures Contract is required (i.e., on a specified date in September, the "delivery month") by the purchase of another Futures Contract of September Deutschemarks on the same exchange. In such instance, the difference between the price at which the Futures Contract was sold and the price paid for the offsetting purchase, after allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts 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 Contracts is the amount of funds that must be deposited by the Fund in order to initiate futures trading and to maintain the Fund's open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered into ("initial margin") is intended to assure the Fund's performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded, and may be modified significantly 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 the 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 Contract more or less valuable, a process known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile and are influenced, among other things, by actual and anticipated changes in interest and currency rates, which in turn are affected by fiscal and monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures Contracts and prices of the securities or currencies in the Fund's portfolio being hedged. The degree of imperfection of correlation depends upon circumstances such as: variations in speculative market demand for Futures and for securities or currencies, including technical influences in Futures trading; and differences between the financial instruments being hedged and the instruments underlying the standard Futures Contracts available for trading. A decision of whether, when, and how to hedge involves skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an extremely high degree of leverage. As a result, a relatively small price movement in a Futures Contract may result in immediate and
substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the Futures Contract is deposited as margin, a subsequent 10% decrease in the value of the Futures Contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the Futures Contract were closed out. Thus, a purchase or sale of a Futures Contract may result in losses in excess of the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures Contract and option on Futures Contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a Futures Contract or option may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of Futures Contract or option, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures Contract and option prices occasionally have moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on 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.
Certain characteristics of the Futures market might increase the risk that movements in the prices of Futures Contracts or options on Futures might not correlate perfectly with movements in the prices of the investments being hedged. For example, all participants in the Futures and options on Futures markets are subject to daily variation margin calls and might be compelled to liquidate Futures or options on Futures positions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase price volatility of the instruments and distort the normal price relationship between the Futures or options and the investments being hedged. Also, because initial margin deposit requirements in the Futures market are less onerous than margin requirements in the securities markets, there might be increased participation by speculators in the Futures markets. This participation also might cause temporary price distortions. In addition, activities of large traders in both the Futures and securities markets involving arbitrage, "program trading" and other investment strategies might result in temporary price distortions.
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, which represents the amount by which the market price of the Futures Contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the Futures Contract. If an option is exercised on the last trading day prior to the expiration date of the option, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the securities, currencies or index upon which the Futures Contract is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the purchase of put options on Futures can serve as a short hedge. Writing call options on Futures can serve as a limited short hedge,
and writing put options on Futures can serve as a limited long hedge, using a strategy similar to that used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to deposit initial and variation margin pursuant to requirements similar to those applicable to Futures Contracts. Premiums received from the writing of an option on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering the same Futures Contract and having the same exercise price and expiration date. The ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON CURRENCIES
To the extent that the 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 by which options are "in-the-money") will not exceed 5% of the total assets of the Fund's portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Fund has entered into. In general, a call option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract exceeds the strike, i.e., exercise, price of the call; a put option on a Futures Contract is "in-the-money" if the value of the underlying Futures Contract is exceeded by the strike price of the put. This guideline may be modified by the Trust's Board of Trustees, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, generally 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. The Fund either may accept or make delivery of the currency at the maturity of the Forward Contract. The 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.
The Fund engages in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. The Fund might sell a particular foreign currency forward, for example, when it holds bonds denominated in a foreign currency but anticipates, and seeks to be protected against, a decline in the currency against the U.S. dollar. Similarly, the Fund might sell the U.S. dollar forward when it holds bonds denominated in U.S. dollars but anticipates, and seeks to be protected against, a decline in the U.S. dollar relative to other currencies. Further, the Fund might purchase a currency forward to "lock in" the price of securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A Forward Contract generally has no deposit requirement, and no commissions are charged at any stage for trades. The Fund will enter into such Forward Contracts with major U.S. or foreign banks and securities or currency dealers in accordance with guidelines approved by the Trust's Board of Trustees.
The Fund may enter into Forward Contracts either with respect to specific transactions or with respect to the overall investment of the Fund. The precise matching of the Forward Contract amounts and the value of specific securities generally will not be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the Forward Contract is entered into and the date it matures. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the Fund is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward Contracts involve the risk that anticipated currency movements will not be predicted accurately, causing the Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a currency, the Fund either may sell a portfolio security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Fund will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, the Fund may close out a Forward Contract requiring it to purchase a specified currency by entering into a second contract, if its contra party agrees, entitling it to sell the same amount of the same currency on the maturity date of the first contract. The Fund would realize a gain or loss as a result of entering into such an offsetting Forward Contract under either circumstance to the extent the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and the offsetting contract.
The cost to the 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 usually are 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 the Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while Forward Contracts 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.
FOREIGN CURRENCY STRATEGIES--SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies, options on Futures on foreign currencies and Forward Contracts to hedge against movements in the values of the foreign currencies in which the Fund's securities are denominated. Such currency hedges can protect against price movements in a security that the Fund owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular currency when no Futures Contract, Forward Contract or option involving that currency is available or one of such contracts is more expensive than certain other contracts. In such cases, the Fund may hedge against price movements in that currency by entering into a contract on another currency or basket of currencies, the values of which AIM believes will have a positive correlation to the value of the currency being hedged. The risk that movements in the price of the contract will not correlate perfectly with movements in the price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts and options on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of Futures Contracts, Forward Contracts or options, the Fund could be disadvantaged by dealing in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies or any regulatory requirements that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or Futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements
might take place in the underlying markets that cannot be reflected in the markets for the Futures contracts or options until they reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, the Fund might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than options purchased by the Fund) expose the Fund to an obligation to another party. The 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, receivables and short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. The Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account 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 the Fund's assets are used for cover or segregated accounts, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Fund usually will enter into interest rate swaps on a net basis, that is, the two payment streams are netted out in a cash settlement on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of the Fund's obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid securities having an aggregate net asset value at least equal to the accrued excess will be maintained in an account by a custodian that satisfies the requirements of the 1940 Act. The Fund will also establish and maintain such segregated accounts with respect to its total obligations under any swaps that are not entered into on a net basis and with respect to any caps or floors that are written by the Fund. The Fund believes that swaps, caps and floors do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to the Fund's borrowing restrictions. The Fund will not enter into any swap, cap, floor, collar or other derivative transaction unless, at the time of entering into the transaction, the unsecured long-term debt rating of the counterparty combined with any credit enhancements is rated at least A by Moody's or S&P, or has an equivalent rating from a nationally recognized statistical rating organization or is determined to be of equivalent credit quality by AIM. If a counterparty defaults, the Fund may have contractual remedies pursuant to the agreements related to the transactions. The swap market has grown substantially in recent years, with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid. Caps, floors and collars are more recent innovations for which standardized documentation has not yet been fully developed and, for that reason, they are less liquid than swaps.
RISK FACTORS
NON-DIVERSIFIED CLASSIFICATION
The Fund is classified as a "non-diversified" fund under the 1940 Act. As a result, the Fund will be able to invest in a fewer number of issuers than if it were classified as a "diversified" fund under the 1940 Act.
To the extent that the Fund invests in a smaller number of issuers, the value of the Fund's shares may fluctuate more widely and the Fund may be subject to greater investment and credit risk with respect to the portfolio.
ILLIQUID SECURITIES
The Fund may invest up to 15% of net assets in illiquid securities. Securities may be considered illiquid if the Fund cannot reasonably expect within seven days to receive approximately the amount at which the Fund values such securities. The sale of illiquid securities, if they can be sold at all, generally will require more time and result in higher brokerage charges or dealer discounts and other selling expenses than will the sale of liquid securities, such as securities eligible for trading on U.S. securities exchanges or in the over-the-counter markets. Moreover, restricted securities, which may be illiquid for purposes of this limitation often sell, if at all, at a price lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in the securities laws of other countries. However, securities that are freely marketable in the country where they are principally traded, but would not be freely marketable in the United States, will not be considered illiquid. Where registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large institutional market has developed for certain securities that are not registered under the Securities Act of 1933, as amended ("1933 Act"), including private placements, repurchase agreements, commercial paper, foreign securities and corporate bonds and notes. These instruments are often restricted securities because the securities are sold in transactions not requiring registration. Institutional investors generally will not seek to sell these instruments to the general public, but instead will often depend either on an efficient institutional market in which such unregistered securities can be readily resold or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are contractual or legal restrictions on resale to the general public or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration requirements of the 1933 Act for resales of certain securities to qualified institutional buyers. Institutional markets for restricted securities have developed as a result of Rule 144A, providing both readily ascertainable values for restricted securities and the ability to liquidate an investment to satisfy share redemption orders. Such markets include automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the National Association of Securities Dealers, Inc. An insufficient number of qualified institutional buyers interested in purchasing Rule 144A-eligible restricted securities held by the Fund, however, could affect adversely the marketability of such portfolio securities and the Fund might be unable to dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board of Trustees has the ultimate responsibility for determining whether specific securities, including restricted securities eligible for resale to qualified institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or illiquid. The Board has delegated the function of making day-to-day determinations of liquidity to AIM in accordance with procedures approved by the Board. AIM takes into account a number of factors in reaching liquidity decisions, including: (i) the frequency of trading in the security; (ii) the number of dealers that make quotes for the security; (iii) the number of dealers that have undertaken to make a market in the security; (iv) the number of other potential purchasers; and (v) the nature of the security and how trading is effected (e.g., the time needed to sell the security, how offers are solicited and the mechanics of transfer). AIM will monitor the liquidity of securities held by the Fund and report periodically on such decisions to the Trust's Board of Trustees. Moreover, certain securities, such as those subject to registration restrictions of more than seven days, will generally be treated as illiquid. If the liquidity percentage restriction of the Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting from a change in market value or assets will not constitute a violation of that restriction. If as a result of a change in market value or assets, the percentage of illiquid securities held by the Fund increases above the applicable limit, AIM will take appropriate steps to bring the aggregate amount of illiquid assets back within the prescribed limitations as soon as reasonably practicable, taking into account the effect of any disposition on the Fund.
FOREIGN SECURITIES
Political, Social and Economic Risks. Investing in securities of non-U.S. companies may entail additional risks due to the potential political, social and economic instability of certain countries and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment, convertibility of currencies into U.S. dollars and on repatriation of capital invested. In the event of such expropriation, nationalization, confiscatory taxation or other confiscation by any country, the Fund could lose its entire investment in any such country. Economies in emerging markets are dependent heavily upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade.
Religious, Political and Ethnic Instability. Certain countries in which the Fund may invest may have groups that advocate radical religious or revolutionary philosophies or support ethnic independence. Any disturbance on the part of such individuals could carry the potential for widespread destruction or confiscation of property owned by individuals and entities foreign to such country and could cause the loss of the Fund's investment in those countries. Instability may also result from, among other things: (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; and (iii) hostile relations with neighboring or other countries. Such political, social and economic instability could disrupt the principal financial markets in which the Fund invests and adversely affect the value of the Fund's assets.
Foreign Investment Restrictions. Certain countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as the Fund. These restrictions or controls may at times limit or preclude investment in certain securities and may increase the cost and expenses of the Fund. For example, certain countries require prior governmental approval before investments by foreign persons may be made, or may limit the amount of investment by foreign persons in a particular company, or limit the investment by foreign persons to only a specific class of securities of a company that may have less advantageous terms than securities of the company available for purchase by nationals. Moreover, the national policies of certain countries may restrict investment opportunities in issuers or industries deemed sensitive to national interests. In addition, some countries require governmental approval for the repatriation of investment income, capital or the proceeds of securities sales by foreign investors. In addition, if there is a deterioration in a country's balance of payments or for other reasons, a country may impose restrictions on foreign capital remittances abroad. The Fund could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental Regulation. Foreign companies are subject to accounting, auditing and financial standards and requirements that differ, in some cases significantly, from those applicable to U.S. companies. In particular, the assets, liabilities and profits appearing on the financial statements of such a company may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. generally accepted accounting principles. Most of the foreign securities held by the Fund will not be registered with the SEC or regulators of any foreign country, nor will the issuers thereof be subject to the SEC's reporting requirements. Thus, there will be less available information concerning most foreign issuers of securities held by the Fund than is available concerning U.S. issuers. In instances where the financial
statements of an issuer are not deemed to reflect accurately the financial situation of the issuer, AIM will take appropriate steps to evaluate the proposed investment, which may include on-site inspection of the issuer, interviews with its management and consultations with accountants, bankers and other specialists. There is substantially less publicly available information about foreign companies than there are reports and ratings published about U.S. companies and the U.S. Government. In addition, where public information is available, it may be less reliable than such information regarding U.S. issuers. Issuers of securities in foreign jurisdictions are generally not subject to the same degree of regulation as are U.S. issuers with respect to such matters as restrictions on market manipulation, insider trading rules, shareholder proxy requirements and timely disclosure of information.
Currency Fluctuations. Because the Fund, under normal circumstances, will invest substantial portions of its total assets in the securities of foreign issuers which are denominated in foreign currencies, the strength or weakness of the U.S. dollar against such foreign currencies will account for part of the Fund's investment performance. A decline in the value of any particular currency against the U.S. dollar will cause a decline in the U.S. dollar value of the Fund's holdings of securities and cash denominated in such currency and, therefore, will cause an overall decline in their respective net asset values and any net investment income and capital gains derived from such securities to be distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value of the foreign currencies in which the Fund receives its income declines relative to the U.S. dollar between the receipt of the income and the making of Fund distributions, the Fund may be required to liquidate securities in order to make distributions if the Fund has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined by several factors including the supply and demand for particular currencies, central bank efforts to support particular currencies, the relative movement of interest rates and the pace of business activity in the other countries, and the United States, and other economic and financial conditions affecting the world economy. Many of the currencies in emerging markets countries have experienced steady devaluations relative to the U.S. dollar and major devaluations have historically occurred in certain countries.
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 the Fund.
Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert holdings of foreign currencies into U.S. dollars on a daily basis. The Fund will do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference ("spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to sell that currency to the dealer.
Adverse Market Characteristics. Securities of many foreign issuers may be less liquid and their prices more volatile than securities of comparable U.S. issuers. In addition, foreign securities markets and brokers generally are subject to less governmental supervision and regulation than in the U.S., and foreign securities transactions usually are subject to fixed commissions, which generally are higher than negotiated commissions on U.S. transactions. In addition, foreign securities transactions may be subject to difficulties associated with the settlement of such transactions. Delays in settlement could result in temporary periods when assets of the Fund are uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause it to miss attractive opportunities. Inability to dispose of a portfolio security due to settlement problems either could result in losses to the Fund due to subsequent declines in value of the portfolio security or, if the Fund has entered into a contract to sell the security, could result in possible liability to the purchaser. AIM will consider such difficulties when determining the allocation of the Fund's assets, although AIM does not believe that such difficulties will have a material adverse effect on the Fund's portfolio trading activities.
The Fund may use foreign custodians, which may charge higher custody fees than those attributable to domestic investing and may involve risks in addition to those related to the use of U.S. custodians. Such risks include uncertainties relating to: (i) determining and monitoring the financial strength, reputation and standing of the foreign custodian; (ii) maintaining appropriate safeguards to protect the Fund's investments and (iii) possible difficulties in obtaining and enforcing judgments against such custodians.
The risk exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, if the
Fund believes that appropriate circumstances warrant, it will promptly apply to
the SEC for a determination that an emergency exists within the meaning of
Section 22(e) of the 1940 Act. During the period commencing from the Fund's
identification of such conditions until the date of SEC action, the portfolio
securities of the Fund in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Trust's Board of
Trustees.
Withholding Taxes. The Fund's net investment income from foreign issuers may be subject to withholding taxes by the foreign issuer's country, thereby reducing the Fund's income or delaying the receipt of income where those taxes may be recaptured. See "Dividends, Distributions and Tax Matters" herein.
Concentration. To the extent the Fund invests a significant portion of its assets in securities of issuers located in a particular country or region of the world, it may be subject to greater risks and may experience greater volatility than a fund that is more broadly diversified geographically.
Special Considerations Affecting Western European Countries. The countries that are members of the European Economic Community ("Common Market") (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom) eliminated certain import tariffs and quotas and other trade barriers with respect to one another over the past several years. AIM believes that this deregulation should improve the prospects for economic growth in many Western European countries. Among other things, the deregulation could enable companies domiciled in one country to avail themselves of lower labor costs existing in other countries. In addition, this deregulation could benefit companies domiciled in one country by opening additional markets for their goods and services in other countries. Since, however, it is not clear what the exact form or effect of these Common Market reforms will be on business in Western Europe, it is impossible to predict the long-term impact of the implementation of these programs on the securities owned by the Fund.
Special Considerations Affecting Russia and Eastern European Countries. Investing in Russia and Eastern European countries involves a high degree of risk and special considerations not typically associated with investing in the United States securities markets, and should be considered highly speculative. Such risks include: (1) delays in settling portfolio transactions and risk of loss arising out of the system of share registration and custody; (2) the risk that it may be impossible or more difficult than in other countries to obtain and/or enforce a judgement; (3) pervasiveness of corruption and crime in the economic system; (4) currency exchange rate volatility and the lack of available currency hedging instruments; (5) higher rates of inflation (including the risk of social unrest associated with periods of hyper-inflation) and high unemployment; (6) controls on foreign investment and local practices disfavoring foreign investors and limitations on repatriation of invested capital, profits and dividends, and on a fund's ability to exchange local currencies for U.S. dollars; (7) political instability and social unrest and violence; (8) the risk that the governments of Russia
and Eastern European countries may decide not to continue to support the economic reform programs implemented recently and could follow radically different political and/or economic policies to the detriment of investors, including non-market-oriented policies such as the support of certain industries at the expense of other sectors or investors, or a return to the centrally planned economy that existed when such countries had a communist form of government; (9) the financial condition of companies in these countries, including large amounts of inter-company debt which may create a payments crisis on a national scale; (10) dependency on exports and the corresponding importance of international trade; (11) the risk that the tax system in these countries will not be reformed to prevent inconsistent, retroactive and/or exorbitant taxation; and (12) the underdeveloped nature of the securities markets.
Special Considerations Affecting Japan. Japan's economic growth has declined significantly since 1990. The general government position has deteriorated as a result of weakening economic growth and stimulative measures taken to support economic activity and to restore financial stability. Although the decline in interest rates and fiscal stimulation packages have helped to contain recessionary forces, uncertainties remain. Japan is also heavily dependent upon international trade, so its economy is especially sensitive to trade barriers and disputes. Japan has had difficult relations with its trading partners, particularly the United States, where the trade imbalance is the greatest. It is possible that trade sanctions and other protectionist measures could impact Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings ratios. Differences in accounting methods make it difficult to compare the earnings of Japanese companies with those of companies in other countries, especially in the U.S. In general, however, reported net income in Japan is understated relative to U.S. accounting standards and this is one reason why price-earnings ratios of the stocks of Japanese companies have tended historically to be higher than those for U.S. stocks. In addition, Japanese companies have tended to have higher growth rates than U.S. companies and Japanese interest rates have generally been lower than in the U.S., both of which factors tend to result in lower discount rates and higher price-earnings ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United States. Evidence has emerged from time to time of distortion of market prices to serve political or other purposes. Shareholders' rights are not always equally enforced. In addition, Japan's banking industry is undergoing problems related to bad loans and declining values in real estate.
Special Considerations Affecting Pacific Region Countries. Certain of the risks associated with international investments are heightened for investments in Pacific region countries. For example, some of the currencies of Pacific region countries have experienced steady devaluations relative to the U.S. dollar, and major adjustments have been made periodically in certain of such currencies. Certain countries, such as India, face serious exchange constraints. Jurisdictional disputes also exist between South Korea and North Korea. In addition, the Funds may invest in Hong Kong. Investments in Hong Kong may be subject to expropriation, national, nationalization or confiscation, in which case a Fund could lose its entire investment in Hong Kong. In addition, the reversion of Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a risk of possible loss of investor confidence in Hong Kong's currency, stock market and assets.
Special Considerations Affecting Latin American Countries. Most Latin American countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain Latin American countries. Certain Latin American countries are also among the largest debtors to commercial banks and foreign governments. At times certain Latin American countries have declared moratoria on the payment of principal and/or interest on external debt. In addition, certain Latin American securities markets have experienced high volatility in recent years.
Latin American countries may also close certain sectors of their economies to equity investments by foreigners. Further due to the absence of securities markets and publicly owned corporations and due to
restrictions on direct investment by foreign entities, investments may only be made in certain Latin American countries solely or primarily through governmentally approved investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. For example, in late 1994, the value of the Mexican peso lost more than one-third of its value relative to the U.S. dollar.
Special Considerations Affecting Emerging Markets. The Fund may invest
in debt securities in emerging markets. Investing in securities in emerging
countries may entail greater risks than investing in debt securities in
developed countries. These risks affecting debt investments in emerging markets
include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interests; (iv) foreign taxation; and
(v) the absence of developed structures governing private or foreign investment
or allowing for judicial redress for injury to private property. Because of the
special risks associated with investing in emerging markets, an investment in
the Fund should be considered speculative.
Settlement mechanisms in emerging securities markets may be less efficient and reliable than in more developed markets. In such emerging securities markets there may be share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates and corresponding currency devaluations have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
The Fund may invest in mortgage-backed and asset-backed securities. The yield characteristics of mortgage-backed and asset-backed securities differ from those of traditional bonds. Among the major differences are that interest and principal payments are made more frequently (usually monthly) and that principal may be prepaid at any time because the underlying mortgage loans or other assets generally may be prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will increase during a period of falling interest rates and decrease during a period of rising interest rates. Mortgage-backed and asset-backed securities may also decrease in value as a result of increasing market interest rates and, because of prepayments, may benefit less than other bonds from declining interest rates. Reinvestments of prepayments may occur at lower interest rates than the original investment, thus adversely affecting the yield of the Fund. Actual prepayment experience may cause the yield of a mortgage-backed security to differ from what was assumed when the Fund purchased the security. The market for privately issued mortgage-backed and asset-backed securities is smaller and less liquid than the market for U.S. government mortgage-backed securities.
Foreign mortgage-backed securities markets are substantially smaller than U.S. markets, but have been established in several countries, including Germany, Denmark, Sweden, Canada and Australia, and may be developed elsewhere. Foreign mortgage-backed securities generally are structured similar to domestic mortgage-backed securities, and they normally present substantially similar investment risks as well as the other risks normally associated with foreign securities.
LOWER QUALITY DEBT SECURITIES
Under normal market conditions the Fund may invest up to 65% of its total assets in debt securities rated below investment grade. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, D, Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. While such lower quality debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest quality debt that is not in default as to principal or interest and such issue so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Lower quality debt securities are also generally considered to be subject to greater risk than higher quality securities with regard to a deterioration of general economic conditions. These securities are the equivalent of high yield, high risk bonds, commonly known as "junk bonds." As noted above, the Fund may invest in debt securities rated below C, which are in default as to principal and/or interest.
Ratings of debt securities represent the rating agency's opinion regarding their quality and are not a guarantee of quality. Rating agencies attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Also, rating agencies may fail to make timely changes in credit quality in response to subsequent events, so that an issuer's current financial conditions may be better or worse than a rating indicates.
The marked values of lower quality debt securities tend to reflect individual developments of the issuer to a greater extent than do higher quality securities, which react primarily to fluctuations in the general level of interest rates. In addition, lower quality debt securities tend to be more sensitive to economic conditions and generally have more volatile prices than higher quality securities. Issuers of lower quality securities are often highly leveraged and may not have available to them more traditional methods of financing. For example, during an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of lower quality securities may experience financial stress. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations may also be adversely affected by specific developments affecting the issuer, such as the issuer's inability to meet specific projected business forecasts or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders of lower quality securities because such securities are generally unsecured and may be subordinated to the claims of other creditors of the issuer.
Lower quality debt securities of corporate issuers frequently have call or buy-back features which would permit an issuer to call or repurchase the security from the Fund. If an issuer exercises these provisions in a declining interest rate market, the Fund may have to replace the security with a lower yielding security, resulting in a decreased return for investors. In addition, the Fund may have difficulty disposing of lower quality securities because there may be a thin trading market for such securities. There may be no established retail secondary market for many of these securities, and the Fund anticipates that such securities could be sold only to a limited number of dealers or institutional investors. The lack of a liquid secondary market also may have an adverse impact on market prices of such instruments and may make it more difficult for the Fund to obtain accurate market quotations for purposes of valuing the securities in the Fund's portfolio. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may also decrease the values and liquidity of lower quality securities, especially in a thinly traded market. The Fund also may acquire lower quality debt securities during an initial underwriting or may acquire lower quality debt securities which are sold without registration under applicable securities laws. Such securities involve special considerations and risks.
Factors having an adverse effect on the market value of lower rated securities or their equivalents purchased by the Fund will adversely impact the respective net asset values of the Fund. In addition to the foregoing, such factors may include: (i) potential adverse publicity; (ii) heightened sensitivity to general economic or political conditions; and (iii) the likely adverse impact of a major economic recession. The Fund also may incur additional expenses to the extent they are required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings, and the Fund may have limited legal recourse in the event of a default. Debt securities issued by governments in emerging markets can differ from debt obligations issued by private entities in that remedies from defaults generally must be pursued in the courts of the defaulting government, and legal recourse is therefore somewhat diminished. Political conditions, in terms of a government's willingness to meet the terms of its debt obligations, also are of considerable significance. There can be no assurance that the holders of commercial bank debt may not contest payments to the holders of debt securities issued by governments in emerging markets in the event of default by the governments under commercial bank loan agreements.
As of October 31, 2000, the Fund had 92.50% of its total net assets in debt securities that received a rating from Standard & Poor's and 3.90% of its total net assets in debt securities that were not so rated. In addition, the Fund had 2.88% in cash and 0.00% in net payables. The Fund had 92.50% of its total net assets invested in rated securities in the following rating categories: AAA - 3.20%; AA - 2.90%; A - 13.28%; BBB - 29.53%; BB - 11.38%; B - 30.12%; CCC - 2.09%; CC - 0.00%; and D - 0.00%. Included in the unrated category are securities held by the Fund which, while unrated, have been determined by AIM to be of comparable quality to rated securities. It should be noted that the allocation of the investments of the Fund by rating on any given date will vary and should not be considered representative of the future composition of the Fund.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations as fundamental policies which may not be changed without approval by a majority of the outstanding shares of the Fund.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more of the Fund's total assets would be invested in securities of issuers having their principal business activities in the same industry, except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-based securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers, except to the extent that the Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities;
(4) Make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets (including the amount borrowed but reduced by any liabilities not constituting borrowings) at the time of the borrowing, except that the Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all of its investable assets (cash, securities and receivables related to securities) in an open-end management investment company having substantially the same investment objective, policies and limitations as the Fund.
For purposes of the Fund's concentration policy contained in limitation
(1) above, the Fund intends to comply with the SEC staff positions that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the Fund are not fundamental policies and may be changed by vote of the Trust's Board of Trustees without shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in securities of an issuer if the investment would cause the Fund to own more than 10% of any class of securities of any one issuer (provided, however, that the Fund may invest all of its investable assets in an open-end management investment company with substantially the same investment objectives, policies, and limitations as the Fund), except that the Fund may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(3) Invest more than 10% of its total assets in shares of other investment companies and invest more than 5% of its total assets in any one investment company or acquire more than 3% of the outstanding voting securities of any one investment company (provided, however, that the Fund may invest all of its investable assets in an open-end management investment company with substantially the same investment objectives, policies, and limitations as the Fund), except that the Fund may purchase securities of Affiliated Money Market Funds to the extent permitted by exemptive order;
(4) Purchase securities on margin, provided that the Fund may obtain short-term credits as may be necessary for the clearance of purchases and sales of securities, and further provided that the Fund may make margin deposits in connection with its use of financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments;
(5) Enter into a futures contract, if, as a result thereof, more than 5% of the Fund's total assets (taken at market value at the time of entering into the contract) would be committed to margin on such futures contracts; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that this shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral arrangements in connection with permissible activities.
Investors should refer to the Fund's Prospectus for further information about the Fund's investment objectives, which may not be changed without the approval of the Fund's shareholders and other investment policies and techniques, which may be changed without shareholder approval.
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by the Trust's Board of Trustees, AIM is responsible for the execution of the Fund's portfolio transactions and the selection of broker/dealers that execute such transactions on behalf of the Fund. In executing transactions, AIM seeks the best net results for the Fund, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. Although AIM generally seeks reasonably competitive commission rates and spreads, payment of the lowest commission or spread is not necessarily consistent with the best net results. While the Fund may engage in soft dollar arrangements for research services, as described below, the Fund has no obligation to deal with any broker/dealer or group of broker/dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as principal for its own account without a stated commission, although the price of the security usually includes a profit to the dealer. U.S. and foreign government securities and money market instruments generally are traded in the OTC markets. In underwritten offerings, securities usually are purchased at a fixed price which includes an amount of compensation to the underwriter. On occasion, securities may be purchased directly from an issuer, in which case no commissions or discounts are paid. Broker/dealers may receive commissions on futures, currency and options transactions.
Consistent with the interest of the Fund, AIM may select brokers to execute the Fund's portfolio transactions on the basis of the research and brokerage services they provide to AIM for its use in managing the Fund and other advisory accounts. Such services may include furnishing analyses, reports and information concerning issuers, industries, securities, geographic regions, economic factors and trends, portfolio strategy, and performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Broker/dealers may communicate such information electronically, orally, in written form or on computer software. Research and brokerage services received from such brokers are in addition to, and not in lieu of, the services required to be performed by AIM under investment management and administration contract. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that AIM determines in good faith that such commission is reasonable in terms either of that particular transaction or the overall responsibility of AIM to the Fund and its other clients and that the total commissions paid by the Fund will be reasonable in relation to the benefits received by the Fund over the long term. Research services may also be received from dealers who execute Fund transactions in OTC markets.
Investment decisions for the Fund and for other investment accounts managed by AIM are made independently of each other in light of differing conditions. However, the same investment decision occasionally may be made for two or more of such accounts, including the Fund. In such cases, simultaneous transactions may occur. Purchases or sales are then allocated as to price or amount in a manner deemed fair and equitable to all accounts involved. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as the Fund is concerned, in other cases AIM believes that coordination and the ability to participate in volume transactions will be beneficial to the Fund.
Under a policy adopted by the Trust's Board of Trustees, and subject to the policy of obtaining the best net results, AIM may consider a broker/dealer's sale of the shares of the Fund and the other funds for which AIM serves as investment manager in selecting brokers and dealers for the execution of portfolio transactions. This policy does not imply a commitment to execute portfolio transactions through all broker/dealers that sell shares of the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in over-the-counter markets or stock exchanges located in the countries in which the respective principal offices of the issuers of the various securities are located, if that is the best available market. The fixed commissions paid in connection with most such foreign stock transactions generally are higher than negotiated commissions on United States transactions. There generally is less government supervision and regulation of foreign stock exchanges and brokers than in the United States. Foreign security settlements may in some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs, CDRs, GDRs or EDRs or securities convertible into foreign equity securities. ADRs, ADSs, CDRs, GDRs and EDRs may be listed on stock exchanges, or traded in the OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates. The foreign and domestic debt securities and money market instruments in which the Fund may invest generally are traded in the OTC markets.
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 the Fund, provided the conditions of an exemptive order received by the Fund from the SEC are met. In addition, the Fund may purchase or sell a security from or to another AIM Fund or account 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.
The Fund contemplates that, consistent with the policy of obtaining the best net results, brokerage transactions may be conducted through certain companies that are affiliates of AIM. The Trust's Board of Trustees has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such affiliates are reasonable and fair in the context of the market in which they are operating. Any such transactions will be effected and related compensation paid only in accordance with applicable SEC regulations. For the fiscal years ended October 31, 2000, 1999 and 1998, the Fund paid aggregate brokerage commissions of $25,100, $12,472 and $933, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when AIM concludes that the sale of a security owned by the Fund and/or the purchase of another security of better value can enhance principal and/or increase income. A security may be sold to avoid any prospective decline in market value, or a security may be purchased in anticipation of a market rise. Consistent with the Fund's investment objective, a security also may be sold and a comparable security purchased coincidentally in order to take advantage of what is believed to be a disparity in the normal yield and price relationship between the two securities. Although the Fund generally does not intend to trade for short-term profits, the securities in the Fund's portfolio will be sold whenever AIM believes it is appropriate to do so, without regard to the length of time a particular security may have been held. Portfolio turnover is calculated by dividing the lesser of sales or purchases of portfolio securities by the Fund's average month-end portfolio value, excluding short-term investments. Higher portfolio turnover involves correspondingly greater brokerage commissions and other transaction costs that the Fund will bear directly, and could result in the realization of net capital gains that would be taxable when distributed to shareholders. The portfolio turnover rates for the Fund the last two fiscal years were as follows:
YEAR ENDED YEAR ENDED
OCT. 31, OCT. 31,
2000 1999
---------- ----------
Strategic Income Fund.............. 309% 235%
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MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of the Fund. The Trust's Board of Trustees has approved all significant agreements between the Trust on the one side and persons or companies furnishing services to the Fund on the other, including the investment management and administration agreement with AIM, the agreements with AIM Distributors regarding distribution of the Fund's shares, the custody agreement and the transfer agency agreement. The day-to-day operations of the Fund are delegated to the officers of the Trust, subject always to the investment objectives and policies of the Fund and to the general supervision of the Trust's Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and AIM Management Group Inc. ("AIM Management"), the parent corporation of AIM.
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
POSITIONS
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
REGISTRANT
--------------------------------------- ----------------- --------------------------------------------------------------
*ROBERT H. GRAHAM (54) Trustee, Director, President and Chief Executive Officer, A I M
Chairman and Management Group, Inc.; Director and President, A I M
President 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 Vice Chairman, AMVESCAP PLC.
--------------------------------------- ----------------- --------------------------------------------------------------
C. DEREK ANDERSON (59) Trustee Senior Managing Partner, Plantagenet Capital Management, LLC
456 Montgomery Street (an investment partnership); Chief Executive Officer,
Suite 200 Plantagenet Holdings, Ltd. (an investment banking firm); and
San Francisco, CA 94104 Director, Premium Wear, Inc. (formerly Munsingwear, Inc.) (a
casual apparel company),"R" Homes, Inc., and various other
privately owned companies.
--------------------------------------- ----------------- --------------------------------------------------------------
FRANK S. BAYLEY (61) Trustee Partner, law firm of Baker & McKenzie; Director and
Two Embarcadero Center Chairman, Stimson Marina, Inc., a subsidiary of C.D. Stimson
Suite 2400 Company (a private investment company) and Trustee, The
San Francisco, CA 94111 Badgley Funds.
--------------------------------------- ----------------- --------------------------------------------------------------
RUTH H. QUIGLEY (66) Trustee Private investor; and President, Quigley Friedlander & Co.,
1055 California Street Inc. (a financial advisory services firm) from 1984 to 1986.
San Francisco, CA 94108
--------------------------------------- ----------------- --------------------------------------------------------------
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POSITIONS
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
REGISTRANT
--------------------------------------- ----------------- --------------------------------------------------------------
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.
--------------------------------------- ----------------- --------------------------------------------------------------
GARY T. CRUM (53) 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) 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; Vice President and General Counsel, A I
M Fund Services, Inc.; and Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.
--------------------------------------- ----------------- --------------------------------------------------------------
DANA R. SUTTON (42) Vice President Vice President and Fund Controller, A I M Advisors, Inc.;
and Treasurer and Assistant Vice President and Assistant Treasurer, Fund
Management Company.
--------------------------------------- ----------------- --------------------------------------------------------------
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The Board of Trustees has a Nominating and Audit Committee, composed of Miss Quigley (Chairman) and Messrs. Anderson and Bayley, which is responsible for nominating persons to serve as Trustees, reviewing audits of the Trust and its funds and recommending firms to serve as independent auditors of the Trust. All of the Trust's Trustees also serve as directors or trustees of some or all of the other investment companies managed, administered or advised by AIM. All of the Trust's Executive Officers hold similar offices with some or all of the other investment companies managed, administered or advised by AIM.
Each Trustee who is not a trustee, officer or employee of AIM or any affiliated company is paid an annual retainer component plus a per-meeting fee component, and reimbursed travel and other expenses incurred in connection with attendance at such meetings. Other Trustees and Officers receive no compensation or expense reimbursement from the Trust. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not trustees, officers, or employees of any affiliated company, received total compensation of $64,278, $65,351 and $65,351, respectively, from the Trust for their services as Trustees. For the fiscal year ended October 31, 2000, Mr. Anderson, Mr. Bayley and Miss Quigley, who are not trustees, officers or employees of any other affiliated company, received total compensation of $105,000, $107,000 and $107,000, respectively, from the investment companies managed or administered by AIM and for which he or she serves as a Director or Trustee. Fees and expenses disbursed to the Trustees contained no accrued or payable pension or retirement benefits.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, was organized in 1976 and, together with its subsidiaries, manages or advises approximately 130 investment portfolios encompassing a broad range of investment objectives. AIM, and its worldwide asset management affiliates provide investment management and/or administrative services to institutional, corporate and individual clients around the world.
AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM is also the sole shareholder of the Fund's principal underwriter, AIM Distributors.
AIM Management and AIM are indirect wholly owned subsidiaries of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an independent management group that has a significant presence in the institutional and retail segment of the investment management industry in North America and Europe, and a growing presence in Asia. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management" herein.
In addition to the investment resources of its Houston and London offices, AIM draws upon the expertise, personnel, data and systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), Frankfurt, Hong Kong, Singapore, Sydney, Tokyo and Toronto. In managing the Fund, AIM employs a team approach, taking advantage of its investment resources around the world.
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 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 minimus exemption), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to a de minimus exemption); 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 from purchasing securities in initial public offerings. 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.
Under an investment management and administration contract between the Trust and AIM ("Trust Advisory Agreement"), AIM serves as the investment manager and administrator for the Fund. AIM became investment manager and administrator to the Fund effective June 1, 1998. Prior to that date, Chancellor LGT Asset Management, Inc. served as investment manager and administrator.
For these services, the Fund pays AIM investment management and administration fees, computed daily and paid monthly, based on its average daily net assets. AIM's fee is calculated at the annualized rate of 0.725% on the first $500 million, 0.70% on the next $1 billion, 0.675% on the next $1 billion and 0.65% on amounts thereafter. The investment management and administration fees paid by the Fund are higher than those paid by most mutual funds. The Fund pays all expenses not assumed by AIM, AIM Distributors or other agents. AIM has undertaken to limit the Fund's expenses (exclusive of brokerage commissions, taxes, interest and extraordinary expenses) to the annual rate of 1.05%, 1.70% and 1.70% of the Fund's Class A, Class B and Class C Shares, respectively until June 30, 2001.
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 Tables 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.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Fund paid AIM and the prior manager and administrator the following investment management and administration fees:
2000 1999 1998
---- ---- ----
Strategic Income Fund................................ $570,155 $1,749,758 $2,691,901
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For the fiscal year ended October 31, 2000, AIM waived management fees for the Fund in the amount of $548,051.
INVESCO (NY), Inc. became sub-advisor to the Fund effective June 1, 1998. Prior to that date, INVESO (NY), Inc.'s predecessor served as sub-advisor. Sub-advisory arrangements with respect to the Fund were terminated effective February 11, 2000.
For the period November 1, 1999 through February 11, 2000, and the fiscal years ended October 31, 2000, 1999 and 1998, AIM and the former investment manager and administrator paid, with respect to the Fund, the following sub-advisory fees:
2000 1999 1998
---- ---- ----
Strategic Income Fund................................ $228,062 $699,903 $1,076,760
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As investment manager and administrator, AIM makes all investment decisions for the Fund and as administrator, AIM administers the Fund's affairs. Among other things, AIM furnishes the services and pays the compensation and travel expenses of persons who perform the executive, administrative, clerical and bookkeeping functions of the Trust and the Fund and provides suitable office space, necessary small office equipment and utilities. AIM determines the composition of the Fund's portfolio, place orders to buy, sell, or hold particular securities and supervise all matters relating to the Fund's operation.
The Trust Advisory Agreement may be renewed for one-year terms, provided that any such renewal has been specifically approved at least annually by: (i) the Trust's Board of Trustees, as applicable, or by the vote of a majority of the Fund's outstanding voting securities (as defined in the 1940 Act), and (ii) a majority of Trustees who are not parties to the Trust Advisory Agreement or "interested persons" of any such party (as defined in the 1940 Act), cast in person at a meeting called for the specific purpose of voting on such approval. The Trust Advisory Agreement provides that with respect to the Fund, the Trust or AIM may terminate the Contracts without penalty upon sixty days' written notice to the other party. The Trust Advisory Agreement terminates automatically in the event of its assignment (as defined in the 1940 Act).
Under a master accounting services agreement AIM serves as the Fund's pricing and accounting agent. For these services, the Fund pays AIM such fees as are determined in accordance with methodologies established, from time to time, by the Trust's Board of Trustees.
For the fiscal years ended October 31, 2000, 1999 and 1998, the Fund paid AIM and the former investment manager and administrator the following accounting services fees:
2000 1999 1998
---- ---- ----
Strategic Income Fund............................... $50,000 $70,274 $99,805
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In placing securities for the Fund's portfolio transactions, AIM seeks to obtain the best net results. Consistent with their obligation to obtain the best net results, AIM may consider a broker/dealer's sale of shares of the AIM Funds as a factor in considering through whom portfolio transactions will be effected. Brokerage transactions may be executed through affiliates of AIM. High portfolio turnover (over 100%) involves correspondingly greater brokerage commissions and other transaction costs that the Fund will bear directly and could result in the realization of net capital gains which would be taxable when distributed to shareholders. See "Dividends, Distributions and Tax Matters."
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by AIM, AIM Distributors and other agents. These expenses include, in addition to the advisory, distribution, transfer agency, pricing and accounting agent and brokerage fees discussed above, legal and audit expenses, custodian fees, trustees' fees, organizational fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses and the expenses of reports and prospectuses sent to existing investors. The allocation of general Trust expenses and expenses shared by the Fund and other funds organized as series of the Trust are allocated on a basis deemed fair and equitable, which may be based on the relative net assets of the Fund or the nature of the services performed and relative applicability to the Fund. Expenditures, including costs incurred in connection with the purchase or sale of portfolio securities, which are capitalized in accordance with generally accepted accounting principles applicable to investment companies, are accounted for as capital items and not as expenses. The ratio of the Fund's expenses to its relative net assets can be expected to be higher than the expense ratios of funds investing solely in domestic securities, since the cost of maintaining the custody of foreign securities and the rate of investment management fees paid by the Fund generally are higher than the comparable expenses of such other funds.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan provides that the Class A shares of the Fund pays 0.35% per annum of the average daily net assets attributable to Class A shares as compensation to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. Under the Class A and C Plan, Class C shares of the Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class C shares. The Class A and C Plan is designed to compensate AIM Distributors, on a quarterly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of the Fund. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares of the Fund and who provide continuing personal services to their customers who own Class A and Class C shares of the Fund. The service fees payable to selected institutions are calculated at the annual rate of 0.25% of the average daily net asset value of the Fund shares that are held in such institution's customers' accounts which were purchased on or after a prescribed date set forth in the Class A and C Plan. Activities appropriate for financing under the Class A and C Plan include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions including AIM Distributors, acting as principal, for providing continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 0.25% of the average 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 and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Class A and C Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Fund 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 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 Fund (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, the 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, the Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class B shares. 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 Fund's 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 Fund. 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 Fund; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of the several special investment plans offered in connection with the purchase of the Fund's shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in the Fund's shares; and providing such other information and services as the Fund 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 the Fund; 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 the Fund reasonably may request, to the extent permitted by applicable statute, rule or regulation.
The Trust may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Fund
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 the 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 the Fund as deemed necessary; generally, facilitating communications with contractholders concerning investments in the 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 Fund, 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, the Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement generally will be calculated at the end of each payment period for each business day of the Fund during such period at the annual rate of 0.25% of the average daily net asset value of the 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 the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Fund to no more than 0.25% per annum of the average daily net assets of the Fund attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Fund and its respective classes.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A 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 Fund's detriment during the period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Fund on an agency basis, may receive payments from the Fund pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Fund, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plans. These payments are an obligation of the Fund and not of AIM Distributors. Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one class over another.
AIM Distributors does not act as principal, but rather as agent for the Fund, in making dealer incentive and shareholder servicing payments under the Plans. These payments are an obligation of the Fund and not of AIM Distributors.
Prior to June 1, 1998, GT Global Inc. was the distributor of the Fund.
For the fiscal year ended October 31, 2000, the various classes of the Fund paid to AIM Distributors the following amounts pursuant to the Plans:
% OF CLASS
AVERAGE DAILY
NET ASSETS
----------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Strategic Income Fund ................... $205,274 $951,451 $4,107 0.35% 1.00% 1.00%
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An estimate by category of actual fees paid by the Fund under the Class A and C Plan during the year ended October 31, 2000, were allocated as follows:
STRATEGIC
INCOME
FUND
----
CLASS A
Advertising......................................... $ 14,106
Printing and Mailing prospectuses, semi-annual
reports and annual reports
(other than to current shareholders)............ 1,655
Seminars............................................ 5,254
Compensation to Underwriters to partially
offset other marketing expenses................. 0
Compensation to Dealers including Finders
Fees............................................ 184,259
Compensation to Sales Personnel..................... 0
Annual Report Total................................. $205,274
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An estimate by category of actual fees paid by the Fund under the Class B Plan during the year ended October 31, 2000, were allocated as follows:
STRATEGIC
INCOME
FUND
----
CLASS B
Advertising......................................... $ 4,115
Printing and Mailing prospectuses, semi-annual
reports and annual reports
(other than to current shareholders)........... 431
Seminars............................................ 1,197
Compensation to Underwriters to partially
offset other marketing expenses................. 713,588
Compensation to Dealers............................. 232,120
Compensation to Sales Personnel..................... 0
Annual Report Total................................. $951,451
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An estimate by category of actual fees paid by the Fund under the Class A and C Plan during the year ended October 31, 2000, were allocated as follows:
STRATEGIC
INCOME
FUND
----
CLASS C
Advertising......................................... $ 834
Printing and Mailing prospectuses, semi-annual
reports and annual reports
(other than to current shareholders)............ 0
Seminars............................................ 0
Compensation to Underwriters to partially
offset other marketing expenses................. 2,501
Compensation to Dealers............................. 772
Compensation to Sales Personnel..................... 0
Annual Report Total................................. $4,107
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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.
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 ("Qualified 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 class of the Fund and its shareholders.
The Plans do not obligate the Fund 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 Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans continue in effect from year to year, as long as such continuance is specifically approved at least annually by the Board of Trustees, including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified 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, it may be amended by the Trustees, including a majority of the Qualified 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 Qualified Trustees is committed to the discretion of the Qualified Trustees. In the event the Class A Plan is amended in a manner which the Board of Trustees determines would materially increase the charges paid under the Class A Plan, the Class B shares of the Fund will no longer convert into Class A shares of the same Fund 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 Fund 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 Fund will be exchanged or converted into such new class of shares no later than the date the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.35% of average daily net assets of the Class A shares of the Fund, as
compared to 1.00% of such assets of the Fund's Class B shares; (ii) the Class B
Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors or its predecessor GT Global, Inc. unless there has
been a complete termination of the Class B Plan (as defined in such Plan) and
(iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer
or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement with AIM Distributors relating to the Class A shares and Class C shares of the Fund and a Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Fund. Such Agreements are hereinafter collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the expenses of printing from the final proof and distributing the Fund's 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 Fund), 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 Fund's 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 Fund.
The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Fund 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 of the Fund 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 the Fund's average daily net assets attributable to Class B shares attributable to the sales efforts of AIM Distributors.
AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B shares of the Fund 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 anticipates that it will require a number of years to recoup from Class B Plan payments the sales commissions paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve the 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.
The Trust (on behalf of any class of the Fund) 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 and its predecessor; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments by the Fund of asset based distribution fees and service fees to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of 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 Agreement relating to Class B Shares in order to finance distribution expenditures in respect of Class B Shares.
The following chart reflects the total sales charges paid in connection with the sale of Class A shares of the Fund and the amount retained by GT Global, Inc., the Trust's distributor prior to June 1, 1998, for the period November 1, 1997 through May 31, 1998.
NOVEMBER 1, 1997
TO MAY 31, 1998
---------------
SALES AMOUNT
CHARGES RETAINED
------- --------
Strategic Income Fund...................... $46,291 $14,511
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For the fiscal year or period ended October 31, 2000, 1999 and 1998, the total sales charges paid in connection with the sale of Class A shares of the Fund and the amount retained by the Trust's distributor are as follows:
JUNE 1, 1998
2000 1999 TO OCTOBER 31, 1998
---- ---- -------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
Strategic Income Fund................. $71,428 $12,841 $67,438 $10,612 $ 6,190 $ 4,499
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The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C* shareholders and retained by the Trust's distributor for the fiscal years ended October 31, 2000, 1999 and 1998:
2000 1999 1998
---- ---- ----
Strategic Income Fund................................... $ 17,039 $ 1,132 $1,307,644
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* Class C shares of the Fund commenced operations on March 1, 1999.
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 Euroland Growth Fund, AIM European Development Fund, AIM European Small Company 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, AIM Weingarten Fund and AIM Worldwide Spectrum 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 Amount Offering 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
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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 Amount Offering Offering
Single Transaction(1) 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 Amount Offering Offering
Single Transaction(1) 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
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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; or
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: (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 charge Categories I and II unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Funds may be purchased appears in the Prospectus under the heading "Purchasing Shares -- How to Purchase Shares."
The sales charge normally deducted on purchases of Class A shares of the Funds is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of such shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons who, because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., because of the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interests that such persons 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 listed under the caption "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 AIM Funds is set forth in the Prospectus under the heading "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in the Prospectus under the heading "Redeeming Shares." Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with
AIM Distributors must phone orders to the order desk of the Fund telephone:
(800) 347-4246 and guarantee delivery of all required documents in good order. A
repurchase is effected at the net asset value of the 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 CDSC) when shares are redeemed or
repurchased, dealers may charge a fair service fee for handling the transaction.
AIM intends to redeem all shares of the Funds in cash.
The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("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 Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will 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
The net asset value per share of the Fund is normally determined once daily as of 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 share 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 equity securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class.
Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each equity security held 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 last available bid. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. 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 mean between the closing bid and asked prices on that day. Debt securities 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, 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 market 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. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE.
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 the 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 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 Trust's Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gain distributions are automatically reinvested in additional shares of the same class of the Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth under the caption "Shareholder Information-Purchasing Shares-Special Plans-Automatic Dividend Investment." If a shareholder's account does not have any shares in it on a dividend or capital gain distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting 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.
TAXATION OF THE FUND
The Fund is treated as a separate corporation for federal income tax purposes. To continue to qualify for treatment as a regulated investment company ("RIC") under the Code, the Fund must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income, net short-term capital gain and net gains from certain foreign currency transactions) ("Distribution Requirement") and must meet several additional requirements. With respect to the Fund, these requirements include the following: (1) the Fund must derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in securities or those currencies ("Income Requirement"); (2) at the close of each quarter of the Fund's taxable year, at least 50% of the value of its total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with these other securities limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Fund's total assets and that does not represent more than 10% of the issuer's outstanding voting securities; and (3) at the close of each quarter of the Fund's taxable year, not more than 25% of the value of its total assets may be invested in securities (other than U.S. government securities or the securities of other RICs) of any one issuer.
By qualifying for treatment as a RIC, the Fund (but not its shareholders) will be relieved of federal income tax on the part of its investment company taxable income and net capital gain (the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. If the Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed as an ordinary corporation on the full amount of its taxable income for that year without being able to deduct the distributions it makes to its shareholders and (2) the shareholders would treat all those distributions, including distributions of net capital gain, as dividends (that is, ordinary income) to the extent of the Fund's earnings and profits. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying for RIC treatment.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the extent it fails to distribute by the end of any calendar year substantially all of its ordinary income for that year and capital gain net income for the one-year period ending on October 31 of that year, plus certain other amounts.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
Foreign Taxes. Interest and dividends received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the yield and/or total return on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate foreign taxes, however,
and many foreign countries do not impose taxes on capital gains in respect of
investments by foreign investors. If more than 50% of the value of the Fund's
total assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible to, and may, file an election with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign taxes
paid by it (a "Fund's foreign taxes"). Pursuant to the election, the Fund would
treat those taxes as dividends paid to its shareholders and each shareholder
would be required to (1) include in gross income, and treat as paid by him, his
proportionate share of the Fund's foreign taxes, (2) treat his share of those
taxes and of any dividend paid by the Fund that represents its income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's foreign
taxes and income from sources within foreign countries and U.S. possessions if
it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax Act"),
individuals who have no more than $300 ($600 for married persons filing jointly)
of creditable foreign taxes included on Form 1099 and all of whose foreign
source income is "qualified passive income" may elect each year to be exempt
from the foreign
tax credit limitation and will be able to claim a foreign tax credit without having to file the Form 1116 that otherwise is required.
Passive Foreign Investment Companies. The Fund may invest in the stock of passive foreign investment companies ("PFICs"). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, the Fund will be subject to federal income tax on a part of any "excess distribution" received by it on the stock of a PFIC or of any gain on the Fund's disposition of that stock (collectively "PFIC income"), plus interest thereon, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified electing fund" ("QEF"), then in lieu of the foregoing tax and interest obligation, the Fund would be required to include in income each year its pro rata share of the QEF's ordinary earnings and net capital gain which most likely would have to be distributed by the Fund to satisfy the Distribution Requirement and avoid imposition of the Excise Tax--even if those earnings and gain were not received thereby from the QEF. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC. "Marking-to-market," in this context, means including in ordinary income each taxable year the excess, if any, of the fair market value of the stock over the Fund's adjusted basis therein as of the end of that year. Pursuant to the election, the Fund also will be allowed to deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock included in income by the Fund for prior taxable years. The Fund's adjusted basis in each PFIC's stock subject to the election will be adjusted to reflect the amounts of income included and deductions taken thereunder. Regulations proposed in 1992 provided a similar election with respect to the stock of certain PFICs.
Options, Futures and Foreign Currency Transactions. The Fund's use of hedging transactions, such as selling (writing) and purchasing options and futures contracts and entering into forward contracts, involves complex rules that will determine, for federal income tax purposes, the amount, character and timing of recognition of the gains and losses the Fund realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures and forward contracts derived by the Fund with respect to its business of investing in securities or foreign currencies, will qualify as permissible income under the Income Requirement for the Fund.
Futures and forward contracts that are subject to Section 1256 of the Code (other than those that are part of a "mixed straddle") ("Section 1256 Contracts") and that are held by the Fund at the end of its taxable year generally will be deemed to have been sold at that time at market value for federal income tax purposes. Sixty percent of any net gain or loss recognized on these deemed sales, and 60% of any net gain or loss realized from any actual sales of Section 1256 Contracts, will be treated as long-term capital gain or loss, and the balance will be treated as short-term capital gain or loss. That 60% portion will qualify for the reduced maximum tax rates on noncorporate taxpayers' net capital gain--20% (10% for noncorporate taxpayers in the 15% marginal tax bracket) for gain recognized on capital assets held for more than 12 months.
Section 988 of the Code also may apply to gains and losses from transactions in foreign currencies, foreign-currency-denominated debt securities and options, futures and forward contracts on foreign currencies ("Section 988" gains and losses). Each Section 988 gain or loss generally is computed separately and treated as ordinary income or loss. In the case of overlap between Sections 1256 and 988, special provisions determine the character and timing of any income, gain or loss. The Fund attempts to monitor Section 988 transactions to minimize any adverse tax impact.
If the Fund has an "appreciated financial position"--generally, an interest (including an interest through an option, futures or forward contract or short sale) with respect to any stock, debt instrument (other than "straight debt") or partnership interest the fair market value of which exceeds its adjusted basis--and enters into a "constructive sale" of the same or substantially identical property, the Fund will be treated as having made an actual sale thereof, with the result that gain will be recognized at that time unless the closed transaction exception applies. A constructive sale generally consists of a short sale, an offsetting notional principal contract or futures or forward contract entered into by the Fund or a related person with respect to the same or substantially identical property. In addition, if the appreciated financial position is itself a short sale or such a contract, acquisition of the underlying property or substantially identical property will be deemed a constructive sale.
The Fund may acquire zero coupon or other securities issued with original issue discount ("OID"). As a holder of those securities, the Fund must include in its income the portion of the OID that accrues on the securities during the taxable year, even if no corresponding payment on them is received during the year. Similarly, the Fund must include in its gross income securities it receives as "interest" on payment-in-kind securities. Because the Fund annually must distribute substantially all of its investment company taxable income, including any OID and other non-cash income, to satisfy the Distribution Requirement and avoid imposition of the Excise Tax, the Fund may be required in a particular year to distribute as a dividend an amount that is greater than the total amount of cash it actually receives. Those distributions will be made from the Fund's cash assets or, if necessary, from the proceeds of sales of portfolio securities. The Fund may realize capital gains or losses from those sales, which would increase or decrease its investment company taxable income and/or net capital gain.
TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by the Fund in, and payable to shareholders of record as of a date in, October, November or December of any year will be deemed to have been paid by the Fund and received by the shareholders on December 31 of that year if the distributions are paid by the Fund during the following January. Accordingly, those distributions will be taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss to the extent of any capital gain distributions received on those shares. Investors also should be aware that if shares are purchased shortly before the record date for any dividend or other distribution, the shareholder will pay full price for the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by the Fund to a shareholder who, as to the United States, is a nonresident alien individual, nonresident alien fiduciary of a trust or estate, foreign corporation or foreign partnership ("foreign shareholder") generally will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate). Withholding will not apply, however, to a dividend paid by the Fund to a foreign shareholder that is "effectively connected with the conduct of a U.S. trade or business," in which case the reporting and withholding requirements applicable to domestic shareholders will apply. A distribution of net capital gain by the Fund to a foreign shareholder generally will be subject to U.S. federal income tax (at the rates applicable to domestic persons) only if the distribution is "effectively connected" or the foreign shareholder is treated as a resident alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax considerations that are in effect at the date of this Statement of Additional Information and that affect the Fund and its shareholders. Investors are urged to consult their own tax advisors for more detailed information and for information regarding any foreign, state and local taxes applicable to distributions received from the Fund.
EXCHANGE AND REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of the Fund's shares ("original shares")
within 90 days after purchase thereof and subsequently reacquires shares of the
Fund or acquires shares of another AIM Fund on which a sales charge normally is
imposed ("replacement shares"), without paying the sales charge (or paying a
reduced charge) due to an exchange privilege or a reinstatement privilege, then
(1) any gain on the disposition of the original shares will be increased, or the
loss thereon decreased, by the amount of the sales charge paid when those shares
were acquired and (2) that amount will increase the adjusted basis of the
replacement shares that were subsequently acquired. In addition, if a
shareholder purchases shares of the Fund (whether pursuant to the reinstatement
privilege or otherwise) within 30 days before or after redeeming at a loss other
shares of the Fund (regardless of class), all or part of that loss will not be
deductible and instead will increase the basis of the newly purchased shares.
SHAREHOLDER INFORMATION
This information supplements the discussion in the 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.
SHARE CERTIFICATES. AIM Funds will issue share certificates upon written request to AFS. Otherwise, shares are held on the shareholder's behalf and recorded on the Fund books. AIM Funds will not issue certificates for shares held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. 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 transactions. 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 transaction. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone 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 mailing 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
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.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Fund. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by the Fund and performs certain other ministerial duties. AIM Fund Services, Inc., a wholly owned subsidiary of AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, acts as transfer and dividend disbursing agent for the Fund. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets. The Fund pays the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time.
INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110, conducts audits of the Fund's financial statements, assists in the preparation of the Fund's federal and state income tax returns and consults with the Trust, the Fund as to matters of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Fund included in this Statement of Additional Information have been examined by PricewaterhouseCoopers LLP, as stated in their opinion appearing herein and are included in reliance upon such opinion given upon the authority of that firm as experts in accounting and auditing.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and the Fund.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations extended to shareholders of private, for-profit corporations. There is a remote possibility, however, that under certain circumstances shareholders of the Trust may be held personally liable for the Trust's 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 a trustee. If a shareholder is held personally liable for the obligations of the Trust, the Trust Agreement provides that the shareholder shall be entitled out of the assets belonging to the applicable Fund (or allocable to the applicable Class), to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring financial loss on account of such liability is limited to circumstances in which the Trust itself would be unable to meet its obligations and where the other party was held not to be bound by the disclaimer.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of the Fund as of February 5, 2001, and the percentage of the outstanding shares held by such holders are set forth below.
PERCENT
PERCENT OWNED OF
NAME AND ADDRESS OWNED OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
---- --------------- ------------ ------------
AIM Strategic Income Fund
Class A Merrill Lynch Pierce Fenner & Smith 6.96% -0-
FBO The Sole Benefit of Customers
4800 Deer Lake Dr East 2nd Floor
Jacksonville, FL 32246
AIM Strategic Income Fund
Class C Margo L. Baird -0- 14.23%
620 N. Washington St.
Hinsdale, IL 60521
US Clearing Corp 13.40% -0-
26 Broadway
New York, NY 10004-1798
Donaldson Lufkin Jenrette 9.15% -0-
Securities Corporation Inc
P. O. Box 2052
Jersey City, NJ 07303-9998
Merrill Lynch Pierce Fenner & Smith 7.87% -0-
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Dean Witter for the Benefit of -0- 6.99%
Mary E. Given
P.O. Box 250 Church Street Station
New York, NY 10008-0250
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As of February 5, 2001, the trustees and officers of the Trust as a group owned beneficially less than 1% of the outstanding shares of the Fund.
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum
sales load is deducted at the beginning of the 1, 5, or 10
year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the 1, 5, or 10 year periods (or fractional
portion of such period).
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The standardized returns for the Class A shares of the Fund, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions), were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Strategic Income Fund............................... (7.03)% 3.89% 6.71% 6.30%
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* The inception dates for Class A shares of the Fund is 03/29/88.
The standardized returns for Class B shares of the Fund, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which deduct the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and include reinvestment of all dividends and distributions), were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Strategic Income Fund............................... (7.63)% 3.89% N/A 5.27%
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* The inception date for Class B shares of the Fund is 10/22/92.
The standardized returns for Class C shares of the Fund, stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, (which include the maximum applicable contingent deferred sales charge on the redemption of shares held for the period and reinvestment of all dividends and distributions) were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Strategic Income Fund............................... (4.03)% N/A N/A (2.94)%
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* The inception date for Class C shares of the Fund is 03/01/99.
NON-STANDARDIZED RETURNS
Standard total return quotes may be accompanied by total return figures calculated by alternative methods. For example, average annual total return may be calculated without assuming payment of the full sales load according to the following formula:
n P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
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The non-standardized returns for the Class A, Class B and Class C shares of the Fund (not taking the sales charges into account and including reinvestment of dividends and distributions), stated as average annual total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Class A shares...................................... (2.35)% 4.90% 6.75% 6.71%
Class B shares...................................... (3.11)% 4.19% N/A 5.27%
Class C shares...................................... (3.12)% N/A N/A (2.94)%
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* The inception dates for Class A, Class B and Class C shares of the Fund are 03/29/88, 10/22/92 and 03/01/99, respectively.
Cumulative total return across a stated period may be calculated as follows:
n P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated
portion of, or none of, the applicable maximum sales load at
the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
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The non-standardized returns (not taking sales charges into account and including reinvestment of dividends and distributions) for the Class A, Class B and Class C shares of the Fund, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Class A shares...................................... (2.35)% 26.99% 92.19% 126.57%
Class B shares...................................... (3.11)% 22.80% N/A 51.01%
Class C shares...................................... (3.12)% N/A N/A (4.86)%
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* The inception dates for Class A, Class B and Class C shares of the Fund are 03/29/88, 10/22/92 and 03/01/99, respectively.
The non-standardized returns (taking sales charges into account and including reinvestment of dividends and distributions) for the Class A, Class B and Class C shares of the Fund, stated as aggregate total returns for the one-year, five-year and ten-year periods ended October 31, 2000, were:
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
Class A shares...................................... (7.03)% 21.01% 83.04% 115.81%
Class B shares...................................... (7.63)% 21.02% N/A 51.01%
Class C shares...................................... (4.03)% N/A N/A (4.86)%
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* The inception dates for Class A, Class B and Class C shares of the Fund are 03/29/88, 10/22/92 and 03/01/99, respectively.
YIELD QUOTATIONS
The standard formula for calculating yield for the Fund, as described in the Prospectus, is as follows:
YIELD=2[((a-b)/(cxd)+1) -1]
Where a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued
rather than recorded on the ex-dividend date. Interest earned
under this formula must generally be calculated based on the
yield to maturity of each obligation (or, if more
appropriate, based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the
period.
d = the maximum offering price per share on the last day of the
period.
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The yields of the Class A shares, Class B shares and Class C shares of the Fund for the one-month period ended October 31, 2000 were 7.98%, 7.65% and 7.66%, respectively.
PERFORMANCE INFORMATION
All advertisements of the Fund will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of the Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding the Fund's performance is contained in the Fund's annual report to shareholders, which is available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized formula for computation of annualized total return. 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 shares reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes in share price and assuming all the Fund's dividends and capital gain distributions are reinvested. A cumulative total return reflects the Fund's performance over a stated period of time. An average annual total return reflects the hypothetical compounded annual rate of return that would have produced the same cumulative total return if the Fund's performance had been constant over the entire period. BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE
SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the Fund may separate its cumulative and average annual returns into income results and capital gains or losses.
Yield is computed in accordance with standardized formulas described herein and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield reflects investment income net of expenses over the relevant period attributable to a Fund share, expressed as an annualized percentage of the maximum offering price per share for Class A shares and net asset value per share for Class B shares.
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 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.
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 a 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 a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in the Fund.
A practice of waiving or reducing fees or reimbursing 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.
Total return and yield figures for the Fund are neither fixed nor guaranteed, and no Fund's principal is insured. Performance quotations reflect historical information and should not be considered representative of the Fund's performance for any period in the future. Performance is a function of a number of factors which can be expected to fluctuate. The Fund may provide performance information in reports, sales literature and advertisements. The Fund may also, from time to time, quote information about the Fund published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about the Fund. Such publications or media entities may include the following, among others:
Advertising Age Christian Science Monitor Financial Product News Barron's Consumer Reports Financial World Best's Review Economist Forbes Broker World EuroMoney Fortune Business Week FACS of the Week Global Finance Changing Times Financial Planning Hartford Courant Inc. |
Institutional Investor Mutual Fund Magazine Smart Money
Insurance Forum Nation's Business USA Today
Insurance Week New York Times U.S. News & World Report
Investor's Daily Pension World Wall Street Journal
Journal of the Pensions & Investments Washington Post
American Society Personal Investor CNN
of CLU & ChFC Financial Services Week CNBC
Kiplinger Letter Philadelphia Inquirer PBS
Money
Mutual Fund Forecaster
|
The Fund and AIM Distributors may from time to time, in advertisements, sales literature and reports furnished to present or prospective shareholders, compare the Fund with the following, or compare the Fund's performance to performance data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index Moody's Investors Service (publications) Bear Stearns Foreign Bond Index Morgan Stanley Capital International All Country Bond Buyer Index (AC) World Index CDA/Wiesenberger Investment Company Morgan Stanley Capital International World Indices Services (data and mutual fund rankings and Morningstar, Inc. (data and mutual fund rankings comparisons) and comparisons) CNBC/Financial News Composite Index NASDAQ COFI Organization for Economic Cooperation and Consumer Price Index Development (publications) Datastream Salomon Brothers Global Telecommunications Donoghue's Index Dow Jones Industrial Average Salomon Brothers World Government Bond EAFE Index Index-Non U.S. First Boston High Yield Index Salomon Brothers World Government Bond Index Fitch IBCA, Inc. (publications) Standard & Poor's (publications) Ibbotson Associates International Bond Index Standard & Poor's 500 Composite Stock Price International Bank for Reconstruction and Index Development (publications) Stangar International Finance Corporation Emerging Wilshire Associates Markets Database World Bank (publications and reports) International Financial Statistics The World Bank Publication of Trends in Lehman Bond Indices Developing Countries Lipper, Inc. (data and mutual fund rankings and Worldscope comparisons) Micropal. Inc. (data and mutual fund rankings and comparisons) |
The Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and diversification is based on sources believed to be reliable but may be subject to revision and has not been independently verified by the Fund or AIM Distributors. Advertising for the Fund may from time to time include discussions of general economic conditions and interest rates. Advertising for the Fund may also include reference to the use of the Fund as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for the Fund may disclose (i) the largest holdings in the Fund's portfolio, (ii) certain selling group members and/or (iii) certain institutional shareholders.
From time to time, the Fund's sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when comparing the Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by the Fund.
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued by various entities from "Aaa" to "C". Investment grade ratings are the first four categories: Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. A--Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time 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.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., ("S&P") rates the securities debt of various entities in categories ranging from "AAA" to "D" according to quality. Investment grade ratings are the first four categories:
AAA--An obligation rated "AAA" has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA--An obligation rated "AA" differs from the highest rated obligations only in a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A--An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. BBB--An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB, B, CCC, CC, C--Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB--An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the
obligation. B--An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC--An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC--An obligation rated "CC" is currently highly vulnerable to nonpayment. C--The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued. D--An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
NR: Indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of senior short-term debt obligations. This normally will be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from "A-1" for the highest quality obligations to "D" for the lowest. Issues in the "A" category are delineated with numbers 1, 2, and 3 to indicate the relative degree of safety. 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 will be denoted with a plus sign (+) designation. A-2--Capacity for timely payments on issues with this designation is satisfactory; however, the relative degree of safety is not as high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the effects of which preclude satisfactory analysis; if there is no longer available reasonable up-to-date data to permit a judgment to be formed; if a bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating classification from Aa to Caa. 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.
FINANCIAL STATEMENTS
FS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Strategic Income Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the AIM Strategic Income Fund at October 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts December 18, 2000 |
FS-1
SCHEDULE OF INVESTMENTS
October 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED NON-
CONVERTIBLE BONDS & NOTES-71.97%
AIR FREIGHT-0.56%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 680,000 $ 707,200
==============================================================
AIRLINES-1.47%
Delta Air Lines, Inc. Deb., 10.38%,
12/15/22 1,300,000 1,382,654
--------------------------------------------------------------
Unsec. Notes, 7.90%, 12/15/09 500,000 464,200
==============================================================
1,846,854
==============================================================
BANKS (MAJOR REGIONAL)-3.09%
BB&T Corp., Putable Sub. Notes,
6.38%, 06/30/05 900,000 852,885
--------------------------------------------------------------
Regions Financial Corp., Putable
Sub. Notes, 7.75%, 09/15/24 1,500,000 1,527,405
--------------------------------------------------------------
Republic New York Corp., Sub.
Notes, 9.70%, 02/01/09 750,000 830,887
--------------------------------------------------------------
UBS Preferred Funding Trust I, Gtd.
Bonds, 8.62%, 10/29/49 680,000 688,522
==============================================================
3,899,699
==============================================================
BANKS (MONEY CENTER)-1.64%
First Union Corp., Putable Sub.
Deb.,
6.55%, 10/15/35 900,000 865,665
--------------------------------------------------------------
7.50%, 04/15/35 1,200,000 1,199,868
==============================================================
2,065,533
==============================================================
BANKS (REGIONAL)-2.73%
Banponce Trust I-Series A, Gtd.
Notes, 8.33%, 02/01/27 900,000 807,714
--------------------------------------------------------------
Mercantile Bancorp., Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 850,000 836,111
--------------------------------------------------------------
NBD Bank N.A. Michigan, Putable
Sub. Deb., 8.25%, 11/01/24 725,000 762,308
--------------------------------------------------------------
Union Planters Bank N.A., Unsec.
Sub. Notes, 6.50%, 03/15/08 760,000 681,112
--------------------------------------------------------------
Union Planters Capital Trust, Gtd.
Bonds, 8.20%, 12/15/26 400,000 347,792
==============================================================
3,435,037
==============================================================
BROADCASTING (TELEVISION, RADIO & CABLE)-7.08%
Adelphia Communications Corp., Sr.
Unsec. Notes, 10.88%, 10/01/10 550,000 519,750
--------------------------------------------------------------
AT&T Corp.-Liberty Media Corp.
Bonds, 7.88%, 07/15/09 680,000 657,363
--------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 820,000 732,326
--------------------------------------------------------------
British Sky Broadcasting Group PLC
(United Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 8.20%, 07/15/09 1,750,000 1,619,747
--------------------------------------------------------------
Charter Communications Holdings
LLC, Sr. Unsec. Notes, 10.25%,
01/15/10 900,000 888,750
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
BROADCASTING (TELEVISION, RADIO & CABLE)-(CONTINUED)
Cox Enterprises, Inc., Notes,
8.00%, 02/15/07 (Acquired
02/16/00; Cost $992,530)(a) $1,000,000 $ 1,004,210
--------------------------------------------------------------
CSC Holdings Inc.
Sr. Unsec. Deb., 7.88%, 02/15/18 1,250,000 1,146,012
--------------------------------------------------------------
Sr. Unsec. Notes, 7.88%, 12/15/07 775,000 751,641
--------------------------------------------------------------
Series B, Sr. Notes, 8.13%,
07/15/09 400,000 391,840
--------------------------------------------------------------
Diamond Cable Communications PLC
(United Kingdom), Sr. Disc.
Yankee Notes, 10.75%, 02/15/07(b) 500,000 362,500
--------------------------------------------------------------
TCI Communications, Inc., Sr. Deb.,
8.75%, 08/01/15 500,000 518,410
--------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands)-Series B, Sr.
Unsec. Disc. Yankee Notes,
13.75%, 02/01/10(b) 850,000 327,250
==============================================================
8,919,799
==============================================================
BUILDING MATERIALS-0.67%
Blount Inc., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 08/01/09 1,000,000 845,000
==============================================================
COMPUTERS (NETWORKING)-0.29%
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 400,000 366,000
==============================================================
COMPUTERS (SOFTWARE &
SERVICES)-0.97%
Globix Corp., Sr. Unsec. Notes,
12.50%, 02/01/10 1,250,000 715,625
--------------------------------------------------------------
PSINet Inc., Sr. Notes, 11.00%,
08/01/09 1,000,000 505,000
==============================================================
1,220,625
==============================================================
CONSUMER FINANCE-1.99%
Capital One Financial Corp., Unsec.
Notes, 7.25%, 05/01/06 1,500,000 1,418,025
--------------------------------------------------------------
MBNA Capital I-Series A, Gtd.
Bonds, 8.28%, 12/01/26 1,300,000 1,086,085
==============================================================
2,504,110
==============================================================
ELECTRIC COMPANIES-4.46%
CILCORP, Inc., Bonds, 9.38%,
10/15/29 500,000 553,910
--------------------------------------------------------------
Cleveland Electric Illuminating Co.
(The) 1st Mortgage, 6.86%,
10/01/08 400,000 379,944
--------------------------------------------------------------
Series D, Sr. Sec. Notes, 7.88%,
11/01/17 1,000,000 982,710
--------------------------------------------------------------
Niagara Mohawk Holdings Inc.-Series
H, Sr. Unsec. Disc. Notes, 8.50%,
07/01/10(b) 2,000,000 1,618,660
--------------------------------------------------------------
Public Service Company of New
Mexico-Series A, Sr. Unsec.
Notes, 7.10%, 08/01/05 300,000 295,884
--------------------------------------------------------------
Texas-New Mexico Power Co., Sr.
Sec. Notes, 6.25%, 01/15/09 2,000,000 1,790,380
==============================================================
5,621,488
==============================================================
|
FS-2
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRICAL EQUIPMENT-0.40%
GE Global Insurance Holdings Corp.,
Notes, 7.75%, 06/15/30 $ 500,000 $ 508,465
==============================================================
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.72%
Israel Electric Corp. Ltd. (Israel)
Sr. Sec. Medium Term Yankee
Notes, 7.75%, 03/01/09 (Acquired
04/13/00; Cost $524,815)(a) 540,000 507,249
--------------------------------------------------------------
Yankee Deb., 7.75%, 12/15/27
(Acquired 06/09/00; Cost
$403,871)(a) 460,000 396,506
==============================================================
903,755
==============================================================
ELECTRONICS (SEMICONDUCTORS)-0.51%
SCG Holding Corp./Semiconductor
Components Industries LLC, Gtd.
Notes, 12.00%, 08/01/09 650,000 648,375
==============================================================
ENGINEERING & CONSTRUCTION-0.37%
Washington Group International,
Inc., Sr. Unsec. Gtd. Notes,
11.00%, 07/01/10(c) 550,000 468,875
==============================================================
ENTERTAINMENT-1.20%
Callahan Nordrhein Westfalen
(Denmark), Sr. Unsec. Yankee
Notes, 14.00%, 07/15/10 (Acquired
06/29/00-08/11/00; Cost
$398,750)(a) 400,000 388,000
--------------------------------------------------------------
Time Warner Inc., Deb., 9.15%,
02/01/23 1,000,000 1,121,020
==============================================================
1,509,020
==============================================================
FINANCIAL (DIVERSIFIED)-1.63%
AIG SunAmerica Global Financing II,
Sr. Sec. Notes, 7.60%, 06/15/05
(Acquired 06/08/00; Cost
$600,000)(a) 600,000 616,230
--------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 6.85%, 06/17/04 600,000 594,636
--------------------------------------------------------------
ONO Finance PLC (United Kingdom),
Sr. Unsec. Gtd. Sub. Euro Notes,
13.00%, 05/01/09 300,000 232,500
--------------------------------------------------------------
Pinnacle Partners, Sr. Notes,
8.83%, 08/15/04 (Acquired
08/02/00; Cost $600,000)(a) 600,000 609,606
==============================================================
2,052,972
==============================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES-1.93%
Hollywood Casino Corp., Sr. Sec.
Gtd. Sub. Notes, 11.25%, 05/01/07 1,575,000 1,657,688
--------------------------------------------------------------
MGM Mirage, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 06/01/07 350,000 364,438
--------------------------------------------------------------
Park Place Entertainment Corp., Sr.
Unsec. Sub. Notes, 8.88%,
09/15/08 420,000 413,700
==============================================================
2,435,826
==============================================================
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.81%
Warner Chilcott, Inc., Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
02/15/08(c) 1,000,000 1,025,000
==============================================================
HEALTH CARE (HOSPITAL MANAGEMENT)-0.38%
Triad Hospitals, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/15/09 460,000 481,850
==============================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
HOMEBUILDING-0.30%
K. Hovanian Enterprises Inc., Sr.
Unsec. Gtd. Notes, 10.50%,
10/01/07(c) $ 400,000 $ 378,000
==============================================================
HOUSEHOLD FURNISHING & APPLIANCES-0.95%
O'Sullivan Industries, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
13.38%, 10/15/09 960,000 561,600
--------------------------------------------------------------
Winsloew Furniture, Inc.-Series B,
Sr. Gtd. Sub. Notes, 12.75%,
08/15/07 690,000 638,250
==============================================================
1,199,850
==============================================================
INSURANCE (LIFE/HEALTH)-0.24%
Torchmark Corp., Notes, 7.88%,
05/15/23 335,000 299,698
==============================================================
INVESTMENT BANKING/BROKERAGE-2.58%
Lehman Brothers Holdings Inc.
Putable Sr. Notes, 8.80%,
03/01/15 900,000 959,634
--------------------------------------------------------------
Notes, 8.50%, 08/01/15 1,000,000 1,036,340
--------------------------------------------------------------
Sr. Sub. Notes, 7.38%, 01/15/07 1,100,000 1,079,023
--------------------------------------------------------------
Series E, Medium Term Notes,
9.20%, 02/10/28(d) 2,200,000 181,522
==============================================================
3,256,519
==============================================================
IRON & STEEL-0.08%
Acme Metals Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(e) 780,000 105,300
==============================================================
MACHINERY (DIVERSIFIED)-0.22%
Actuant Corp., Sr. Unsec. Gtd. Sub.
Notes, 13.00%, 05/01/09 (Acquired
07/21/00; Cost $281,224)(a) 285,000 277,875
==============================================================
MANUFACTURING (SPECIALIZED)-0.20%
Tekni-Plex, Inc., Sr. Sub. Notes,
12.75%, 06/15/10(c) 280,000 256,200
==============================================================
NATURAL GAS-1.02%
Coastal Corp. (The), Sr. Unsec.
Deb., 6.70%, 02/15/27 400,000 380,640
--------------------------------------------------------------
Dynegy Inc., Sr. Unsec. Deb.,
7.13%, 05/15/18 1,000,000 899,520
==============================================================
1,280,160
==============================================================
OIL & GAS (DRILLING & EQUIPMENT)-0.62%
Petroleum Geo-Services A.S.A.
(Norway), Yankee Notes, 7.50%,
03/31/07 800,000 781,544
==============================================================
OIL & GAS (EXPLORATION & PRODUCTION)-3.04%
Anadarko Petroleum Corp., Deb.,
7.73%, 09/15/2096 1,000,000 999,150
--------------------------------------------------------------
Den Norske Stats Oljeselskap A.S.
(Norway), Yankee Unsec. Deb.,
7.38%, 05/01/16 (Acquired
06/01/00; Cost $469,245)(a) 500,000 476,420
--------------------------------------------------------------
Parker & Parsley Petroleum Co., Sr.
Unsec. Notes, 8.25%, 08/15/07 500,000 490,265
--------------------------------------------------------------
Pioneer Natural Resources Co., Sr.
Unsec. Gtd. Notes, 9.63%,
04/01/10 750,000 785,625
--------------------------------------------------------------
|
FS-3
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED)
Triton Energy Ltd. (Cayman
Islands), Sr. Yankee Notes,
8.88%, 10/01/07 (Acquired
09/27/00; Cost $255,000)(a) $ 255,000 $ 255,000
--------------------------------------------------------------
Union Pacific Resources Group Inc.,
Unsec. Deb., 7.50%, 10/15/26 850,000 827,662
==============================================================
3,834,122
==============================================================
OIL (DOMESTIC INTEGRATED)-0.22%
Amerada Hess Corp., Bonds, 7.88%,
10/01/29 275,000 281,185
==============================================================
OIL (INTERNATIONAL INTEGRATED)-1.86%
YPF Sociedad Anonima (Argentina), Yankee Bonds,
8.00%, 02/15/04 1,350,000 1,331,181
--------------------------------------------------------------
9.13%, 02/24/09 1,000,000 1,014,620
==============================================================
2,345,801
==============================================================
PHOTOGRAPHY/IMAGING-0.67%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 1,050,000 845,250
==============================================================
POWER PRODUCERS (INDEPENDENT)-0.81%
AES Corp. (The), Sr. Unsec. Notes,
9.50%, 06/01/09 1,000,000 1,020,000
==============================================================
PUBLISHING (NEWSPAPERS)-3.32%
News America Holdings, Inc. Putable
Notes, 8.45%, 08/01/34 2,200,000 2,195,556
--------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 1,850,000 1,992,783
==============================================================
4,188,339
==============================================================
RAILROADS-0.44%
CSX Corp., Sr. Unsec. Putable Deb.,
7.25%, 05/01/27 250,000 248,695
--------------------------------------------------------------
Railamerica Transportation Corp.,
Sr. Unsec. Gtd. Sub. Notes,
12.88%, 08/15/10(c) 325,000 303,875
==============================================================
552,570
==============================================================
REAL ESTATE INVESTMENT TRUSTS-0.41%
ERP Operating L.P., Unsec. Notes,
7.13%, 10/15/17 600,000 520,848
==============================================================
RETAIL (DRUG STORES)-0.24%
Duane Reade, Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.25%, 02/15/08 350,000 299,250
==============================================================
SAVINGS & LOAN COMPANIES-0.48%
Washington Mutual, Inc., Sub.
Notes, 8.25%, 04/01/10 600,000 607,620
==============================================================
SERVICES (COMMERCIAL & CONSUMER)-0.43%
Avis Group Holdings, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
05/01/09 500,000 537,500
==============================================================
SOVEREIGN DEBT-9.16%
Republic of Argentina (Argentina),
Unsec. Unsub. Notes, 11.75%,
04/07/09 1,500,000 1,312,500
--------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
SOVEREIGN DEBT-(CONTINUED)
Republic of Brazil (Brazil) Bonds,
11.63%, 04/15/04 $1,228,000 $ 1,252,560
--------------------------------------------------------------
Floating Rate Gtd. Bonds, 7.63%,
04/15/24(f) 2,000,000 1,538,200
--------------------------------------------------------------
Series C, Bonds, 8.00%, 04/15/14 2,462,816 1,852,484
--------------------------------------------------------------
Unsub. Notes, 14.50%, 10/15/09 2,415,000 2,569,560
--------------------------------------------------------------
Republic of Bulgaria (Bulgaria)
Series PDI, Floating Rate Deb.,
7.75%, 07/28/11(f) 190,000 142,251
--------------------------------------------------------------
Series A, Gtd. Bonds, 3.00%,
07/28/12(g) 205,000 147,514
--------------------------------------------------------------
Series A, Gtd. Floating Rate Sec.
Bonds, 7.75%, 07/28/24(f) 198,000 149,172
--------------------------------------------------------------
Republic of Panama (Panama), Bonds,
8.88%, 09/30/27 304,000 254,586
--------------------------------------------------------------
Republic of Turkey (Turkey) Bonds,
11.88%, 11/05/04 115,000 118,306
--------------------------------------------------------------
Sr. Unsec. Unsub. Notes, 12.38%,
06/15/09 115,000 115,863
--------------------------------------------------------------
Republic of Venezuela (Venezuela)
Unsec. Bonds, 9.25%, 09/15/27 1,683,000 1,114,988
--------------------------------------------------------------
Unsec. Bonds, 9.25%, 09/15/27 817,000 535,282
--------------------------------------------------------------
United Mexican States (Mexico),
Notes, 9.88%, 02/01/10 420,000 437,850
==============================================================
11,541,116
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.47%
Crown Castle International Corp.
Sr. Disc. Notes, 10.38%,
05/15/11(b) 785,000 498,475
--------------------------------------------------------------
Sr. Unsec. Notes, 10.75%,
08/01/11 270,000 278,775
--------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Unsec. Notes, 13.50%, 05/15/09 400,000 130,000
--------------------------------------------------------------
Nextel International, Inc., Sr.
Notes, 12.75%, 08/01/10(c) 320,000 292,800
--------------------------------------------------------------
TeleCorp PCS, Inc., Sr. Unsec. Gtd.
Sub. Notes, 11.63%, 04/15/09(b) 1,000,000 650,000
==============================================================
1,850,050
==============================================================
TELECOMMUNICATIONS (LONG DISTANCE)-3.07%
360networks Inc. (Canada) Sr.
Unsec. Yankee Notes, 12.00%,
08/01/09 500,000 397,500
--------------------------------------------------------------
Sr. Yankee Notes, 12.50%,
12/15/05 500,000 440,000
--------------------------------------------------------------
MCI Communications Corp., Sr.
Unsec. Putable Deb., 7.13%,
06/15/27 500,000 493,380
--------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Unsec. Notes, 11.25%,
01/15/09 1,600,000 824,000
--------------------------------------------------------------
Tele1 Europe B.V. (Netherlands),
Sr. Unsec. Yankee Notes, 13.00%,
05/15/09 1,000,000 865,000
--------------------------------------------------------------
Williams Communications Group,
Inc., Sr. Unsec. Notes, 10.88%,
10/01/09 1,000,000 847,500
==============================================================
3,867,380
==============================================================
TELEPHONE-3.09%
CFW Communications Co., Sr. Notes,
13.00%, 08/15/10(c)(h) 425,000 376,125
--------------------------------------------------------------
|
FS-4
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE-(CONTINUED)
Intermedia Communications Inc
Series B, Sr. Disc. Notes,
11.25%, 07/15/07(b) $ 550,000 $ 459,250
--------------------------------------------------------------
Series B, Sr. Unsec. Notes,
9.50%, 03/01/09 900,000 875,250
--------------------------------------------------------------
Koninklijke (Royal) KPN N.V.
(Netherlands), Sr. Unsec. Unsub.
Yankee Notes, 7.50%, 10/01/05
(Acquired 09/27/00; Cost
$699,552)(a) 700,000 695,842
--------------------------------------------------------------
NTL Inc.-Series B, Sr. Disc. Notes,
11.50%, 02/01/06(b) 350,000 327,250
--------------------------------------------------------------
Qwest Capital Funding, Unsec. Gtd.
Notes, 7.90%, 08/15/10 (Acquired
08/24/00; Cost $702,254)(a) 700,000 713,958
--------------------------------------------------------------
XO Communications, Inc., Sr. Unsec.
Notes, 10.75%, 11/15/08 500,000 440,000
==============================================================
3,887,675
==============================================================
TRUCKERS-0.89%
North American Van Lines Inc., Sr.
Sub. Notes, 13.38%, 12/01/09(c) 1,250,000 1,118,750
==============================================================
WASTE MANAGEMENT-3.26%
Allied Waste North America Inc.
Series B, Sr. Unsec. Gtd. Sub.
Notes, 10.00%, 08/01/09 1,600,000 1,392,000
--------------------------------------------------------------
Waste Management, Inc.
Sr. Unsec. Notes, 7.13%, 12/15/17 900,000 773,973
--------------------------------------------------------------
Unsec. Putable Notes, 7.10%,
08/01/26 2,000,000 1,937,120
==============================================================
4,103,093
==============================================================
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes
(Cost $95,003,386) 90,701,178
==============================================================
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES-12.97%
BROADCASTING (TELEVISION, RADIO & CABLE)-1.27%
Charter Communications, Inc., Conv.
Bonds, 5.75%, 10/15/05 (Acquired
10/25/00; Cost $1,500,000)(a) 1,500,000 1,599,375
==============================================================
COMMUNICATIONS EQUIPMENT-2.65%
Cyras Systems, Inc., Conv. Sub.
Notes, 4.50%, 08/15/05 (Acquired
08/15/00; Cost $750,000)(a) 750,000 870,000
--------------------------------------------------------------
Juniper Networks, Inc., Unsec.
Conv. Notes, 4.75%, 03/15/07 1,200,000 1,674,000
--------------------------------------------------------------
Kestrel Solutions, Conv. Sub.
Notes, 5.50%, 07/15/05 (Acquired
07/20/00; Cost $750,000)(a) 750,000 795,000
==============================================================
3,339,000
==============================================================
COMPUTERS (HARDWARE)-0.34%
Candescent Technologies Corp., Sr.
Conv. Gtd. Sub. Debs., 8.00%,
05/01/03 (Acquired 03/07/00; Cost
$480,000)(a) 600,000 426,000
==============================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
COMPUTERS (SOFTWARE & SERVICES)-1.10%
Aether Systems, Inc., Conv. Unsec.
Sub. Notes, 6.00%, 03/22/05 $2,000,000 $ 1,385,000
==============================================================
ELECTRONICS (COMPONENT DISTRIBUTORS)-1.01%
ASM Lithography Holding N.V.
(Netherlands), Conv. Yankee
Notes, 4.25%, 11/30/04 (Acquired
04/05/00; Cost $1,507,813)(a) 1,250,000 1,268,750
==============================================================
ELECTRONICS (SEMICONDUCTORS)-1.13%
TranSwitch Corp., Conv. Unsec.
Unsub. Notes, 4.50%, 09/12/05
(Acquired 09/06/00; Cost
$1,250,000)(a) 1,250,000 1,428,125
==============================================================
FINANCIAL (DIVERSIFIED)-0.88%
Verizon Global Funding
Corp.,-Series REGS, Conv. Euro
Bonds, 4.25%, 09/15/05 1,000,000 1,107,405
==============================================================
FOODS-1.26%
Nestle Holding Inc.-Series WW,
Conv. Sr. Unsub. Euro Notes,
3.00%, 05/09/05 1,500,000 1,586,250
==============================================================
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.46%
Roche Holding A.G., Conv. Notes,
0.00%, 01/19/15 (Acquired
03/10/00; Cost $624,812)(a)(d) 650,000 586,625
==============================================================
OIL & GAS (EXPLORATION & PRODUCTION)-0.98%
Kerr-McGee Corp., Conv. Notes,
5.25%, 02/15/10 1,000,000 1,233,750
==============================================================
SERVICES (ADVERTISING/MARKETING)-1.22%
Lamar Advertising Co., Conv. Unsec.
Notes, 5.25%, 09/15/06 1,300,000 1,542,125
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.67%
Nextel Communications, Inc., Sr.
Conv. Notes, 5.25%, 01/15/10
(Acquired 02/15/00; Cost
$1,055,000)(a) 1,000,000 845,000
==============================================================
Total U.S. Dollar Denominated
Convertible Bonds & Notes
(Cost $16,441,504) 16,347,405
==============================================================
|
PRINCIPAL
AMOUNT(i)
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES-1.77%
NETHERLANDS-0.40%
Grapes Communications N.V.
(Telecommunications-Cellular/Wireless),
Sr. Notes, 13.50%, 05/15/10
(Acquired 05/03/00; Cost
$997,480)(a)(h) EUR 1,100,000 508,766
==============================================================
NORWAY-0.28%
Enitel ASA (Telecommunications-Long
Distance), Sr. Unsec. Unsub. Euro
Notes, 12.50%, 04/15/10 EUR 630,000 347,522
==============================================================
|
FS-5
PRINCIPAL MARKET
AMOUNT(i) VALUE
UNITED STATES OF AMERICA-0.79%
Fannie Mae (Sovereign Debt), Notes,
7.25%, 06/20/02 NZD 2,000,000 790,652
--------------------------------------------------------------
John Hancock Global Fund
(Insurance-Life/Health), Sr. Sec.
Sub Medium Term Notes, 6.75%,
02/15/06 AUD 400,000 203,846
==============================================================
994,498
==============================================================
UNITED KINGDOM-0.30%
Jazztel PLC (Telephone), Sr. Unsec.
Euro Notes, 14.00%, 04/01/09 EUR 300,000 183,692
--------------------------------------------------------------
ONO Finance PLC
(Financial-Diversified), Sr.
Unsec. Gtd. Euro Notes, 13.00%,
05/01/09 EUR 300,000 192,649
==============================================================
376,341
==============================================================
Total Non-U.S. Dollar
Denominated Non-Convertible
Bonds & Notes (Cost
$3,845,859) 2,227,127
==============================================================
|
PRINCIPAL
AMOUNT(i)
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-0.51%
FRANCE-0.51%
Vivendi Environment (Waste
Management), Sr. Conv. Gtd.
Bonds, 1.50%, 01/01/05 (Cost
$862,755) EUR 250,000 642,151
==============================================================
|
SHARES
COMMON STOCKS & OTHER EQUITY INTERESTS-8.35%
CHEMICALS (DIVERSIFIED)-1.03%
Pharmacia Corp.-$2.60 Conv. Pfd.
ACES 27,000 $ 1,301,062
==============================================================
ELECTRIC COMPANIES-2.83%
Reliant Energy, Inc., $1.35 Conv.
Pfd 17,000 1,280,321
--------------------------------------------------------------
SEI Trust I-Series A, $3.13 Conv.
Pfd 37,500 2,280,469
==============================================================
3,560,790
==============================================================
ELECTRONICS (SEMICONDUCTORS)-0.57%
Intersil Holding Corp.-Wts.,
expiring 08/15/09 (Acquired
12/08/99; Cost $0)(a)(j) 800 720,200
==============================================================
FINANCIAL (DIVERSIFIED)-0.00%
ONO Finance PLC (United
Kingdom)-Wts., expiring
05/31/09(j) 300 0
==============================================================
HOUSEHOLD FURNISHING & APPLIANCES-0.02%
O'Sullivan Industries, Inc.
Wts., expiring 11/15/09(j) 960 $ 9,840
--------------------------------------------------------------
Series B, Wts., expiring
11/15/09(c)(j) 960 9,840
--------------------------------------------------------------
Winsloew Furniture, Inc.-Wts.,
expiring 08/15/07(c)(j) 690 6,986
==============================================================
26,666
==============================================================
|
MARKET
SHARES VALUE
OIL & GAS (REFINING & MARKETING)-1.11%
Valero Energy Corp.-$1.94 Conv.
Pfd. 50,000 1,400,000
==============================================================
POWER PRODUCERS (INDEPENDENT)-2.66%
AES Trust VII-$3.00 Conv. Pfd.
(Acquired 05/15/00; Cost
$1,268,352)(a) 24,000 1,689,000
--------------------------------------------------------------
Calpine Capital Trust III-$2.50
Conv. Pfd. (Acquired 10/26/00;
Cost $1,713,750)(a) 30,000 1,665,000
==============================================================
3,354,000
==============================================================
RAILROADS-0.00%
Railamerica Transportation Corp.-
Wts., expiring 08/15/10 (Acquired
10/05/00; Cost $0)(a)(j) 325 3,331
==============================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Carrier 1 International S.A.
(Switzerland)-Wts., expiring
02/15/09 (Acquired 09/03/99; Cost
$0)(a)(j) 150 15,912
==============================================================
TELECOMMUNICATIONS (LONG DISTANCE)-0.12%
Enitel ASA (Norway)-Wts., expiring
04/03/05(j) 630 4,010
--------------------------------------------------------------
Tele1 Europe B.V.-ADR
(Netherlands)(k) 17,612 138,695
==============================================================
142,705
==============================================================
Total Common Stocks & Other
Equity Interests (Cost
$9,448,728) 10,524,666
==============================================================
|
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.82%
U.S. TREASURY NOTE-0.82%
6.75%, 05/15/05 (Cost $1,030,313) $1,000,000 1,036,880
==============================================================
ASSET-BACKED SECURITIES-0.73%
FINANCIAL (DIVERSIFIED)-0.73%
Beaver Valley II Funding Corp.,
Sec. Lease Obligations Deb.,
9.00%, 06/01/17 400,000 421,608
--------------------------------------------------------------
Citicorp Lease-Class A2, Series
1999-1, Pass Through Ctfs.,
8.04%, 12/13/19 (Acquired
06/01/00; Cost $493,835)(a) 500,000 497,965
==============================================================
919,573
==============================================================
Total Asset-Backed Securities
(Cost $887,719) 919,573
==============================================================
TOTAL INVESTMENTS -- 97.12% (Cost
$127,520,264) 122,398,980
==============================================================
OTHER ASSETS LESS
LIABILITIES -- 2.88% 3,629,319
==============================================================
NET ASSETS -- 100.00% $126,028,299
______________________________________________________________
==============================================================
|
FS-6
Investment Abbreviations:
ACES - Automatic Common Exchange Securities ADR - American Depositary Receipt AUD - Australian Dollar |
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
EUR - Euro Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred PDI - Past Due Interest REGS - Regulation S Sec. - Secured Sr. - Senior 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 aggregate market value of these securities at 10/31/00
was $18,859,945 which represented 14.96% 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) 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.
(d) Zero coupon bond issued at a discount. The interest rate represents the
coupon rate at which the bond will accrue at a specified future date.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) The coupon rate shown on floating rate notes represents the rate at period
end.
(g) The coupon rate show on step up coupon bond represents the rate at period
end.
(h) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit includes common or preferred
shares of the issuer.
(i) Foreign denominated security. Par value is denominated in currency
indicated.
(j) Acquired as part of a unit with or in exchange for other securities.
(k) Non-income producing security.
See Notes to Financial Statements.
FS-7
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments, at market value (cost
$127,520,264) $122,398,980
------------------------------------------------------------
Foreign currencies, at value (cost $53,291) 52,753
------------------------------------------------------------
Receivables for:
Investments sold 21,755,580
------------------------------------------------------------
Fund shares sold 57,356
------------------------------------------------------------
Dividends and interest 2,482,433
------------------------------------------------------------
Foreign currency contracts outstanding 44,547
------------------------------------------------------------
Other assets 12,411
============================================================
Total assets $146,804,060
============================================================
LIABILITIES:
Payables for:
Investments purchased 14,030,625
------------------------------------------------------------
Fund shares reacquired 1,427,160
------------------------------------------------------------
Amount due to custodian 5,024,969
------------------------------------------------------------
Accrued advisory fees 56,483
------------------------------------------------------------
Accrued administrative services fees 4,238
------------------------------------------------------------
Accrued distribution fees 98,712
------------------------------------------------------------
Accrued trustees' fees 2,676
------------------------------------------------------------
Accrued transfer agent fees 35,850
------------------------------------------------------------
Accrued operating expenses 95,048
============================================================
Total liabilities 20,775,761
============================================================
Net assets applicable to shares outstanding $126,028,299
____________________________________________________________
============================================================
NET ASSETS:
Class A $ 48,864,876
____________________________________________________________
============================================================
Class B $ 76,679,680
____________________________________________________________
============================================================
Class C $ 483,743
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 5,330,186
____________________________________________________________
============================================================
Class B 8,349,234
____________________________________________________________
============================================================
Class C 52,728
____________________________________________________________
============================================================
Class A:
Net asset value and redemption price per
share $ 9.17
------------------------------------------------------------
Offering price per share:
(Net asset value of $9.17 divided by
95.25%) $ 9.63
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per share $ 9.18
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per share $ 9.17
____________________________________________________________
============================================================
|
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
INVESTMENT INCOME:
Interest $ 13,369,681
------------------------------------------------------------
Dividends 154,919
------------------------------------------------------------
Dividends from affiliated money market funds 414,357
------------------------------------------------------------
Security lending income 816
============================================================
Total investment income 13,939,773
============================================================
EXPENSES:
Advisory fees 1,118,206
------------------------------------------------------------
Administrative services fees 50,000
------------------------------------------------------------
Custodian fees 43,933
------------------------------------------------------------
Distribution fees -- Class A 205,274
------------------------------------------------------------
Distribution fees -- Class B 951,451
------------------------------------------------------------
Distribution fees -- Class C 4,107
------------------------------------------------------------
Transfer agent fees 428,114
------------------------------------------------------------
Trustees' fees 10,664
------------------------------------------------------------
Other 233,884
============================================================
Total expenses 3,045,633
============================================================
Less: Fees waived (548,051)
------------------------------------------------------------
Expenses paid indirectly (16,757)
============================================================
Net expenses 2,480,825
============================================================
Net investment income 11,458,948
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FOREIGN CURRENCY CONTRACTS, FUTURES
CONTRACTS AND SWAP AGREEMENTS:
Net realized gain (loss) from:
Investment securities (27,654,369)
------------------------------------------------------------
Foreign currencies (167,199)
------------------------------------------------------------
Foreign currency contracts 32,005
------------------------------------------------------------
Futures contracts (151,502)
------------------------------------------------------------
Swap agreements 316,535
============================================================
(27,624,530)
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 12,470,240
------------------------------------------------------------
Foreign currencies (4,022)
------------------------------------------------------------
Foreign currency contracts 51,775
------------------------------------------------------------
Futures contracts 65,179
============================================================
12,583,172
============================================================
Net gain (loss) from investment securities,
foreign currencies, foreign currency
contracts, futures contracts and swap
agreements (15,041,358)
============================================================
Net increase (decrease) in net assets
resulting from operations $ (3,582,410)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
FS-8
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
2000 1999
------------- -------------
OPERATIONS:
Net investment income $ 11,458,948 $ 14,565,127
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and swap agreements (27,624,530) (16,216,754)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts, futures contracts and swap agreements 12,583,172 2,953,192
============================================================================================
Net increase (decrease) in net assets resulting from
operations (3,582,410) 1,301,565
============================================================================================
Distributions to shareholders from net investment income:
Class A (3,110,833) (5,310,549)
--------------------------------------------------------------------------------------------
Class B (4,335,943) (8,423,847)
--------------------------------------------------------------------------------------------
Class C (20,220) (2,176)
--------------------------------------------------------------------------------------------
Advisor Class* (1,231) (14,345)
--------------------------------------------------------------------------------------------
Return of Capital:
Class A (1,297,698) (313,916)
--------------------------------------------------------------------------------------------
Class B (2,088,596) (557,789)
--------------------------------------------------------------------------------------------
Class C (9,264) (193)
--------------------------------------------------------------------------------------------
Advisor Class* (2,240) (640)
--------------------------------------------------------------------------------------------
Share transactions-net:
Class A (14,226,418) (28,748,300)
--------------------------------------------------------------------------------------------
Class B (33,405,587) (61,297,148)
--------------------------------------------------------------------------------------------
Class C 279,127 254,116
--------------------------------------------------------------------------------------------
Advisor Class* (104,641) (739,856)
============================================================================================
Net increase (decrease) in net assets (61,905,954) (103,853,078)
============================================================================================
NET ASSETS:
Beginning of year 187,934,253 291,787,331
============================================================================================
End of year $ 126,028,299 $ 187,934,253
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 244,842,709 $ 295,698,026
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (3,518) (809,500)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and swap agreements (113,726,070) (89,286,279)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and foreign currency
contracts (5,084,822) (17,667,994)
============================================================================================
$ 126,028,299 $ 187,934,253
____________________________________________________________________________________________
============================================================================================
|
* Advisor Class shares were converted to Class A shares effective as of the close of business on February 11, 2000.
See Notes to Financial Statements.
FS-9
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Strategic Income Fund (the "Fund") is a separate series of AIM Investment
Funds (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of nine
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. The Fund formerly
offered Advisor Class shares; however, as of the close of business on February
11, 2000 the Advisor Class shares were converted to Class A 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. Advisor Class shares were sold
without a 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 high current income, and its secondary
investment objective is growth of capital.
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 -- Securities, including restricted securities, are
valued according to the following policy. 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 October 31, 2000, undistributed net investment income increased by
$213,059, undistributed net realized gains were increased by $3,184,739 and
paid-in capital decreased by $3,397,798 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications.
C. Distributions -- Distributions from income are declared 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 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 $113,632,495 as of October 31,
2000 which may be carried forward to offset
FS-10
future taxable gains, if any, which expires, if not previously utilized, in
the year 2007.
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 October 31, 2000 were as follows:
SETTLEMENT CONTRACT TO CONTRACT TO UNREALIZED
DATE DELIVER RECEIVE VALUE APPRECIATION
---------- ----------- ----------- ------- ------------
12/11/00 AUD (250,000) $139,290 129,644 $ 9,646
-------------------------------------------------------------------------------
12/29/00 AUD (130,000) 71,391 67,431 3,960
-------------------------------------------------------------------------------
12/29/00 NZD (1,900,000) 784,795 753,854 30,941
===============================================================================
(2,280,000) $995,476 950,929 $44,547
______________________________________________________________________________
===============================================================================
|
G. Mortgage Dollar Rolls -- 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 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.
H. Future Contracts -- A future contract is an agreement between two parties to
buy and sell a security at a set price on a future date. Upon entering into
such a contract the Fund is required to pledge to the broker an amount of
cash or securities equal to the minimum "initial margin" requirements of the
exchange on which the contract is traded. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are
known as "variation margin" and are recorded by the Fund as unrealized gains
or losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time is was closed. The potential risk to
the Fund is that the change in value of the underlying securities may not
correlate to the change in value of the contracts. The Fund may use futures
contracts to manage its exposure to the stock market and to fluctuations in
currency values or interest rates.
I. Swap Agreements -- The Fund may enter into interest rate swap agreements to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for
managing their respective portfolio's duration (i.e., price sensitivity to
changes in interest rates) or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. Interest rate
swap agreements involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional
amount of principal. Swaps are marked to market daily based upon quotations
from market makers and the change, if any, is recorded as unrealized gain or
loss in the Statement of Operations. Payments received or made at the end of
the measurement period are recorded as realized gain or loss in the Statement
of Operations. Net payments of interest rate swap agreements are recorded as
interest income. Entering into these agreements involves, to varying degrees,
elements of credit and market risk in excess of the amounts recognized on the
Statement of Assets and Liabilities. Such risks involve the possibility that
there will be no liquid market for these agreements, that the counterparty to
the agreements may default on its obligations to perform and that there may
be unfavorable changes in the fluctuation of interest rates.
J. Bond Premiums -- It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was
issued and is effective for fiscal years beginning after December 15, 2000.
The revised Guide will require the Fund to
FS-11
amortize premium and discount on all fixed-income securities. Upon initial
adoption, the Fund will be required to adjust the cost of its fixed-income
securities by the cumulative amount of amortization that would have been
recognized had amortization been in effect from the purchase date of each
holding. Adopting this accounting principle will not affect the Fund's net
asset value, but will change the classification of certain amounts between
interest income and realized and unrealized gain/loss in the Statement of
Operations. The Fund expects that the impact of the adoption of this
principle will not be material to the financial statements.
K. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' 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
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO (NY), Inc. is the Fund's subadvisor. The Fund pays AIM investment
management and administration fees at an annual rate of 0.725% on the first $500
million of the Fund's average daily net assets, plus 0.70% on the next $1
billion of the Fund's average daily net assets, plus 0.675% on the next $1
billion of the Fund's average daily net assets, plus 0.65% on the Fund's average
daily net assets exceeding $2.5 billion. AIM has contractually agreed to limit
total annual operating expenses (excluding interest, taxes, dividend expense on
short sales, extraordinary items and increases in expenses due to offset
arrangements, if any) for Class A, Class B and Class C shares to 1.05%, 1.70%
and 1.70%, respectively. Prior to January 12, 2000, AIM had agreed to limit
total annual operating expenses (excluding interest, taxes, dividend expense on
short sales, extraordinary items and increases in expenses due to offset
arrangements, if any) for Class A, Class B and Class C shares to 1.75%, 2.40%
and 2.40%, respectively. During the year ended October 31, 2000, AIM waived fees
of $548,051.
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 October 31, 2000, AIM was
paid $50,000 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 October 31, 2000, AFS was
paid $266,405 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
0.35% 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 October 31, 2000,
the Class A, Class B and Class C shares paid AIM Distributors $205,274, $951,451
and $4,107, respectively, as compensation under the Plans.
AIM Distributors received commissions of $12,841 from sales of the Class A
shares of the Fund during the year ended October 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 October 31, 2000,
AIM Distributors received $17,039 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.
NOTE 3-INDIRECT EXPENSES
For the year ended October 31, 2000, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) of $2,013 and reductions in custodian fees of $14,744 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $16,757.
NOTE 4-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 October 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 5-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly, and the borrower fails to return the securities.
At October 31, 2000, there were no securities on loan to brokers. For the year
ended October 31, 2000, the Fund received fees of $816 for securities lending.
FS-12
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 October 31, 2000 was
$485,416,577 and $524,436,963, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 4,173,615 ------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (9,343,930) ========================================================================= Net unrealized appreciation (depreciation) of investment securities $(5,170,315) _________________________________________________________________________ ========================================================================= |
Cost of investments for tax purposes is $127,569,295.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 2000 and 1999 were as follows:
2000 1999
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold:
Class A 1,203,928 $ 11,556,535 3,735,185 $ 40,211,400
----------------------------------------------------------------------------------------------------------------------
Class B 727,886 7,090,652 570,671 6,113,002
----------------------------------------------------------------------------------------------------------------------
Class C* 51,395 500,167 25,089 258,028
----------------------------------------------------------------------------------------------------------------------
Advisor Class** 25 256 18,917 210,688
======================================================================================================================
Issued as reinvestment of dividends:
Class A 324,043 3,148,620 412,050 4,409,344
----------------------------------------------------------------------------------------------------------------------
Class B 380,663 3,710,538 544,054 5,826,667
----------------------------------------------------------------------------------------------------------------------
Class C* 2,405 23,176 196 2,004
----------------------------------------------------------------------------------------------------------------------
Advisor Class** 70 715 1,153 12,565
======================================================================================================================
Conversion of Advisor Class shares to Class A shares***:
Class A 10,457 105,612 -- --
----------------------------------------------------------------------------------------------------------------------
Advisor Class** (10,415) (105,612) -- --
======================================================================================================================
Reacquired:
Class A (2,984,827) (29,037,185) (6,845,161) (73,369,044)
----------------------------------------------------------------------------------------------------------------------
Class B (4,475,397) (44,206,777) (6,857,590) (73,236,817)
----------------------------------------------------------------------------------------------------------------------
Class C* (25,784) (244,216) (573) (5,916)
----------------------------------------------------------------------------------------------------------------------
Advisor Class** -- -- (87,987) (963,109)
======================================================================================================================
(4,795,551) $(47,457,519) (8,483,996) $(90,531,188)
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Class C shares commenced sales on March 1, 1999. ** Advisor Class share activity for the period November 1, 1999 through February 11, 2000 (date of conversion). *** Effective as of the close of business February 11, 2000, pursuant to approval by the Board of Trustees on November 3, 1999, all outstanding shares of Advisor Class shares were converted to Class A shares of the fund.
FS-13
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A
------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------
2000(a) 1999 1998(a) 1997 1996(a)
------- ------- -------- -------- --------
Net asset value, beginning of period $ 10.13 $ 10.80 $ 12.00 $ 11.76 $ 10.32
--------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.77 0.68 0.91(b) 0.74 0.89
--------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.99) (0.66) (1.27) 0.34 1.44
====================================================================================================================
Total from investment operations (0.22) 0.02 (0.36) 1.08 2.33
====================================================================================================================
Less distributions:
Dividends from net investment income (0.52) (0.65) (0.65) (0.78) (0.82)
--------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.06) (0.07)
--------------------------------------------------------------------------------------------------------------------
Returns of capital (0.22) (0.04) (0.19) -- --
====================================================================================================================
Total distributions (0.74) (0.69) (0.84) (0.84) (0.89)
====================================================================================================================
Net asset value, end of period $ 9.17 $ 10.13 $ 10.80 $ 12.00 $ 11.76
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(c) (2.35)% 0.06% (3.41)% 9.40% 23.00%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $48,865 $68,675 $102,280 $138,715 $185,126
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.21%(d) 1.41% 1.56% 1.44% 1.40%
--------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.57%(d) 1.41% 1.56% 1.44% 1.40%
====================================================================================================================
Ratio of net investment income to average net assets 7.84%(d) 6.44% 7.73% 6.18% 8.09%
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 309% 235% 306% 149% 177%
____________________________________________________________________________________________________________________
====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.11 per share.
(c) Does not include sales charges.
(d) Ratios are based on average daily net assets of $58,649,641.
FS-14
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
2000(a) 1999 1998(a) 1997 1996(a)
------- -------- -------- -------- --------
Net asset value, beginning of period $ 10.15 $ 10.81 $ 12.01 $ 11.77 $ 10.33
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.71 0.62 0.84(b) 0.67 0.82
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.01) (0.66) (1.28) 0.33 1.44
=====================================================================================================================
Total from investment operations (0.30) (0.04) (0.44) 1.00 2.26
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.45) (0.58) (0.57) (0.71) (0.75)
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.05) (0.07)
---------------------------------------------------------------------------------------------------------------------
Returns of capital (0.22) (0.04) (0.19) -- --
=====================================================================================================================
Total distributions (0.67) (0.62) (0.76) (0.76) (0.82)
=====================================================================================================================
Net asset value, end of period $ 9.18 $ 10.15 $ 10.81 $ 12.01 $ 11.77
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(c) (3.11)% (0.52)% (4.04)% 8.70% 22.15%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $76,680 $118,904 $188,660 $281,376 $333,178
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(d) 2.07% 2.21% 2.09% 2.05%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(d) 2.07% 2.21% 2.09% 2.05%
=====================================================================================================================
Ratio of net investment income to average net assets 7.18%(d) 5.78% 7.08% 5.53% 7.44%
_____________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 309% 235% 306% 149% 177%
_____________________________________________________________________________________________________________________
======================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Net investment income per share reflects an interest payment received from
the conversion of Vnesheconombank loan agreements of $0.11 per share.
(c) Does not include contingent deferred sales charges.
(d) Ratios are based on average daily net assets of $95,145,091.
FS-15
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
----------------------------
MARCH 1, 1999
(DATE SALES
YEAR ENDED COMMENCED) TO
OCTOBER 31, OCTOBER 31,
2000(a) 1999
----------- -------------
Net asset value, beginning of period $10.14 $10.78
--------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.70 0.33
--------------------------------------------------------------------------------------
Net losses on securities (both realized and unrealized) (1.00) (0.63)
======================================================================================
Total from investment operations (0.30) (0.30)
======================================================================================
Less distributions:
Dividends from net investment income (0.45) (0.31)
--------------------------------------------------------------------------------------
Returns of capital (0.22) (0.03)
======================================================================================
Total distributions (0.67) (0.34)
======================================================================================
Net asset value, end of period $ 9.17 $10.14
______________________________________________________________________________________
======================================================================================
Total return(b) (3.12)% (1.80)%
______________________________________________________________________________________
======================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 484 $ 251
______________________________________________________________________________________
======================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.86%(c) 2.07%(d)
--------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.07%(d)
======================================================================================
Ratio of net investment income to average net assets 7.18%(c) 5.78%(d)
______________________________________________________________________________________
======================================================================================
Portfolio turnover rate 309% 235%
______________________________________________________________________________________
======================================================================================
|
(a) Calculated using average shares outstanding.
(b) Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average daily net assets of $410,715.
(d) Annualized.
FS-16
PART C: OTHER INFORMATION
Item 23. Exhibits
Exhibit
Number Description
------- -----------
(a) (1) - (a) Agreement and Declaration of Trust of Registrant, dated
May 7, 1998, was filed as an Exhibit to Post-Effective
Amendment No. 55, on August 26, 1998 and is hereby
incorporated by reference.
- (b) First Amendment to Agreement and Declaration of Trust of
Registrant, dated August 12, 1998, was filed as an Exhibit to
Post-Effective Amendment No. 56, on December 30, 1998 and is
hereby incorporated by reference.
- (c) Second Amendment to Agreement and Declaration of Trust of
Registrant, dated December 10, 1998, was filed as an Exhibit
to Post-Effective Amendment No. 57 on February 22, 1999 and
is hereby incorporated by reference.
- (d) Third Amendment to Agreement and Declaration of Trust of
Registrant, dated February 4, 1999, was filed as an Exhibit
to Post-Effective Amendment No. 58, on February 24, 2000 and
is hereby incorporated by reference.
|
- (e) Fourth Amendment to Agreement and Declaration of Trust of Registrant, dated February 16, 1999, was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (f) Fifth Amendment to Agreement and Declaration of Trust of Registrant, dated February 11, 2000, is filed herewith electronically.
- (g) Amendment No. 6 to Agreement and Declaration of Trust of Registrant, dated May 24, 2000, is filed herewith electronically.
- (h) Amendment No. 7 to Agreement and Declaration of Trust of Registrant, dated June 12, 2000, is filed herewith electronically.
- (i) Amendment No. 8 to Agreement and Declaration of Trust of Registrant, dated June 19, 2000, is filed herewith electronically.
- (j) Amendment No. 9 to Agreement and Declaration of Trust of Registrant, dated December 5, 2000, is filed herewith electronically.
(b) (1) - (a) By-Laws of Registrant were filed as an Exhibit to Post- Effective Amendment No. 55, on August 26, 1998.
- (b) Amendment No. 1 to By-laws of Registrant, dated December 10, 1998, was filed as an Exhibit to Post-Effective Amendment No. 57 on February 22, 1999.
(2) - (a) Amended and Restated By-Laws of Registrant, adopted effective May 7, 1998, amended December 10, 1998, was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (b) First Amendment to Amended and Restated By-Laws of Registrant, dated June 15, 1999, was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
(c) - Provisions of instruments defining the rights of holders of
Registrant's securities are contained in the Agreement and
Declaration of Trust, as amended, Articles II, VI, VII, VIII
and IX and By-Laws Articles IV, V, VI, VII and VIII, which are
included as part of Exhibits (a)(1) and (b) of this
Registration Statement.
(d) (1) - Investment Management and Administration Contract, dated May
29, 1998, between Registrant and A I M Advisors, Inc. was
filed as an Exhibit to Post-Effective Amendment No. 55 on
August 26, 1998.
(2) - Investment Management and Administration Contract, dated
September 8, 1998, between Registrant and A I M Advisors, Inc.
was filed as an Exhibit to Post-Effective Amendment No. 55 on
August 26, 1998.
(3) - Amended and Restated Investment Management and Administration
Contract, dated June 1, 1999, between Registrant and A I M
Advisors, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 58, on February 24, 2000.
(4) - Second Amended and Restated Investment Management and
Administration Contract, dated June 12, 2000, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(5) - Administration Contract, dated May 29, 1998, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 55 on August 26, 1998.
(6) - Administration Contract, dated September 8, 1998, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 55 on August 26, 1998.
(7) - Amended and Restated Administration Contract, dated September
11, 2000, between Registrant and A I M Advisors, Inc. is filed
herewith electronically.
(8) - Sub-Administration Contract, dated May 29, 1998, between A I M
Advisors, Inc. and INVESCO (NY), Inc. with respect to
Registrant was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998.
(9) - Sub-Administration Contract, dated September 8, 1998, between
A I M Advisors, Inc. and INVESCO (NY), Inc. with respect to
Registrant was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998.
|
(10) - Sub-Advisory and Sub-Administration Contract, dated May 29,
1998, between A I M Advisors, Inc. and INVESCO (NY), Inc. with
respect to Registrant was filed as an Exhibit to Post-
Effective Amendment No. 55 on August 26, 1998.
(11) - Sub-Advisory and Sub-Administration Contract, dated September
8, 1998, between A I M Advisors, Inc. and INVESCO (NY), Inc.
with respect to Registrant was filed as an Exhibit to
Post-Effective Amendment No. 55 on August 26, 1998.
(12) - Investment Management and Administration Contract, dated May
29, 1998, between Global Investment Portfolio and A I M
Advisors, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 55 on August 26, 1998.
(13) - Second Amended and Restated Investment Management and
Administration Contract, dated September 11, 2000, between
Global Investment Portfolio and A I M Advisors, Inc. is filed
herewith electronically.
|
(14) - Investment Management and Administration Contract, dated May 29, 1998, between Global High Income Portfolio (now known as Emerging Markets Debt Portfolio) and A I M Advisors, Inc. was filed as an Exhibit to Post-Effective Amendment No. 55 on August 26, 1998.
(15) - Amended and Restated Investment Management and Administration
Contract, dated September 8, 1998, between Emerging Markets
Debt Portfolio and A I M Advisors, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 58, on February 24,
2000.
(16) - Master Investment Advisory Agreement, dated September 11,
2000, between Registrant and A I M Advisors, Inc. is filed
herewith electronically.
(17) - Sub-Advisory and Sub-Administration Contract, dated May 29,
1998, between A I M Advisors, Inc. and INVESCO (NY), Inc. with
respect to Global Investment Portfolio was filed as an Exhibit
to Post-Effective Amendment No. 55 on August 26, 1998.
(18) - Sub-Advisory and Sub-Administration Contract, dated May 29,
1998, between A I M Advisors, Inc. and INVESCO (NY), Inc. with
respect to Global High Income Portfolio (now known as Emerging
Markets Debt Portfolio) was filed as an Exhibit to
Post-Effective Amendment No. 55 on August 26, 1998.
(19) - Sub-Advisory Contract, dated December 14, 1998, between A I M
Advisors, Inc. and INVESCO (NY), Inc. with respect to
Registrant's AIM Strategic Income Fund was filed as an Exhibit
to Post-Effective Amendment No. 58, on February 24, 2000 and
is hereby incorporated by reference.
(20) - Amended and Restated Sub-Advisory Contract, dated February 12,
1999, between A I M Advisors, Inc. and INVESCO Asset
Management Limited with respect to Registrant was filed as an
Exhibit to Post-Effective Amendment No. 58, on February 24,
2000.
|
(21) - Second Amended and Restated Sub-Advisory Contract, dated March 22, 2000, between A I M Advisors, Inc. and INVESCO Asset Management Limited with respect to Registrant 's AIM Developing Markets Fund and AIM Latin American Growth Fund is filed herewith electronically.
(22) - Sub-Advisory Contract, dated December 14, 1998, between A I M Advisors, Inc. and INVESCO Asset Management Limited with respect to Emerging Markets Debt Portfolio was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
(e) (1) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Class A shares
was filed as an Exhibit to Post-Effective Amendment No. 55 on
August 26, 1998.
(2) - Distribution Agreement, dated September 8, 1998, between
Registrant and A I M Distributors, Inc. with respect to Class
A shares was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998 and is hereby incorporated by
reference.
(3) - (a) Master Distribution Agreement, dated March 1, 1999,
between Registrant and A I M Distributors, Inc. with respect
to Class A and C shares was filed as an Exhibit to
Post-Effective Amendment No. 58, on February 24, 2000.
|
- (b) Amendment No. 1, dated March 1, 1999, to the Master Distribution Agreement, dated March 1, 1999, between Registrant and A I M Distributors, Inc., with respect to Class A and C shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
(4) - First Amended and Restated Master Distribution Agreement,
dated July 1, 2000, between Registrant and A I M Distributors,
Inc., with respect to Class A and Class C shares is filed
herewith electronically.
(5) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Class B shares
was filed as an Exhibit to Post-Effective Amendment No. 55 on
August 26, 1998.
(6) - (a) Distribution Agreement, dated September 8, 1998, between
Registrant and A I M Distributors, Inc. with respect to Class
B shares was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998.
|
- (b) Amendment No. 1, dated March 18, 1999, to the Distribution Agreement, dated September 8, 1998, between Registrant and A I M Distributors, Inc., with respect to Class B shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
- (c) Amendment No. 2, dated June 1, 1999, to the Distribution Agreement, dated September 8, 1998, between Registrant and A I M Distributors, Inc., with respect to Class B shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
- (d) Amendment No. 3, dated June 12, 2000, to the Distribution Agreement, dated September 8, 1998, between Registrant and A I M Distributors, Inc., with respect to Class B shares is filed herewith electronically.
- (e) Amendment No. 4, dated June 19, 2000, to the Distribution Agreement, dated September 8, 1998, between Registrant and A I M Distributors, Inc., with respect to Class B shares is filed herewith electronically.
(7) - First Amended and Restated Master Distribution Agreement,
dated December 31, 2000, between Registrant and A I M
Distributors, Inc., with respect to Class B shares is filed
herewith electronically.
(8) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Advisor Class
shares was filed as an Exhibit to Post-Effective Amendment No.
55 on August 26, 1998.
(9) - Distribution Agreement, dated September 8, 1998, between
Registrant and A I M Distributors, Inc. with respect to
Advisor Class shares was filed as an Exhibit to Post-
Effective Amendment No. 55 on August 26, 1998.
(10) - Form of Selected Dealer Agreement between and A I M
Distributors, Inc. and selected dealers was filed as an
Exhibit to Post-Effective Amendment No. 57 on February 22,
1999 and is hereby incorporated by reference.
(11) - Form of Selected Dealer Agreement for Investment Companies
Managed by A I M Advisors, Inc. is filed herewith
electronically.
(12) - Form of Bank Selling Group Agreement between and A I M
Distributors, Inc. and banks was filed as an Exhibit to
Post-Effective Amendment No. 57 on February 22, 1999 and is
hereby incorporated by reference.
|
(f) - Agreements Concerning Officers and Directors/Trustees Benefits
- None.
(g) (1) - (a) Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (b) Notice of Additional Fund, dated August 7, 1989, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (c) Notice of Additional Fund, dated September 23, 1990, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (d) Notice of Additional Fund, dated August 8, 1991, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (e) Notice of Additional Fund, dated January 27, 1992, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (f) Notice of Additional Fund, dated May 10, 1992, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (g) Notice of Additional Fund, dated June 1, 1992, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (h) Notice of Additional Fund, dated October 22, 1992, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (i) Notice of Additional Fund, dated May 31, 1994, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (j) Amendment to Custodian Contract, dated August 17, 1994, was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (k) Amendment to Custodian Contract, dated June 20, 1995, was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (l) Notice of Additional Fund, dated October 24, 1997, to Custodian Contract, dated April 27, 1988, between Registrant and State Street Bank and Trust Company was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (m) Notice of Registrant's reorganization, dated September 22, 1998, to Custodian was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (n) Amendment to Custodian Contract, dated January 26, 1999, was filed as an Exhibit to Post-Effective Amendment No. 57 on February 22, 1999.
(2) - (a) Master Custodian Contract, dated May 1, 2000, between Registrant and State Street Bank and Trust Company is filed herewith electronically.
- (b) Amendment, dated May 1, 2000, to Custodian Contract, dated May 1, 2000, between Registrant and State Street Bank and Trust Company is filed herewith electronically.
(h) (1) - (a) Transfer Agency and Service Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998 and is hereby incorporated by reference.
- (b) Amendment No. 1, dated March 1, 1999, to Transfer Agency and Services Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (c) Amendment No. 2, dated July 1, 1999, to Transfer Agency and Services Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (d) Amendment No. 3, dated July 1, 1999, to Transfer Agency and Services Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (e) Amendment No. 4, dated February 11, 2000, to Transfer Agency and Services Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000 and is hereby incorporated by reference.
- (f) Amendment No. 5, dated July 1, 2000, to the Transfer Agency and Service Agreement, dated September 8, 1998, between Registrant and A I M Fund Services, Inc. is filed herewith electronically.
(2) - (a) Remote Access and Related Services Agreement, dated as of
December 23, 1994, was filed as an Exhibit to Post-Effective
Amendment No. 55 on August 26, 1998 and is hereby incorporated
by reference.
- (b) Amendment No. 1, dated October 4, 1995, to the Remote
Access and Related Services Agreement, dated as of December
23, 1994, was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998 and is hereby incorporated by
reference.
- (c) Addendum No. 2, dated October 12, 1995, to the Remote
Access and Related Services Agreement, dated as of December
23, 1994, was filed as an Exhibit to Post-Effective Amendment
No. 55 on August 26, 1998 and is hereby incorporated by
reference.
- (d) Amendment No. 3, dated February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, was filed as an Exhibit to Post-Effective Amendment No.
55 on August 26, 1998 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, was filed as an Exhibit to Post-Effective Amendment No.
55 on August 26, 1998 and is hereby incorporated by reference.
|
- (f) Preferred Registration Technology Escrow Agreement, dated September 10, 1997, was filed as an Exhibit to Post-Effective Amendment No. 55 on August 26, 1998 and is hereby incorporated by reference.
- (g) Amendment No. 4, dated June 30, 1998, to the Remote Access and Related Services Agreement, dated December 23, 1994, was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998 and is hereby incorporated by reference.
- (h) Amendment No. 5, dated July 1, 1998, to the Remote Access and Related Services Agreement, dated December 23, 1994, was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998 and is hereby incorporated by reference.
- (i) Amendment No. 6, dated August 30, 1999, to the Remote Access and Related Services Agreement for IMPRESSNET(TM) Services, dated December 23, 1994, between Registrant and FIRST DATA INVESTOR SERVICES GROUP, INC. is filed herewith electronically.
- (j) Amendment No. 7, dated February 29, 2000, to the Remote Access and Related Services Agreement for IMPRESSPlus Forms Processing Software dated December 23, 1994, between Registrant and FIRST DATA INVESTOR SERVICES GROUP, INC. (k/n/a PFPC Inc.) ("PFPC") is filed herewith electronically.
- (k) Amendment No. 8, dated June 26, 2000, to the Remote Access and Related Services Agreement for AccessTA Services, dated December 23, 1994, between Registrant and PFPC is filed herewith electronically.
- (l) Amendment No. 9, dated June 26, 2000, Restated and Amended Amendment No. 6 to the Remote Access and Related Services Agreement for IMPRESSNet(TM) Services, dated December 23, 1994, between Registrant and PFPC is filed herewith electronically.
- (m) Amendment No. 10, dated July 28, 2000, to the Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and PFPC is filed herewith electronically.
- (n) Amendment, dated August 22, 2000, to Amendment No. 9, dated June 26, 2000 to the Remote Access and Related Services Agreement for IMPRESSNET(TM) Services, dated December 23, 1994, between Registrant and PFPC is filed herewith electronically.
(3) - Form of Fund Accounting and Pricing Agent Agreement between
Registrant and INVESCO (NY), Inc. was filed as an Exhibit to
Post-Effective Amendment No. 55 on August 26, 1998.
(4) - Fund Accounting and Pricing Agent Agreement between Registrant
and A I M Advisors, Inc. dated June 1, 1998, was filed as an
Exhibit to Post-Effective Amendment No. 57 on February 22,
1999.
|
(5) - (a) Master Accounting Services Agreement, dated July 1, 1999,
between Registrant and A I M Advisors, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 58, on February 24,
2000 and is hereby incorporated by reference.
|
- (b) Amendment No. 1, dated June 12, 2000, to Master Accounting Services Agreement, dated July 1, 1999, between Registrant and A I M Advisors, Inc., is filed herewith electronically.
- (c) Amendment No. 2, dated June 19, 2000, to Master Accounting Services Agreement, dated July 1, 1999, between Registrant and A I M Advisors, Inc. is filed herewith electronically.
- (d) Amendment No. 3, dated September 11, 2000, to Master Accounting Services Agreement, dated July 1, 1999, between Registrant and A I M Advisors, Inc. is filed herewith electronically.
(6) - Memorandum of Agreement, dated March 1, 1999, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 58, on February 24, 2000.
(7) - Amended and Restated Memorandum of Agreement, dated February
4, 2000, between Registrant and A I M Advisors, Inc. was filed
as an Exhibit to Post-Effective Amendment No. 58, on February
24, 2000.
(8) - Memorandum of Agreement, dated June 19, 2000, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(9) - Memorandum of Agreement, dated July 1, 2000, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(10) - Memorandum of Agreement, dated September 11, 2000, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(11) - Master Administrative Agreement, dated September 11, 2000,
between Registrant and A I M Advisors, Inc. is filed herewith
electronically.
|
(i) (1) - Opinion and Consent of Kirkpatrick & Lockhart is filed herewith electronically.
(2) - Opinion and Consent of Delaware Counsel is filed herewith electronically.
(j) (1) - Consent of PricewaterhouseCoopers LLP is filed herewith electronically.
(k) - Financial Statements - None.
(l) - Agreements Concerning Initial Capitalization - None.
(m) (1) - Distribution Plan, effective as of September 8, 1998, adopted
pursuant to Rule 12b-1 with respect to Class A shares was
filed as an Exhibit to Post-Effective Amendment No. 56 on
December 30, 1998 and is hereby incorporated by reference.
(2) - (a) Master Distribution Plan, dated March 1, 1999, pursuant
to Rule 12b-1 with respect to Class A and C shares was filed
as an Exhibit to Post-Effective Amendment No. 58, on February
24, 2000.
|
- (b) Amendment No. 1, dated March 18, 1999, to Master Distribution Plan, dated March 1, 1999, with respect to Class A and C shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
- (c) Amendment No. 2, dated June 1, 1999, to Master Distribution Plan, dated March 1, 1999, with respect to Class A and C shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
(3) - Amended and Restated Master Distribution Plan, effective as of
July 1, 1999, with respect to Class A and C shares was filed
as an Exhibit to Post-Effective Amendment No. 58, on February
24, 2000.
(4) - Second Amended and Restated Master Distribution Plan of
Registrant, effective as of July 1, 2000, with respect to
Class A and Class C shares is filed herewith electronically.
|
(5) - (a) Distribution Plan, effective as of September 8, 1998, adopted pursuant to Rule 12b-1 with respect to Class B shares was filed as an Exhibit to Post-Effective Amendment No. 56 on December 30, 1998.
- (b) Amendment No. 1, dated March 18, 1999, to Distribution Plan, effective as of September 8, 1998, with respect to Class B shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
- (c) Amendment No. 2, dated June 1, 1999, to Distribution Plan, effective as of September 8, 1998, with respect to Class B shares was filed as an Exhibit to Post-Effective Amendment No. 58, on February 24, 2000.
- (d) Amendment No. 3, dated June 12, 2000, to the Distribution Plan, effective as of September 8, 1998, with respect to Class B shares is filed herewith electronically.
- (e) Amendment No. 4, dated June 19, 2000, to the Distribution Plan, effective as of September 8, 1998, with respect to Class B shares is filed herewith electronically.
(6) - First Amended and Restated Master Distribution Plan, effective
as of December 31, 2000, with respect to Class B shares is
filed herewith electronically.
(7) - (a) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed as an Exhibit to Post-Effective Amendment No. 57 on
February 22, 1999 and is hereby incorporated by reference.
|
- (b) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan was filed as an Exhibit to Post-Effective Amendment No. 57 on February 22, 1999 and is hereby incorporated by reference.
- (c) Form of Variable Group Annuity Contractholder Service Agreement is filed herewith electronically.
- (d) Form of Service Agreement for Bank Trust Department and for Broker to be used in connection with Registrant's Master Distribution Plan was filed as an Exhibit to Post-Effective Amendment No. 57 on February 22, 1999 and is hereby incorporated by reference.
- (e) Form of Agency Pricing Agreement to be used in connection with Registrant's Master Distribution Plan was filed as an Exhibit to Post-Effective Amendment No. 57 on February 22, 1999 and is hereby incorporated by reference.
- (f) Form of Shareholder Service Agreement for Shares of the Mutual Funds is filed herewith electronically.
(n) (1) - Rule 18f-3 Multiple Class Plan was filed as an Exhibit to Post-Effective Amendment No. 55 on August 26, 1998 and is hereby incorporated by reference.
(2) - Multiple Class Plan of Registrant, AIM Growth Series and AIM
Series Trust, effective February 11, 2000, is filed herewith
electronically.
(o) - Reserved.
(p) (1) - The A I M Management Group Code of Ethics, as amended August
17, 1999, relating to A I M Management Group Inc. and A I M
Advisors, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 58, on February 24, 2000 and is hereby
incorporated by reference.
|
(2) - The Code of Ethics of Registrant, effective March 14, 2000, is filed herewith electronically.
(3) - The AIM Funds Code of Ethics of Registrant, effective June 23, 2000, is filed herewith electronically.
(4) - The AIM Funds Code of Ethics of Registrant, effective September 28, 2000, is filed herewith electronically.
Item 24. Persons Controlled by or Under Common Control with the Fund
Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Fund. 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, arrangements or statute under which any director, officer, underwriter or affiliated person of the Fund 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.
Article VIII of the Registrant's Agreement and Declaration of Trust, as amended, provides for indemnification of certain persons acting on behalf of the Registrant. Article VIII, Section 8.1 provides that a Trustee, when acting in such capacity, shall not be personally liable to any person for any act, omission, or obligation of the Registrant or any Trustee; provided, however, that nothing contained in the Registrant's Agreement and Declaration of Trust or in the Delaware Business Trust Act shall protect any Trustee against any liability to the Registrant or the 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 the office of Trustee.
Article VIII, Section 3 of the Registrant's By-Laws, as amended, also provides that every person who is, or has been, a Trustee or Officer of the Registrant is indemnified to the fullest extent permitted by the Delaware Business Trust Act, the Registrant's By-Laws and other applicable law.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment companies managed by AIM and their respective officers, trustees, directors and employees (the "Insured Parties") are insured under a joint Mutual Fund and Investment Advisory Professional and Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Section 9 of the Investment Management and Administration Contract between the Registrant and AIM provides that AIM shall not be liable, and each series of the Registrant shall indemnify AIM and its directors, officers and employees, for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Investment Management and Administration Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of AIM in the performance by AIM of its duties or from reckless disregard by AIM of its obligations and duties under the Investment Management and Administration Contract.
Section 7 of the Sub-Advisory Contract between AIM and INVESCO Asset Management Limited (collectively, the "Sub-Advisory Contract") provides that the Sub-advisor shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-advisor in the performance by the Sub-advisor of its duties or from reckless disregard by the Sub-advisor of its obligations and duties under the Sub-Advisory Contract.
Item 26. Business and Other Connections of the Investment Advisor
Describe any other business, profession, vocation or employment of a substantial nature that each investment adviser, and each director, officer or partner of the adviser, is or has been engaged within the last two fiscal years for his or her own account or in the capacity of director, officer, employee, partner, or trustee.
See the material under the headings "Trustees and Executive Officers" and "Management" included in Part B (Statement of Additional Information) of this Post-Effective Amendment. Information as to the Directors and Officers of A I M Advisors, Inc., INVESCO (NY), Inc. and INVESCO Asset Management Limited is included in Schedule A and Schedule D of Part I of each entity's Form ADV (File No. 801-12313, File No. 801-10254 and File No. 8-50197, respectively), filed with the Securities and Exchange Commission, which are incorporated herein by reference thereto.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Equity Funds
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
AIM Floating Rate Fund
(b)
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Fund
------------------ -------------------- ---------------------
Michael J. Cemo President & Director None
Gary T. Crum Director Vice President
Robert H. Graham Senior Vice President & Director Chairman & President
William G. Littlepage Senior Vice President & Director None
James L. Salners Executive Vice President None
Marilyn M. Miller Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Gene L. Needles Senior Vice President None
B.J. Thompson First Vice President None
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Charles H. McLaughlin Vice President None
|
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Fund
------------------ -------------------- ---------------------
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Vice President
Kamala C. Sachidanandan Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Normal W. Woodson Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer
& Controller
Kathleen J. Pflueger Secretary Assistant Secretary
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
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
& Assistant Secretary
P. Michelle Grace Assistant Secretary None
|
Name and Principal Position and Offices Position and Offices Business Address* with Underwriter with Fund ------------------ -------------------- --------------------- Lisa A. Moss Assistant Secretary None |
(c) - Not Applicable
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical possessions 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.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant and its advisor A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and its custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110.
Records covering shareholder accounts and portfolio transactions are also maintained and kept by the Registrant's Transfer Agent, A I M Fund Services, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and by the Registrant's custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110.
Item 29. Management Services
Provide a summary of the substantive provisions of any management-related service contract not discussed in Part A or B, disclosing the parties to the contract and the total amount paid and by whom for the Fund's last three fiscal years.
None.
Item 30. Undertakings
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 28th day of February, 2001.
REGISTRANT: AIM INVESTMENT 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 February 28, 2001
---------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee February 28, 2001
----------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee February 28, 2001
----------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee February 28, 2001
----------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President & Treasurer February 28, 2001
---------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
SIGNATURES
Global Investment Portfolio has duly caused this Post-Effective Amendment of AIM Investment Funds to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston and the State of Texas on the 28th day of February, 2001.
GLOBAL INVESTMENT PORTFOLIO
By: /s/ ROBERT H. GRAHAM
------------------------------
Robert H. Graham, President
|
This Post-Effective Amendment to the Registration Statement of AIM Investment Funds 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 February 28, 2001
---------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee February 28, 2001
----------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee February 28, 2001
----------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee February 28, 2001
----------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President & Treasurer February 28, 2001
---------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX TO EXHIBITS
AIM INVESTMENT FUNDS
Exhibit Number
--------------
(a)(1)(f) Fifth Amendment to Agreement and Declaration of Trust of
Registrant, dated February 11, 2000
(a)(1)(g) Amendment No. 6 to Agreement and Declaration of Trust of
Registrant, dated May 24, 2000
(a)(1)(h) Amendment No. 7 to Agreement and Declaration of Trust of
Registrant, dated June 12, 2000
(a)(1)(i) Amendment No. 8 to Agreement and Declaration of Trust of
Registrant, dated June 19, 2000
(a)(1)(j) Amendment No. 9 to Agreement and Declaration of Trust of
Registrant, dated December 5, 2000
(d)(4) Second Amended and Restated Investment Management and
Administration Contract, dated June 12, 2000, between
Registrant and A I M Advisors, Inc.
(d)(7) Amended and Restated Administration Contract, dated September
11, 2000, between Registrant and A I M Advisors, Inc.
(d)(13) Second Amended and Restated Investment Management and
Administration Contract, dated September 11, 2000, between
Global Investment Portfolio and A I M Advisors, Inc.
(d)(16) Master Investment Advisory Agreement, dated September 11,
2000, between Registrant and A I M Advisors, Inc.
(d)(21) Second Amended and Restated Sub-Advisory Contract, dated March
22, 2000, between A I M Advisors, Inc. and INVESCO Asset
Management Limited with respect to Registrant
(e)(4) First Amended and Restated Master Distribution Agreement,
dated July 1, 2000, between Registrant and A I M Distributors,
Inc., with respect to Class A and Class C shares
(e)(6)(d) Amendment No. 3, dated June 12, 2000, to the Distribution
Agreement, dated September 8, 1998, between Registrant and
A I M Distributors, Inc., with respect to Class B shares
(e)(6)(e) Amendment No. 4, dated June 19, 2000, to the Distribution
Agreement, dated September 8, 1998, between Registrant and
A I M Distributors, Inc., with respect to Class B shares
(e)(7) First Amended and Restated Master Distribution Agreement,
dated December 31, 2000, between Registrant and A I M
Distributors, Inc., with respect to Class B shares
|
Exhibit Number
--------------
(e)(11) Form of Selected Dealer Agreement for Investment Companies
Managed by A I M Advisors, Inc.
(g)(2)(a) Master Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company
(g)(2)(b) Amendment, dated May 1, 2000, to Custodian Contract, dated May
1, 2000, between Registrant and State Street Bank and Trust
Company
(h)(1)(f) Amendment No. 5, dated July 1, 2000, to the Transfer Agency
and Service Agreement, dated September 8, 1998, between
Registrant and A I M Fund Services, Inc.
(h)(2)(i) Amendment No. 6, dated August 30, 1999, to the Remote Access
and Related Services Agreement for IMPRESSNET(TM) Services,
dated December 23, 1994, between Registrant and FIRST DATA
INVESTOR SERVICES GROUP, INC.
(h)(2)(j) Amendment No. 7, dated February 29, 2000, to the Remote Access
and Related Services Agreement for IMPRESSPlus Forms
Processing Software dated December 23, 1994, between
Registrant and FIRST DATA INVESTOR SERVICES GROUP, INC. (k/n/a
PFPC Inc.) ("PFPC")
(h)(2)(k) Amendment No. 8, dated June 26, 2000, to the Remote Access and
Related Services Agreement for AccessTA Services, dated
December 23, 1994, between Registrant and PFPC Inc.
(h)(2)(l) Amendment No. 9, dated June 26, 2000, Restated and Amended
Amendment No. 6 to the Remote Access and Related Services
Agreement for IMPRESSNet(TM) Services, dated December 23, 1994,
between Registrant and PFPC Inc.
(h)(2)(m) Amendment No. 10, dated July 28, 2000, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and PFPC Inc.
(h)(2)(n) (n) Amendment, dated August 22, 2000, to Amendment No. 9,
dated June 26, 2000 to the Remote Access and Related Services
Agreement for IMPRESSNET(TM) Services, dated December 23, 1994,
between Registrant and PFPC Inc.
(h)(5)(b) Amendment No. 1, dated June 12, 2000, to Master Accounting
Services Agreement, dated July 1, 1999, between Registrant and
A I M Advisors, Inc.
(h)(5)(c) Amendment No. 2, dated June 19, 2000, to Master Accounting
Services Agreement, dated July 1, 1999, between Registrant and
A I M Advisors, Inc.
(h)(5)(d) Amendment No. 3, dated September 11, 2000, to Master
Accounting Services Agreement, dated July 1, 1999, between
Registrant and A I M Advisors, Inc.
(h)(8) Memorandum of Agreement, dated June 19, 2000, between
Registrant and A I M Advisors, Inc.
|
Exhibit Number
--------------
(h)(9) Memorandum of Agreement, dated July 1, 2000, between
Registrant and A I M Advisors, Inc.
(h)(10) Memorandum of Agreement, dated September 11, 2000, between
Registrant and A I M Advisors, Inc.
(h)(11) Master Administrative Agreement, dated September 11, 2000,
between Registrant and A I M Advisors, Inc.
(i)(1) Opinion and Consent of Kirkpatrick & Lockhart
(i)(2) Opinion and Consent of Delaware Counsel
(i)(3) Consent of PricewaterhouseCoopers LLP
(m)(4) Second Amended and Restated Master Distribution Plan of
Registrant, effective as of July 1, 2000, with respect to
Class A and Class C shares
(m)(5)(d) Amendment No. 3, dated June 12, 2000, to the Distribution
Plan, effective as of September 8, 1998, with respect to Class
B shares
(m)(5)(e) Amendment No. 4, dated June 19, 2000, to the Distribution
Plan, effective as of September 8, 1998, with respect to Class
B shares
(m)(6) First Amended and Restated Master Distribution Plan, effective
as of December 31, 2000, with respect to Class B shares
(m)(7)(c) Form of Variable Group Annuity Contractholder Service Agreement
(m)(7)(f) Form of Shareholder Service Agreement for Shares of the Mutual
Funds
(n)(2) Multiple Class Plan of Registrant, AIM Growth Series and AIM
Series Trust, effective February 11, 2000
(p)(2) The Code of Ethics of Registrant, effective March 14, 2000
(p)(3) The AIM Funds Code of Ethics of Registrant, effective June 23,
2000
(p)(4) The AIM Funds Code of Ethics of Registrant, effective
September 28, 2000
|
EXHIBIT (a)(1)(f)
FIFTH AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT FUNDS
THIS FIFTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM INVESTMENT FUNDS (the "Amendment") is entered into as of the 11th day of February, 2000, among C. Derek Anderson, Frank S. Bayley, Robert H. Graham and Ruth H. Quigley, as Trustees, and each person who became or becomes a Shareholder in accordance with the terms set forth in that certain Agreement and Declaration of Trust of AIM Investment Funds, a Delaware business trust (the "Trust"), entered into as of May 7, 1998, as amended (the "Agreement").
WHEREAS, Sections 2.3 and 9.7 of the Agreement empower the Trustees without Shareholder action to amend the Agreement in order to change the designations of the Portfolios and the Classes thereof; and
WHEREAS, the Trustees on November 3, 1999, acting pursuant to Section 9.3 of the Agreement, approved the termination of the Advisor Classes of the Portfolios and the conversion of shares of such Advisor Classes into shares of Class A of the Portfolios;
NOW, THEREFORE, the Trustees hereby amend the Agreement as follows:
1. Capitalized terms not specifically defined in this Amendment shall have the meanings ascribed to them in the Agreement.
2. Schedule A of the Agreement is hereby deleted in its entirety and a new Schedule A to the Agreement is substituted to read in its entirety as follows:
"SCHEDULE A
AIM Investment Funds shall be divided into the following Portfolios, each of which shall have three Classes (Class A, Class B and Class C):
AIM Developing Markets Fund AIM Global Growth & Income Fund AIM Latin American Growth Fund AIM Global Consumer Products and Services Fund AIM Global Financial Services Fund AIM Global Health Care Fund AIM Global Infrastructure Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund AIM Global Government Income Fund AIM Emerging Markets Debt Fund AIM Strategic Income Fund
Dated: February 11th, 2000"
3. Except for the above change in Schedule A to the Agreement, the Agreement shall in all other respects remain in full force and effect.
4. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust, have executed this Fifth Amendment to Agreement and Declaration of Trust of AIM Investment Funds as of the day and year first above written.
/s/ C. DEREK ANDERSON /s/ ROBERT H. GRAHAM -------------------------- ------------------------- C. Derek Anderson, Trustee Robert H. Graham, Trustee /s/ FRANK S. BAYLEY /s/ RUTH H. QUIGLEY ------------------------ ------------------------ Frank S. Bayley, Trustee Ruth H. Quigley, Trustee |
[THIS IS THE SIGNATURE PAGE FOR
THE FIFTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT FUNDS]
EXHIBIT (a)(1)(g)
AMENDMENT NO. 6
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT FUNDS
This Amendment No. 6 to the Agreement and Declaration of Trust of AIM Investment Funds (this "Amendment") amends, effective as of May 24, 2000, the Agreement and Declaration of Trust of AIM Investment Funds dated as of May 7, 1998, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a majority of the Trustees of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Unless defined herein, each capitalized term used in this Amendment shall have the meaning given it in the Agreement.
2. A new Section 1.2(g) is hereby added to the Agreement to read in full as follows:
"(g) 'fund complex' has the meaning specified in Regulation 14A under the Securities Exchange Act of 1934, as amended from time to time;"
With the addition of new Section 1.2(g) above, existing Sections 1.2(g) through 1.2(o) are hereby renumbered as Sections 1.2(h) through 1.2(p), respectively.
3. The first sentence of Section 4.3 is hereby amended and restated in its entirety to read as follows:
"The Trustees shall act by majority vote of those present at a meeting duly called (including a meeting by telephonic or other electronic means, unless the 1940 Act requires that a particular action be taken only at a meeting of the Trustees in person) at which a quorum is present, or by written consent of at least seventy-five percent (75%) of the Trustees without a meeting, provided that the writing or writings are filed with the minutes of proceedings of the Board of Trustees."
4. A new Section 4.7 is hereby added to the Agreement to read in its entirety as follows:
"Section 4.7. Independent or Disinterested Trustee. A Trustee who is not an interested person of the Trust shall be deemed to be independent and disinterested under the Delaware Act and other applicable Delaware law when making any determinations or taking any action as a Trustee. Service by a person as a trustee
or a director of one or more trusts, corporations or other entities of a fund complex shall not be considered in determining whether a trustee is independent or disinterested under the Delaware Act and other applicable Delaware law."
5. All references in the Agreement to "this Agreement" shall mean the Agreement (including all prior amendments thereto) as amended by this Amendment.
6. Except as specifically amended by this Amendment, the Agreement (including all prior amendments thereto) is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned Trustees of the Trust have executed this Amendment as of May 24, 2000.
/s/ C. DEREK ANDERSON /s/ FRANK S. BAYLEY -------------------------- ------------------------- C. Derek Anderson, Trustee Frank S. Bayley, Trustee /s/ ROBERT H. GRAHAM /s/ RUTH H. QUIGLEY ------------------------- ------------------------- Robert H. Graham, Trustee Ruth H. Quigley, Trustee |
EXHIBIT (a)(1)(h)
AMENDMENT NO. 7
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT FUNDS
This Amendment No. 7 to the Agreement and Declaration of Trust of AIM Investment Funds (this "Amendment") amends, effective as of June 12, 2000, the Agreement and Declaration of Trust of AIM Investment Funds, a Delaware business trust (the "Trust"), dated as of May 7, 1998, as amended (the "Agreement").
WHEREAS, the Trustees of the Trust and the Shareholders of AIM Global Growth & Income Fund and AIM Global Government Income Fund have approved the Agreement and Plan of Reorganization, dated as of March 22, 2000, adopted by the Trust on behalf of AIM Global Growth & Income Fund and AIM Global Government Income Fund, pursuant to which AIM Global Growth & Income Fund and AIM Global Government Income Fund would be reorganized into AIM Global Growth Fund and AIM Global Income Fund, respectively, portfolios of AIM International Funds, Inc. (the "Reorganization"); and
WHEREAS, the Reorganization was consummated on June 12, 2000, at 8:00
a.m. Eastern Time; and
WHEREAS, the Trustees of the Trust have directed that promptly following the Reorganization, the Trust shall terminate AIM Global Growth & Income Fund and AIM Global Government Income Fund in accordance with Delaware law;
NOW, THEREFORE, the Trustees hereby amend the Agreement as follows:
1. Capitalized terms not specifically defined in this Amendment shall have the meanings ascribed to them in the Agreement.
2. Schedule A to the Agreement is hereby deleted in its entirety and a new Schedule A to the Agreement is substituted to read in its entirety as follows:
"SCHEDULE A
AIM Investment Funds shall be divided into the following Portfolios, each of which shall have three Classes (Class A, Class B and Class C):
AIM Developing Markets Fund AIM Latin American Growth Fund AIM Global Consumer Products and Services Fund AIM Global Financial Services Fund AIM Global Health Care Fund AIM Global Infrastructure Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund
AIM Emerging Markets Debt Fund AIM Strategic Income Fund
Date: June 12, 2000"
3. Except as specifically amended by this Amendment, the Agreement (including all prior amendments thereto) is hereby confirmed and remains in full force and effect.
4. All references in the Agreement to "this Agreement" shall mean the Agreement (including all prior amendments thereto) as amended by this Amendment.
5. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned Trustees of the Trust have executed this Amendment as of June 12, 2000.
/s/ C. DEREK ANDERSON /s/ ROBERT H. GRAHAM -------------------------- ------------------------- C. Derek Anderson, Trustee Robert H. Graham, Trustee /s/ FRANK S. BAYLEY /s/ RUTH H. QUIGLEY ------------------------ ------------------------ Frank S. Bayley, Trustee Ruth H. Quigley, Trustee |
[THIS IS THE SIGNATURE PAGE FOR
AMENDMENT NO. 7 TO AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT FUNDS]
EXHIBIT (a)(1)(i)
AMENDMENT NO. 8
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT FUNDS
This Amendment No. 8 to the Agreement and Declaration of Trust of AIM Investment Funds (this "Amendment") amends, effective as of June 19, 2000, the Agreement and Declaration of Trust of AIM Investment Funds, a Delaware business trust (the "Trust"), dated as of May 7, 1998, as amended (the "Agreement").
WHEREAS, the Trustees of the Trust and the Shareholders of AIM Emerging Markets Debt Fund have approved the Plan of Reorganization and Termination, dated as of March 22, 2000, adopted by the Trust on behalf of AIM Emerging Markets Debt Fund and AIM Developing Markets Fund, pursuant to which AIM Emerging Markets Debt Fund would be reorganized into AIM Developing Markets Fund, (the "Reorganization"); and
WHEREAS, the Reorganization was consummated on June 19, 2000, at 8:00
a.m. Eastern Time; and
WHEREAS, the Trustees of the Trust have directed that promptly following the Reorganization, the Trust shall terminate AIM Emerging Markets Debt Fund in accordance with Delaware law;
NOW, THEREFORE, the Trustees hereby amend the Agreement as follows:
1. Capitalized terms not specifically defined in this Amendment shall have the meanings ascribed to them in the Agreement.
2. Schedule A to the Agreement is hereby deleted in its entirety and a new Schedule A to the Agreement is substituted to read in its entirety as follows:
"SCHEDULE A
AIM Investment Funds shall be divided into the following Portfolios, each of which shall have three Classes (Class A, Class B and Class C):
AIM Developing Markets Fund AIM Latin American Growth Fund AIM Global Consumer Products and Services Fund AIM Global Financial Services Fund AIM Global Health Care Fund AIM Global Infrastructure Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund AIM Strategic Income Fund
Date: June 19, 2000"
3. Except as specifically amended by this Amendment, the Agreement (including all prior amendments thereto) is hereby confirmed and remains in full force and effect.
4. All references in the Agreement to "this Agreement" shall mean the Agreement (including all prior amendments thereto) as amended by this Amendment.
5. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned Trustees of the Trust have executed this Amendment as of June 19, 2000.
/s/ C. DEREK ANDERSON /s/ ROBERT H. GRAHAM -------------------------- ------------------------- C. Derek Anderson, Trustee Robert H. Graham, Trustee /s/ FRANK S. BAYLEY /s/ RUTH H. QUIGLEY ------------------------ ------------------------ Frank S. Bayley, Trustee Ruth H. Quigley, Trustee |
[THIS IS THE SIGNATURE PAGE FOR
AMENDMENT NO. 8 TO AGREEMENT AND DECLARATION OF TRUST
OF AIM INVESTMENT FUNDS]
EXHIBIT (a)(1)(j)
AMENDMENT NO. 9
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INVESTMENT FUNDS
This Amendment No. 9 to the Agreement and Declaration of Trust of AIM Investment Funds (this "Amendment") amends, effective as of December 5, 2000, the Agreement and Declaration of Trust of AIM Investment Funds, a Delaware business trust (the "Trust"), dated as of May 7, 1998, as amended (the "Agreement").
Under Section 9.7 of the Agreement, the Amendment may be executed by a majority of the Trustees of the Trust.
NOW, THEREFORE, the Trustees hereby amend the Agreement as follows:
1. Unless defined herein, each capitalized term used in this Agreement shall have the meaning given it in the Agreement.
2. Sections 2.3, 2.3.1 and 2.3.2 of the Agreement are hereby deleted and replaced with the following sections 2.3, 2.4, 2.5 and 2.6:
"Section 2.3. Establishment of Portfolios and Classes.
(a) The Trust shall consist of one or more separate and distinct
Portfolios, each with an unlimited number of Shares unless
otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto
and made a part hereof ("Schedule A"). Each additional
Portfolio shall be established by the adoption of a resolution
by the Trustees. Each such resolution is hereby incorporated
herein by this reference and made a part of the Trust's
Governing Instrument whether or not expressly stated in such
resolution, and shall be effective upon the occurrence of both
(i) the date stated therein (or, if no such date is stated,
upon the date of such adoption) and (ii) the execution of an
amendment either to this Agreement or to Schedule A hereto
establishing and designating such additional Portfolio or
Portfolios. The Shares of each Portfolio shall have the
relative rights and preferences provided for herein and such
rights and preferences as may be designated by the Trustees in
any amendment or modification to the Trust's Governing
Instrument. The Trust shall maintain separate and distinct
records of each Portfolio and shall hold and account for the
assets belonging thereto separately from the other Trust
Property and the assets belonging to any other Portfolio. Each
Share of a Portfolio shall represent an equal beneficial
interest in the net assets belonging to that Portfolio, except
to the extent of Class Expenses and other expenses separately
allocated to Classes thereof (if any Classes have been
established) as permitted herein.
(b) The Trustees may establish one or more Classes of Shares of
any Portfolio, each with an unlimited number of Shares unless
otherwise specified. Each Class so established and designated
shall represent a Proportionate Interest (as defined in
Section 2.5(d)) in the net assets belonging to that Portfolio
and shall have identical voting, dividend, liquidation, and
other rights and be subject to the same terms and conditions,
except that (1) Class Expenses allocated to a Class for which
such expenses were incurred shall be borne solely by that
Class, (2) other expenses, costs, charges, and reserves
allocated to a Class in accordance with Section 2.5(e) may be
borne solely by that Class, (3) dividends declared and payable
to a Class pursuant to Section 7.1 shall reflect the items
separately
|
allocated thereto pursuant to the preceding clauses, (4) each
Class may have separate rights to convert to another Class,
exchange rights, and similar rights, each as determined by the
Trustees, and (5) subject to Section 2.6(c), each Class may
have exclusive voting rights with respect to matters affecting
only that Class. The Trustees hereby establish for each
Portfolio listed on Schedule A the Classes listed thereon.
Each additional Class for any or all Portfolios shall be
established by the adoption of a resolution by the Trustees,
each of which is hereby incorporated herein by this reference
and made a Governing Instrument whether or not expressly
stated in such resolution, and shall be effective upon the
occurrence of both (i) the date stated therein (or, if no such
date is stated, upon the date of such adoption) and (ii) the
execution of an amendment to this Agreement establishing and
designating such additional Class or Classes.
|
Section 2.4. Actions Affecting Portfolios and Classes. Subject to the right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees shall have full power and authority, in their sole discretion without obtaining any prior authorization or vote of the Shareholders of any Portfolio, or Class thereof, to establish and designate and to change in any manner any Portfolio of Shares, or any Class or Classes thereof; to fix or change such preferences, voting powers, rights, and privileges of any Portfolio, or Classes thereof, as the Trustees may from time to time determine, including any change that may adversely affect a Shareholder, to divide or combine the Shares of any Portfolio, or Classes thereof, into a greater or lesser number; to classify or reclassify or convert any issued Shares of any Portfolio, or Classes thereof, into one or more Portfolios or Classes of Shares of a Portfolio; and to take such other action with respect to the Shares as the Trustees may deem desirable. A Portfolio and any Class thereof may issue any number of Shares but need not issue any Shares. At any time that there are no Outstanding Shares of any particular Portfolio or Class previously established and designated, the Trustees may abolish that Portfolio or Class and the establishment and designation thereof.
Section 2.5. Relative Rights and Preferences. Unless the establishing resolution or any other resolution adopted pursuant to Section 2.3 otherwise provides, Shares of each Portfolio or Class thereof established hereunder shall have the following relative rights and preferences:
(a) Except as set forth in paragraph (e) of this Section 2.5, each Share of a Portfolio, regardless of Class, shall represent an equal pro rata interest in the assets belonging to such Portfolio and shall have identical voting, dividend, liquidation and other rights, preferences, powers, restrictions, limitations, qualifications and designations and terms and conditions with each other Share of such Portfolio.
(b) Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees, whether of the same or other Portfolio (or Class).
(c) All consideration received by the Trust for the issue or sale of Shares of a particular Portfolio, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange, or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Portfolio and may be referred to herein as "assets belonging to" that Portfolio. The assets belonging to a particular Portfolio shall belong to that Portfolio for all purposes, and to no other Portfolio, subject only to the rights of creditors of that Portfolio. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Portfolio shall be allocated by the Trustees between and among
one or more of the Portfolios in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios thereof for all purposes, and such assets, income, earnings, profits, or funds, or payments and proceeds with respect thereto shall be assets belonging to that Portfolio.
(d) Each Class of a Portfolio shall have a proportionate undivided interest (as determined by or at the direction of, or pursuant to authority granted by, the Trustees, consistent with industry practice) ("Proportionate Interest") in the net assets belonging to that Portfolio. References herein to assets, expenses, charges, costs, and reserves "allocable" or "allocated" to a particular Class of a Portfolio shall mean the aggregate amount of such items(s) of the Portfolio multiplied by the Class's Proportionate Interest.
(e) A particular Portfolio shall be charged with the liabilities of that Portfolio, and all expenses, costs, charges and reserves attributable to any particular Portfolio shall be borne by such Portfolio; provided that the Trustees may, in their sole discretion, allocate or authorize the allocation of particular expenses, costs, charges, and/or reserves of a Portfolio to fewer than all the Classes thereof. Class Expenses shall, in all cases, be allocated to the Class for which such Class Expenses were incurred. Any general liabilities, expenses, costs, charges or reserves of the Trust (or any Portfolio) that are not readily identifiable as chargeable to or bearable by any particular Portfolio (or any particular Class) shall be allocated and charged by the Trustees between or among any one or more of the Portfolios (or Classes) in such manner as the Trustees in their sole discretion deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios (or Classes) for all purposes. Without limitation of the foregoing provisions of this Section 2.5(e), (i) the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Portfolio shall be enforceable against the assets of such Portfolio only, and not against the assets of the Trust generally or assets belonging to any other Portfolio, and (ii) none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally that have not been allocated to a specified Portfolio, or with respect to any other Portfolio, shall be enforceable against the assets of such specified Portfolio. Notice of this contractual limitation on inter-Portfolio liabilities shall be set forth in the Trust's Certificate of Trust described to Section 1.4, and upon the giving of such notice in the Certificate of Trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on inter-Portfolio liabilities (and the statutory effect under Section 3804 of setting forth such notice in the Certificate of Trust) shall become applicable to the Trust and each Portfolio.
All references to Shares in this Agreement shall be deemed to be shares of any or all Portfolios, or Classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Portfolio of the Trust, and each Class thereof, except as the context otherwise requires.
Section 2.6. Additional Rights and Preferences of Class B Shares. In addition to the relative rights and preferences set forth in Section 2.5 and all other provisions of this Agreement relating to Shares of the Trust generally, any Class of any Portfolio designated as Class B Shares shall have the following rights and preferences:
(a) Subject to provisions of paragraph (c) below, all Class B Shares other than those purchased through the reinvestment of dividends and distributions shall automatically convert to Class A Shares at the end of the month which is eight
(8) years after the date on which a Shareholder's order to purchase such shares was accepted.
(b) Subject to the provisions of paragraph (c) below, Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares will be considered held in a separate sub-account, and will automatically convert to Class A Shares in the same proportion as any Class B Shares (other than those in the sub-account) convert to Class A Shares. Other than this conversion feature, the Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares shall have all the rights and preferences, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of Class B Shares generally.
(c) If a Portfolio of the Trust implements any amendment to a Plan of Distribution adopted under Rule 12b-1 promulgated under the 1940 Act (or adopts or implements a non-Rule 12b-1 shareholder services plan that the Trustees have caused to be submitted to the Shareholders for their approval) that the Trustees determine would materially increase the charges that may be borne by the Class A Shareholders under such plan, the Class B Shares will stop converting to the Class A Shares unless the Class B Shares, voting separately, approve the amendment or adoption. The Trustees shall have sole discretion in determining whether such amendment or adoption is submitted to a vote of the Class B Shareholders. Should such amendment or adoption not be submitted to a vote of the Class B Shareholders or, if submitted, should the Class B Shareholders fail to approve such amendment or adoption, the Trustees shall take such action as is necessary to: (1) create a new class (the "New Class A Shares") which shall be identical in all material respects to the Class A Shares as they existed prior to the implementation of the amendment or adoption; and (2) ensure that the existing Class B Shares will be exchanged or converted into New Class A Shares no later than the date such Class B Shares were scheduled to convert to Class A Shares. If deemed advisable by the Trustees to implement the foregoing, and at the sole discretion of the Trustees, such action may include the exchange of all Class B Shares for a new class (the "New Class B Shares"), identical in all material respects to the Class B Shares except that the New Class B shares will automatically convert into the New Class A Shares. Such exchanges or conversions shall be effected in a manner that the Trustees reasonably believe will not be subject to federal taxation."
3. Existing sections 2.4, 2.5 and 2.6 are hereby renumbered 2.7, 2.8, and 2.9, respectively.
4. Section 6.1(7) is hereby amended by deleting the words "with and", so that it reads as follows:
"(7) the merger or consolidation of the Trust or any Portfolio into another Company or a series or portfolio thereof, unless..."
5. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by the Amendment.
6. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
7. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned Trustees of the Trust have executed this Amendment as of December 5, 2000.
/s/ C. DEREK ANDERSON /s/ ROBERT H. GRAHAM -------------------------- ------------------------- C. Derek Anderson, Trustee Robert H. Graham, Trustee /s/ FRANK S. BAYLEY /s/ RUTH H. QUIGLEY ------------------------ ------------------------ Frank S. Bayley, Trustee Ruth H. Quigley, Trustee |
EXHIBIT (d)(4)
AIM INVESTMENT FUNDS
SECOND AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M ADVISORS, INC.
Contract made as of June 12, 2000, between AIM Investment Funds, a Delaware business trust ("Company"), and A I M Advisors, Inc., a Delaware corporation (the "Adviser").
WHEREAS the Company is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company, and has offered for public sale shares of AIM Developing Markets Fund, AIM Global Government Income Fund, AIM Global Growth & Income Fund, AIM Global Health Care Fund, AIM Global Telecommunications and Technology Fund, AIM Latin American Growth Fund, and AIM Strategic Income Fund, each being a series of the Company's shares of beneficial interest; and
WHEREAS the Company hereafter may establish additional series of its shares (any such additional series, together with the series named in the paragraph immediately preceding, are collectively referred to herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company has retained Adviser as investment manager and administrator to furnish certain investment advisory, portfolio management and administration services to the Company and the Funds, and the Company and Adviser entered into an Investment Management and Administration Contract dated September 8, 1998 with the respect to the Funds ("Advisory Agreement"); and
WHEREAS the Company and the Adviser desire to amend and restate the Advisory Agreement in order to remove AIM Global Government Income Fund and AIM Global Growth & Income Fund as of June 12, 2000;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Adviser as investment manager and administrator of each Fund for the period and on the terms set forth in this Contract. Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Company's Board of Trustees ("Board"), Adviser will provide a continuous investment program for each Fund, including investment research and management with respect to all securities and investments and cash equivalents of the Fund. Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by each Fund, and the brokers and dealers through whom trades will be executed.
(b) Adviser agrees that in placing orders with brokers and dealers it will attempt to obtain the best net results in terms of price and execution. Consistent with this obligation Adviser may, in its discretion, purchase and sell portfolio securities to and from brokers and dealers who sell shares of the Funds or provide the Funds or Adviser's other clients with research, analysis, advice and similar services. Adviser may pay to brokers and dealers, in return for research and analysis, a higher commission or spread than may be charged by other brokers and dealers, subject to Adviser's determining in good faith that such commission or spread is reasonable in terms either of the particular transaction or of the overall responsibility of Adviser to the Funds and its other clients and that the total commissions or spreads paid by each Fund will be reasonable in relation to the benefits to the Fund over the long term. In no instance will portfolio securities be purchased from or sold to Adviser or any affiliated person thereof except in accordance with the federal securities laws and the rules and regulations thereunder and any exemptive orders currently in effect. Whenever Adviser simultaneously places orders to purchase or sell the same security on behalf of a Fund and one or more other accounts advised by Adviser, such orders will be allocated as to price and amount among all such accounts in a manner believed to be equitable to each account. The Company recognizes that in some cases this procedure may adversely affect the results obtained for each Fund.
(c) Adviser will oversee the maintenance of all books and records with respect to the securities transactions of the Funds, and will furnish the Board with such periodic and special reports as the Board reasonably may request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser hereby agrees that all records which it maintains for the Company are the property of the Company, agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for the Company and which are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Company any records which it maintains for the Company upon request by the Company.
3. Duties as Administrator. Adviser will administer the affairs of each Fund subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund, including the oversight of transfer agency and custodial services, except as hereinafter set forth; provided, however, that nothing herein contained shall be deemed to relieve or deprive the Board of its responsibility for control of the conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the Funds with such corporate, administrative and clerical personnel (including officers of the Company) and services as are reasonably deemed necessary or advisable by the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation, updating, filing and dissemination (as applicable) of each Fund's prospectus, statement of additional information, proxy material, tax returns and required reports with or to the Fund's shareholders, the Securities and Exchange Commission and other appropriate federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for them, adequate office space and all necessary office equipment and services, including telephone service, heat, utilities, stationery supplies and similar items.
4. Further Duties. In all matters relating to the performance of this Contract, Adviser will act in conformity with the Agreement and Declaration of Trust, By-Laws and Registration Statement of the Company and with the instructions and directions of the Board and will comply with the requirements of the 1940 Act, the rules thereunder, and all other applicable federal and state laws and regulations.
5. Delegation of Adviser's Duties as Investment Manager and Administrator. With respect to one or more of the Funds, Adviser may enter into one or more contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or sub-administrator in which Adviser delegates to such sub-adviser or sub-administrator the performance of any or all of the services specified in Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and Sub-Administration Contract imposes on the sub-adviser or sub-administrator bound thereby all the duties and conditions to which Adviser is subject with respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940 Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory or Sub-Administration Contract unless it is approved by the Board prior to implementation.
6. Services Not Exclusive. The services furnished by Adviser hereunder are not to be deemed exclusive and Adviser shall be free to furnish similar services to others so long as its services under this Contract are not impaired thereby. Nothing in this Contract shall limit or restrict the right of any director, officer or employee of Adviser, who may also be a Trustee, officer or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses, not specifically assumed by Adviser, incurred in its operations and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
filing reports and other documents with governmental and regulatory agencies;
(vi) filing fees and expenses relating to the registration and qualification of
the Fund's shares and the Company under federal and/or state securities laws and
maintaining such registrations and qualifications; (vii) costs incurred in
connection with the issuance, sale or repurchase of the Fund's shares of common
stock; (viii) fees and salaries payable to the Company's Trustees who are not
parties to this Contract or interested persons of any such party ("Independent
Trustees"); (ix) all expenses incurred in connection with the Independent
Trustees' services, including travel expenses; (x) taxes (including any income
or franchise taxes) and governmental fees; (xi) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (xii) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Company or the Fund for violation of any law;
(xiii) interest charges; (xiv) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Trustees; (xv)
charges of custodians, transfer agents, pricing agents and other agents; (xvi)
expenses of disbursing dividends and distributions; (xvii) costs of preparing
share certificates; (xviii) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, statements of additional information and
supplements thereto, reports, notices and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds shall be allocated among each Fund on a basis deemed fair and equitable by Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services provided to the Company received by the officers of the Company and by the Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or any Fund that Adviser is not required by this Contract to pay or assume shall not obligate Adviser to pay or assume the same or any similar expense of the Company or any Fund on any subsequent occasion.
8. Compensation.
(a) For the services provided to a Fund under this Contract, the Company shall pay the Adviser an annual fee, payable monthly, based upon the average daily net assets of such Fund as forth in Appendix A attached hereto. Such compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter may be established will pay to Adviser a fee in an amount to be agreed upon in a written Appendix to this Contract executed by the Company on behalf of such Fund and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Adviser and Indemnification. Adviser shall not be liable and each Fund shall indemnify Adviser and its trustees, officers and employees, for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by the Fund or the Company in connection with the matters to which this Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Adviser in the performance by Adviser of its duties or from reckless disregard by Adviser of its obligations and duties under this Contract. Any person, even though also an officer, partner, employee, or agent of Adviser, who may be or become an officer, Trustee, employee or agent of the Company shall be deemed, when rendering services to a Fund or the Company or acting with respect to any business of a Fund or the Company, to be rendering such service to or acting solely for the Fund or the Company and not as an officer, partner, employee, or agent or one under the control or direction of Adviser even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written, provided that this Contract shall not take effect with respect to any Fund unless it has first been approved (i) by a vote of a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by vote of a majority of that Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall continue in effect for two years from the above written date. Thereafter, if not terminated, with respect to each Fund this Contract shall continue automatically for successive periods not to exceed twelve months each, provided that such continuance is specifically approved at least annually (i) by a vote of a majority of the Independent Trustees cast in person at a meeting called for the purpose of voting on such approval, and (ii) by the Board or by vote of a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract may be terminated at any time, without the payment of any penalty, by vote of the Board or by a vote of a majority of the outstanding voting securities of the Fund on sixty days' written notice to Adviser or by Adviser at any time, without the payment of any penalty, on sixty days' written notice to the Company. Termination of this Contract with respect to one Fund shall not affect the continued effectiveness of this Contract with respect to any other Fund. This Contract will automatically terminate in the event of its assignment.
11. Amendment of this Contract. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Contract shall be effective until approved by vote of a majority of the Fund's outstanding voting securities, when required by the 1940 Act.
12. Governing Law. This Contract shall be construed in accordance with the laws of the State of Delaware (without regard to Delaware conflict or choice of law provisions) and the 1940 Act. To the extent that the applicable laws of the State of Delaware conflict with the applicable provisions of the 1940 Act, the latter shall control.
13. License Agreement. The Company shall have the non-exclusive right to use the name "AIM" to designate any current or future series of shares only so long as A I M Advisors, Inc. serves as investment manager or adviser to the Company with respect to such series of shares.
14. Miscellaneous. The captions in this Contract are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Contract shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Contract shall not be affected thereby. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. As used in this Contract, the terms "majority of the outstanding voting securities," "interested person," "assignment," "broker," "dealer," "investment adviser," "national securities exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have the same meaning as such terms have in the 1940 Act, subject to such exemption as may be granted by the Securities and
Exchange Commission by any rule, regulation or order. Where the effect of a requirement of the 1940 Act reflected in any provision of this Contract is made less restrictive by a rule, regulation or order of the Securities and Exchange Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated as of the day and year first above written.
Attest: /s/ KATHLEEN J. PFLUEGER AIM INVESTMENT FUNDS
-----------------------------
By: /s/ CAROL F. RELIHAN
---------------------------
Name: Carol F. Relihan
Title: Vice President
Attest: /s/ KATHLEEN J. PFLUEGER A I M ADVISORS, INC.
-----------------------------
By: /s/ CAROL F. RELIHAN
---------------------------
Name: Carol F. Relihan
Title: Senior Vice President
|
APPENDIX A
TO
SECOND AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
AIM INVESTMENT FUNDS
The Company shall pay the Adviser, out of the assets of a Fund, as full compensation for all services rendered and all facilities furnished hereunder, a management fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM DEVELOPING MARKETS FUND
AIM GLOBAL HEALTH CARE FUND
AIM GLOBAL TELECOMMUNICATIONS AND TECHNOLOGY FUND
AIM LATIN AMERICAN GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 500 million.............................................. 0.975% Next $ 500 million............................................... 0.95% Next $ 500 million............................................... 0.925% On amounts thereafter............................................ 0.90% |
AIM STRATEGIC INCOME FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $ 500 million.............................................. 0.725% Next $ 1 billion................................................. 0.70% Next $ 1 billion................................................. 0.675% On amounts thereafter............................................ 0.65% |
EXHIBIT (d)(7)
AMENDED AND RESTATED
ADMINISTRATION CONTRACT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M ADVISORS, INC.
Contract made as of September 11, 2000, between AIM Investment Funds, a Delaware business trust ("Company"), and A I M Advisors, Inc., a Delaware corporation (the "Administrator").
WHEREAS the Company is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company, and offers for public sale shares of AIM Global Consumer Products and Services Fund, AIM Global Financial Services Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund and AIM Emerging Markets Debt Fund (formerly known as AIM Global High Income Fund), each being a series of the Company's shares of common stock;
WHEREAS the Company hereafter may establish additional series of its shares of common stock that invest substantially all of their assets in another investment company (any such additional series, together with the series named in the paragraph immediately preceding, are collectively referred to herein as the "Funds," and singly may be referred to as a "Fund");
WHEREAS the Company desired to retain Administrator as administrator to furnish certain administration services to the Company and the Funds, and the Company and Administrator entered into an Administration Contract dated September 8, 1998, with respect to the Funds; and
WHEREAS the Company and the Administrator desire to amend and restate the Administration Contract in order to remove AIM Emerging Markets Debt Fund as of June 19, 2000 and AIM Global Financial Services Fund and AIM Global Infrastructure Fund as of September 11, 2000;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Administrator as administrator of each Fund for the period and on the terms set forth in this Contract. Administrator accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
2. Duties as Administrator. Administrator will administer the affairs of each Fund subject to the supervision of the Company's Board of Trustees ("Board") and the following understandings:
(a) Administrator will supervise all aspects of the operations of each Fund, including the oversight of transfer agency and custodial services, except as hereinafter set forth; provided, however, that nothing herein contained shall be deemed to relieve or deprive the Board of its responsibility for control of the conduct of the affairs of the Funds.
(b) At Administrator's expense, Administrator will provide the Company and the Funds with such corporate, administrative and clerical personnel (including officers of the Company) and services as are reasonably deemed necessary or advisable by the Board.
(c) Administrator will arrange, but not pay, for the periodic preparation, updating, filing and dissemination (as applicable) of each Fund's prospectus, statement of additional information, proxy material, tax returns and required reports with or to the Fund's shareholders, the Securities and Exchange Commission and other appropriate federal or state regulatory authorities.
(d) Administrator will provide the Company and the Funds with, or obtain for them, adequate office space and all necessary office equipment and services, including telephone service, heat, utilities, stationery supplies and similar items.
3. Further Duties. In all matters relating to the performance of this Contract, Administrator will act in conformity with the Articles of Incorporation, By-Laws and Registration Statement of the Company and with the instructions and directions of the Board and will comply with the requirements of the 1940 Act, the rules thereunder, and all other applicable federal and state laws and regulations.
4. Delegation of Administrator's Duties as Administrator. With respect to one or more of the Funds, Administrator may enter into one or more contracts (each a "Sub-Administration Contract") with a sub-administrator pursuant to which Administrator delegates to such sub-administrator the performance of any or all of the services specified in Paragraph 2 of this Contract, provided that: (i) each Sub-Administration Contract imposes on the sub-administrator bound thereby all the duties and conditions to which Administrator is subject with respect to the services under Paragraphs 2 and 3 of this Contract; (ii) each Sub-Administration Contract meets all requirements of the 1940 Act and rules thereunder, and (iii) Administrator shall not enter into a Sub-Administration Contract unless it is approved by the Board prior to implementation.
5. Services Not Exclusive. The services furnished by Administrator hereunder are not to be deemed exclusive and Administrator shall be free to furnish similar services to others so long as its services under this Contract are not impaired thereby. Nothing in this Contract shall limit or restrict the right of any director, officer or employee of Administrator, who may also be a Trustee, officer or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
6. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses, not specifically assumed by Administrator, incurred in its operations and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Administrator under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Company and the Fund; (v) expenses of
preparing filing reports and other documents with governmental and regulatory
agencies; (vi) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Company under federal and/or state
securities laws and maintaining such registrations and qualifications; (vii)
costs incurred in connection with the issuance, sale or repurchase of the Fund's
shares of common stock; (viii) fees and salaries payable to the Company's
Trustees who are not parties to this Contract or interested persons of any such
party ("Independent Trustees"); (ix) all expenses incurred in connection with
the Independent Trustees' services, including travel expenses; (x) taxes
(including any income or franchise taxes) and governmental fees; (xi) costs of
any liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Company or the Fund for
violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii) costs
of preparing share certificates; (xviii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports, notices and proxy materials for
existing shareholders; (xix) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Company is a party and the expenses the Company may incur as a result of its
legal obligation to provide indemnification to its officers, Trustees, employees
and agents) incurred by the Company or the Fund; (xx) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xxi) costs of mailing and tabulating proxies
and costs of meetings of shareholders, the Board and any committees thereof;
(xxii) the cost of investment company literature and other publications provided
by the Company to its Trustees and officers; and (xxiii) costs of mailing,
stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds shall be allocated among each Fund on a basis deemed fair and equitable by Administrator, subject to the Board's supervision.
(d) Administrator will assume the cost of any compensation for services provided to the Company received by the officers of the Company and by the Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Administrator of any expense of the Company or any Fund that Administrator is not required by this Contract to pay or assume shall not obligate Administrator to pay or assume the same or any similar expense of the Company or any Fund on any subsequent occasion.
7. Compensation.
(a) For the services -provided to a Fund under this Contract, the Company shall pay the Administrator an annual fee, payable monthly, based upon the average daily net assets of such Fund as forth in Appendix A attached hereto. Such compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter may be established will pay to Administrator a fee in an amount to be agreed upon in a written Appendix to this Contract executed by the Company on behalf of such Fund and by Administrator.
(c) The fee shall be computed daily and paid monthly to Administrator on or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.
8. Limitation of Liability of Administrator and Indemnification. Administrator shall not be liable and each Fund shall indemnify Administrator and its directors, officers and employees, for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by the Fund or the Company in connection with the matters to which this Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Administrator in the performance by Administrator of its duties or from reckless disregard by Administrator of its obligations and duties under this Contract. Any person, even though also an officer, partner, employee, or agent of Administrator, who may be or become an officer, Trustee, employee or agent of the Company shall be deemed, when rendering services to a Fund or the Company or acting with respect to any business of a Fund or the Company, to be rendering such service to or acting solely for the Fund or the Company and not as an officer, partner, employee, or agent or one under the control or direction of Administrator even though paid by it.
9. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written, provided that this Contract shall not take effect with respect to any Fund unless it has first been approved by a vote of a majority of the Company's Trustees.
(b) Unless sooner terminated as provided herein, this Contract shall continue in effect for two years from the above written date. Thereafter, if not terminated, with respect to each Fund this Contract shall continue automatically for successive periods not to exceed twelve months each, provided that such continuance is specifically approved at least annually by the Company's Board.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract may be terminated at any time, without the payment of any penalty, by vote of the Board or by a vote of a majority of the outstanding voting securities of the Fund on sixty days' written notice to Administrator or by Administrator at any time, without the payment of any penalty, on sixty days' written notice to the Company. Termination of this Contract with respect to one Fund shall not affect the continued effectiveness of this Contract with respect to any other Fund. This Contract will automatically terminate in the event of its assignment.
10. Amendment of this Contract. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.
11. Governing Law. This Contract shall be construed in accordance with the laws of the State of Delaware (without regard to Delaware conflict or choice of law provisions) and the 1940 Act. To the extent that the applicable laws of the State of Delaware conflict with the applicable provisions of the 1940 Act, the latter shall control.
12. Miscellaneous. The captions in this Contract are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. if any provision of this Contract shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Contract shall not be affected thereby. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. As used in this Contract, the terms "majority of the outstanding voting securities," "interested person," "assignment," "broker," "dealer," "investment adviser," "national securities exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have the same meaning as such terms have in the 1940 Act, subject to such exemption as may be granted by the Securities and Exchange Commission by any rule, regulation or order. Where the effect of a requirement of the 1940 Act reflected in any provision of this Contract is made less restrictive by a rule, regulation or order of the Securities and Exchange Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated as of the day and year first above written.
Attest: /s/ OFELIA M. MAYO AIM INVESTMENT FUNDS
------------------------------
Name: Ofelia M. Mayo
Title: Assistant Secretary By: /s/ ROBERT H. GRAHAM
------------------------------
Name: Robert H. Graham
Title: President
Attest: /s/ OFELIA M. MAYO A I M ADVISORS, INC.
------------------------------
Name: Ofelia M. Mayo
Title: Assistant Secretary By: /s/ ROBERT H. GRAHAM
------------------------------
Name: Robert H. Graham
Title: President
|
APPENDIX A
TO
AMENDED AND RESTATED
ADMINISTRATION CONTRACT
OF
AIM INVESTMENT FUNDS
The Company shall pay the Administrator, out of the assets of a Fund, as full compensation for all services rendered and all facilities furnished hereunder, an administration 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.
FUND ANNUAL RATE ---- ----------- AIM Global Consumer Products and Services Fund 0.25% AIM Global Resources Fund 0.25% |
EXHIBIT (d)(13)
GLOBAL INVESTMENT PORTFOLIO
SECOND AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
GLOBAL INVESTMENT PORTFOLIO
AND
A I M ADVISORS, INC.
Contract made as of September 11, 2000, between Global Investment Portfolio, a Delaware business trust ("Company), and A I M Advisors, Inc., a Delaware corporation (the "Adviser").
WHEREAS the Company is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company and has established the following subtrusts with each subtrust having its own assets and investment policies: Global Consumer Products and Services Portfolio, Global Financial Services Portfolio, Global Infrastructure Portfolio and Global Resources Portfolio (collectively, the "Funds" and singly a "Fund");
WHEREAS the Company desired to retain Adviser as investment manager and administrator to furnish certain investment advisory, portfolio management and administration services to the Company and the Funds, and the Company and Adviser entered into an Investment Management and Administration Contract dated May 29, 1998 with respect to the Funds ("Advisory Agreement"); and
WHEREAS the Company and the Adviser desire to amend and restate the Advisory Agreement to remove Global Financial Services Portfolio and Global Infrastructure Portfolio as of September 11, 2000;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Adviser as investment manager and administrator of each Fund for the period and on the terms set forth in this Contract. Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Company's Board of Trustees ("Board"), Adviser will provide a continuous investment program for each Fund, including investment research and management with respect to all securities and investments and cash equivalents of the Fund. Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by each Fund, and the brokers and dealers through whom trades will be executed.
(b) Adviser agrees that in placing orders with brokers and dealers it will attempt to obtain the best net results in terms of price and execution. Consistent with this obligation Adviser may, in its discretion, purchase and sell portfolio securities to and from brokers and dealers who sell shares of the Funds or provide the Funds or Adviser's other clients with research, analysis, advice and similar services. Adviser may pay to brokers and dealers, in return for research and analysis, a higher commission or spread than may be charged by other brokers and dealers, subject to Adviser's determining in good faith that such commission or spread is reasonable in terms either of the particular transaction or of the overall responsibility of Adviser to the Funds and its other clients and that the total commissions or spreads paid by each Fund will be reasonable in relation to the benefits to the Fund over the long term. In no instance will portfolio securities be purchased from or sold to Adviser or any affiliated person thereof except in accordance with the federal securities laws and the rules and regulations thereunder and any exemptive orders currently in effect. Whenever Adviser simultaneously places orders to purchase or sell the same security on behalf of a Fund and one or more other accounts advised by Adviser, such orders will be allocated as to price and amount among all such accounts in a manner believed to be equitable to each account. The Company recognizes that in some cases this procedure may adversely affect the results obtained for each Fund.
(c) Adviser will oversee the maintenance of all books and records with respect to the securities transactions of the Funds, and will furnish the Board with such periodic and special reports as the Board reasonably may request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser hereby agrees that all records which it maintains for the Company are the property of the Company, agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for the Company and which are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Company any records which it maintains for the Company upon request by the Company.
3. Duties as Administrator. Adviser will administer the affairs of each Fund subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund, including the oversight of transfer agency and custodial services, except as hereinafter set forth; provided, however, that nothing herein contained shall be deemed to relieve or deprive the Board of its responsibility for control of the conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the Funds with such corporate, administrative and clerical personnel (including officers of the Company) and services as are reasonably deemed necessary or advisable by the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation, updating, filing and dissemination (as applicable) of each Fund's proxy material, tax returns and
required reports with or to the Fund's shareholders, the Securities and Exchange Commission and other appropriate federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for them, adequate office space and all necessary office equipment and services, including telephone service, heat, utilities, stationery supplies and similar items.
4. Further Duties. In all matters relating to the performance of this Contract, Adviser will act in conformity with the Agreement and Declaration of Trust, By-Laws and Registration Statement of the Company and with the instructions and directions of the Board and will comply with the requirements of the 1940 Act, the rules thereunder, and all other applicable federal and state laws and regulations.
5. Delegation of Adviser's Duties as Investment Manager and Administrator. With respect to one or more of the Funds, Adviser may enter into one or more contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or sub-administrator in which Adviser delegates to such sub-adviser or sub-administrator the performance of any or all of the services specified in Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and Sub-Administration Contract imposes on the sub-adviser or sub-administrator bound thereby all the duties and conditions to which Adviser is subject with respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940 Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory or Sub-Administration Contract unless it is approved by the Board prior to implementation.
6. Services Not Exclusive. The services furnished by Adviser hereunder are not to be deemed exclusive and Adviser shall be free to furnish similar services to others so long as its services under this Contract are not impaired thereby. Nothing in this Contract shall limit or restrict the right of any director, officer or employee of Adviser, who may also be a Trustee, officer or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses, not specifically assumed by Adviser.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii)
expenses of setting in type, printing and mailing reports, notices and proxy
materials for existing shareholders; (xviii) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions, suits or
proceedings to which the Company is a party and the expenses the Company may
incur as a result of its legal obligation to provide indemnification to its
officers, Trustees, employees and agents) incurred by the Company or the Fund;
(xix) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (xx) costs of mailing and
tabulating proxies and costs of meetings of shareholders, the Board and any
committees thereof; (xxi) the cost of investment company literature and other
publications provided by the Company to its Trustees and officers; and (xxii)
costs of mailing, stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds shall be allocated among each Fund on a basis deemed fair and equitable by Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services provided to the Company received by the officers of the Company and by the Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or any Fund that Adviser is not required by this Contract to pay or assume shall not obligate Adviser to pay or assume the same or any similar expense of the Company or any Fund on any subsequent occasion.
8. Compensation.
(a) For the services provided to a Fund under this Contract, the Company shall pay the Adviser an annual fee, payable monthly, based upon the average daily net assets of such Fund as forth in Appendix A attached hereto. Such compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter may be established will pay to Adviser a fee in an amount to be agreed upon in a written Appendix to this Contract executed by the Company on behalf of such Fund and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Adviser and Indemnification. Adviser shall not be liable and each Fund shall indemnify Adviser and its directors, officers and employees, for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by the Fund or the Company in connection with the matters to which this Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Adviser in the performance by Adviser of its duties or from reckless disregard by Adviser of its obligations and duties under this Contract. Any person, even though also an officer, partner, employee, or agent of Adviser, who may be or become an officer, Trustee, employee or agent of the Company shall be deemed, when rendering services to a Fund or the Company or acting with respect to any business of a Fund or the Company, to be rendering such service to or acting solely for the Fund or the Company and not as an officer, partner, employee, or agent or one under the control or direction of Adviser even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written, provided that this Contract shall not take effect with respect to any Fund unless it has first been approved (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by vote of a majority of that Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall continue in effect for two years from the above written date. Thereafter, if not terminated, with respect to each Fund this Contract shall continue automatically for successive periods not to exceed twelve months each, provided that such continuance is specifically approved at least annually (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by the Board or by vote of a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract may be terminated at any time, without the payment of any penalty, by vote of the Board or by a vote of a majority of the outstanding voting securities of the Fund on sixty days' written notice to Adviser or by Adviser at any time, without the payment of any penalty, on sixty days' written notice to the Company. Termination of this Contract with respect to one Fund shall not affect the continued effectiveness of this Contract with respect to any other Fund. This Contract will automatically terminate in the event of its assignment.
11. Amendment of this Contract. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Contract shall be effective until approved by vote of a majority of the Fund's outstanding voting securities, when required by the 1940 Act.
12. Governing Law. This Contract shall be construed in accordance with the laws of the State of Delaware (without regard to Delaware conflict or choice of law provisions) and the 1940 Act. To the extent that the applicable laws of the State of Delaware conflict with the applicable provisions of the 1940 Act, the latter shall control.
13. License Agreement. The Company shall have the non-exclusive right to use the name "AIM" to designate any current or future series of shares only so long as A I M Advisors, Inc. serves as investment manager or adviser to the Company with respect to such series of shares.
14. Limitation of Shareholder Liability. It is expressly agreed that the obligations of the Company hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Company personally, but shall only bind the assets and property of the Funds, as provided in the Company's Agreement and Declaration of Trust. The execution and delivery of this Contract have been authorized by the Trustees of the Company and shareholders of the Funds, and this Contract has been executed and delivered by an authorized officer of the Company acting as such; neither such authorization by such Trustees and shareholders nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Company's Agreement and Declaration of Trust.
15. Miscellaneous. The captions in this Contract are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Contract shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Contract shall not be affected thereby. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. As used in this Contract, the terms "majority of the outstanding voting securities," "interested person," "assignment," "broker," "dealer," "investment adviser," "national securities exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have the same meaning as such terms have
in the 1940 Act, subject to such exemption as may be granted by the Securities and Exchange Commission by any rule, regulation or order. Where the effect of a requirement of the 1940 Act reflected in any provision of this Contract is made less restrictive by a rule, regulation or order of the Securities and Exchange Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated as of the day and year first above written.
Attest: GLOBAL INVESTMENT PORTFOLIO
By: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Name: Ofelia M. Mayo Name: Robert H. Graham
Title: Assistant Secretary Title: President
Attest: A I M ADVISORS, INC.
By: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Name: Ofelia M. Mayo Name: Robert H. Graham
Title: Assistant Secretary Title: President
|
APPENDIX A
TO
SECOND AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
GLOBAL INVESTMENT PORTFOLIO
The Company shall pay the Adviser, out of the assets of a Fund, as full compensation for all services rendered and all facilities furnished hereunder, a management fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO, GLOBAL RESOURCES PORTFOLIO
NET ASSETS ANNUAL RATE ---------- ----------- First $500 million............................................... .725% Next $500 million................................................ .70% Next $500 million................................................ .675% On amounts thereafter............................................ .65% |
EXHIBIT (d)(16)
AIM INVESTMENT FUNDS
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 11th day of September, 2000, by and between AIM Investment Funds, a Delaware business trust (the "Trust") with respect to its series of shares shown on the Appendix A attached hereto, as the same may be amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the "Advisor").
RECITALS
WHEREAS, the 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 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 in the Trust, and as of the date of this Agreement, the Board of Trustees has created 9 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 Appendix 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 directors 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 directors of the Trust, and that officers or directors 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 Trust trustees), 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 Funds
(a Delaware business trust)
Attest:
/s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM -------------------------- ------------------------- Assistant Secretary President (SEAL) Attest: A I M Advisors, Inc. /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM -------------------------- ------------------------- Assistant Secretary President |
(SEAL)
APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM Global Financial Services Fund September 11, 2000 AIM Global Infrastructure Fund September 11, 2000 |
APPENDIX 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 GLOBAL FINANCIAL SERVICES FUND AND
AIM GLOBAL INFRASTRUCTURE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $500 million .975% Next $500 million .95% Next $500 million .925% On amounts thereafter .90% |
EXHIBIT (d)(21)
AIM INVESTMENT FUNDS
SECOND AMENDED AND RESTATED
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
Contract made as of March 22, 2000, between A I M Advisors, Inc., a Delaware corporation ("Adviser"), and INVESCO Asset Management Limited, a company organized under the laws of England and Wales ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and Administration Contract with AIM Investment Funds ("Company"), an open-end management investment company registered under the Investment Company Act of 1940, as amended ("1940 Act"), with respect to AIM Developing Markets Fund, AIM Global Government Income Fund, AIM Global Growth & Income Fund, and AIM Latin American Growth Fund (each a "Fund" and collectively, the "Funds"), each Fund being a series of the Company's shares of beneficial interest; and
WHEREAS Adviser previously retained Sub-Adviser as investment sub-adviser in order to furnish certain advisory services to the Funds, and Adviser and Sub-Adviser entered into a Sub-Advisory Contract dated as of December 14, 1998, as amended and restated February 12, 1999, with respect to the Funds ("Sub-Advisory Contract"); and
WHEREAS Adviser and Sub-Adviser desire to amend and restate the Sub-Advisory Contract to remove AIM Global Government Income Fund and AIM Global Growth & Income Fund from the list of Funds;
NOW THEREFORE, in consideration of the promises and the mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser as sub-adviser of each Fund for the period and on the terms set forth in this Contract. Sub-Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of the Company's Board of Trustees ("Board") and Adviser, the Sub-Adviser will provide a continuous investment program for each Fund, including investment research and management, with respect to all securities and investments and cash equivalents of the Fund. The Sub-Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by each Fund, and the brokers and dealers through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers and dealers, it will attempt to obtain the best net result in terms of price and execution. Consistent with this obligation, the Sub-Adviser may, in its discretion, purchase and sell portfolio securities from and to brokers and dealers who sell shares of the Funds or provide the Funds, Adviser's other clients, or Sub-Adviser's other clients with research, analysis, advice and similar services. The Sub-Adviser may pay to brokers and dealers, in return for such research and analysis, a higher commission or spread than may be charged by other brokers and dealers, subject to the Sub-Adviser determining in good faith that such commission or spread is reasonable in terms either of the particular transaction or of the overall responsibility of the Adviser and the Sub-Adviser to the Funds and their other clients and that the total commissions or spreads paid by each Fund will be reasonable in relation to the benefits to the Fund over the long term. In no instance will portfolio securities be purchased from or sold to the Sub-Adviser, or any affiliated person thereof, except in accordance with the federal securities laws and the rules and regulations thereunder and any exemptive orders currently in effect. Whenever the Sub-Adviser simultaneously places orders to purchase or sell the same security on behalf of a Fund and one or more other accounts advised by the Sub-Adviser, such orders will be allocated as to price and amount among all such accounts in a manner believed to be equitable to each account.
(c) The Sub-Adviser will maintain all books and records with respect to the securities transactions of the Funds, and will furnish the Board and Adviser with such periodic and special reports as the Board or Adviser reasonably may request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for the Company are the property of the Company, agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for the Company and which are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Company any records which it maintains for the Company upon request by the Company.
3. Further Duties. In all matters relating to the performance of this Contract, Sub-Adviser will act in conformity with the Agreement and Declaration of Trust, By-Laws and Registration Statement of the Company and with the instructions and directions of the Board and will comply with the requirements of the 1940 Act, the rules thereunder, and all other applicable federal and state laws and regulations.
4. Services Not Exclusive. The services furnished by Sub-Adviser hereunder are not to be deemed exclusive and Sub-Adviser shall be free to furnish similar services to others so long as its services under this Contract are not impaired thereby. Nothing in this Contract shall limit or restrict the right of any director, officer or employee of Sub-Adviser, who may also be a Trustee, officer or employee of the Company, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
5. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses, not specifically assumed by Adviser and Sub-Adviser, incurred in its operations and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Adviser under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Company and the Fund; (v) expenses of
preparing and filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii) costs
of preparing share certificates; (xviii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information, reports, notices and proxy materials for existing shareholders;
(xix) any extraordinary expenses (including fees and disbursements of counsel,
costs of actions, suits or proceedings to which the Company is a party and the
expenses the Company may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, employees and agents) incurred by the
Company; (xx) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; (xxi) costs of
mailing and tabulating proxies and costs of meetings of shareholders, the Board
and any committees thereof; (xxii) the cost of investment company literature and
other publications provided by the Company to its Trustees and officers; and
(xxiii) costs of mailing, stationery and communications equipment.
(c) The payment or assumption by Sub-Adviser of any expense of the Company or any Fund that Sub-Adviser is not required by this Contract to pay or assume shall not obligate Sub-Adviser to pay or assume the same or any similar expense of the Company or any Fund on any subsequent occasion.
6. Compensation.
(a) For the services provided to a Fund under this Contract, Adviser will pay Sub-Adviser a fee, computed weekly and paid monthly, as set forth in Appendix A hereto.
(b) For the services provided under this Contract to each Fund as hereafter may be established, Adviser will pay to Sub-Adviser a fee in an amount to be agreed upon in a written Appendix to this Contract executed by Adviser and by Sub-Adviser.
(c) The fee shall be computed weekly and paid monthly to Sub-Adviser on or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.
7. Limitation of Liability of Sub-Adviser and Indemnification. Sub-Adviser shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by the Fund or the Company in connection with the matters to which this Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser in the performance by Sub-Adviser of its duties or from reckless disregard by Sub-Adviser of its obligations and duties under this Contract. Any person, even though also an officer, partner, employee, or agent of Sub-Adviser, who may be or become a Trustee, officer, employee or agent of the Company, shall be deemed, when rendering services to a Fund or the Company or acting with respect to any business of a Fund or the Company to be rendering such service to or acting solely for the Fund or the Company and not as an officer, partner, employee, or agent or one under the control or direction of Sub-Adviser even though paid by it.
8. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written, provided that this Contract shall not take effect with respect to any Fund unless it has first been approved (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by vote of a majority of that Fund's outstanding voting securities, when required by the 1940 Act.
(b) Unless sooner terminated as provided herein, this Contract shall continue in effect for two years from the above written date. Thereafter, if not terminated, with respect to each Fund, this Contract shall continue automatically for successive periods not to exceed twelve months each, provided that such continuance is specifically approved at least annually (i) by a vote of a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by the Board or by vote of a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract may be terminated at any time, without the payment of any penalty, by vote of the Board or by a vote of a majority of the outstanding voting securities of the Fund on sixty days' written notice to Sub-Adviser or by Sub-Adviser at any time, without the payment of any penalty, on sixty days' written notice to the Company. Termination of this Contract with respect to one Fund shall not affect the continued effectiveness of this Contract with respect to any other Fund. This Contract will automatically terminate in the event of its assignment.
9. Amendment. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Contract shall be effective until approved by vote of a majority of the Fund's outstanding voting securities, when required by the 1940 Act.
10. Governing Law. This Contract shall be construed in accordance with the laws of the State of Delaware (without regard to Delaware conflict or choice of law provisions) and the 1940 Act. To the extent that the applicable laws of the State of Delaware conflict with the applicable provisions of the 1940 Act, the latter shall control.
11. Miscellaneous. The captions in this Contract are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Contract shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Contract shall not be affected thereby. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. As used in this Contract, the terms "majority of the outstanding voting securities," "interested person," "assignment," "broker," "dealer," "investment adviser," "national securities exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have the same meaning as such terms have in the 1940 Act, subject to such exemption as may be granted by the Securities and Exchange Commission by any rule, regulation or order. Where the effect of a requirement of the 1940 Act reflected in any provision of this Contract is made less restrictive by a rule, regulation or order of the Securities and Exchange Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated as of the day and year first above written.
Attest: /s/ P. MICHELLE GRACE A I M ADVISORS, INC.
------------------------
By: /s/ ROBERT H. GRAHAM
----------------------------
Name: Robert H. Graham
Title: President
Attest: INVESCO ASSET MANAGEMENT LIMITED
------------------------
By: /s/ DALLAS J. MCGILLIVRAY
----------------------------
Name: Dallas J. McGillivray
Title: Director
By: /s/ MICHAEL S. PERMAN
----------------------------
Name: Michael S. Perman
Title: Company Secretary
|
APPENDIX A
TO
AIM INVESTMENT FUNDS
SECOND AMENDED AND RESTATED
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
AIM DEVELOPING MARKETS FUND AND
AIM LATIN AMERICAN GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $500 million............................................... 0.39% Next $500 million................................................ 0.38% Next $500 million................................................ 0.37% On amounts thereafter............................................ 0.36% |
EXHIBIT (e)(4)
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
(CLASS A SHARES AND CLASS C SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the 1st day of July, 2000, by and between AIM INVESTMENT FUNDS, a Delaware business trust (the "Company"), with respect to each of the Class A and Class C shares (the "Class A and C shares") of each series of shares of beneficial interest set forth on Appendix A to this Agreement (the "Portfolios") 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 and Class C Shares hereby appoints the Distributor as its exclusive agent for the sale of the Class A and Class C 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 and Class C 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 and Class C 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 and Class C 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 and Class C Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the Class A and Class C 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 and Class C 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 and Class C 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 and Class C Shares. The Company shall have the right to specify minimum amounts for initial and subsequent orders for the purchase of Class A and Class C Shares.
FOURTH:
(A) The public offering price of Class A 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 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 redemption of Class
A 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 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 and Class C 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 and Class C Shares shall be equal to the net asset value of the Class A and Class C 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 and Class C 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 and Class C 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 and Class C 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 and Class C 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 and Class C 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 and Class C 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 FUNDS
Attest:
By: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Name: Ofelia M. Mayo Name: Robert H. Graham
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest:
By: /s/ OFELIA M. MAYO By: /s/ MICHAEL J. CEMO
------------------------ ------------------------
Name: Ofelia M. Mayo Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT FUNDS
CLASS A SHARES
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
CLASS C SHARES
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
EXHIBIT (e)(6)(d)
AMENDMENT NO. 3
DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M DISTRIBUTORS, INC.
(CLASS B SHARES)
The Distribution Agreement (the "Agreement"), dated September 8, 1998, by and between AIM Investment Funds, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT FUNDS
CLASS B SHARES
AIM Developing Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: June 12, 2000
AIM INVESTMENT FUNDS
Attest: /s/ OFELIA M. MAYO /s/ ROBERT N. GRAHAM ----------------------------- ----------------------------- Assistant Secretary President |
A I M DISTRIBUTORS, INC.
Attest: /s/ OFELIA M. MAYO /s/ MICHAEL Q. CEMO ----------------------------- ----------------------------- Assistant Secretary President |
EXHIBIT e(6)(e)
AMENDMENT NO. 4
DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M DISTRIBUTORS, INC.
(CLASS B SHARES)
The Distribution Agreement (the "Agreement"), dated September 8, 1998, by and between AIM Investment Funds, a Delaware business trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT FUNDS
CLASS B SHARES
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: June 19, 2000 Attest: AIM INVESTMENT FUNDS /s/ OFELIA M. MAYO /s/ ROBERT N. GRAHAM ----------------------------- ----------------------------- Assistant Secretary President Attest: A I M DISTRIBUTORS, INC. /s/ OFELIA M. MAYO /s/ MICHAEL Q. CEMO ----------------------------- ----------------------------- Assistant Secretary President |
EXHIBIT e(7)
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M DISTRIBUTORS, INC.
CLASS B SHARES
THIS AGREEMENT made this 31st day of December, 2000, by and between AIM Investment Funds, a Delaware business trust (the "Trust"), with respect to each of the Class B shares (the "Shares") of each series of shares of beneficial interest set forth on Schedule A to this agreement (the "Portfolios"), 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 Trust hereby appoints the Distributor as its exclusive agent for the sale of the Shares to the public directly and through investment dealers in the United States and throughout the world. If subsequent to the termination of the Distributor's services to the Trust pursuant to this Agreement, the Trust retains the services of another distributor, the distribution agreement with such distributor shall contain provisions comparable to Clauses FOURTH and SEVENTH hereof and Exhibit A hereto, and without limiting the generality of the foregoing, will require such distributor to maintain and make available to the Distributor records regarding sales, redemptions and reinvestments of Shares necessary to implement the terms of Clauses FOURTH, SEVENTH and EIGHTH hereof.
SECOND: The Trust shall not sell any 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 Trust may issue 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;
(B) the Trust may issue Shares at their net asset value in connection with certain classes of transactions or to certain classes of persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), provided that any such class is specified in the then current prospectus of the applicable Shares; and
(C) the Trust shall have the right to specify minimum amounts for initial and subsequent orders for the purchase of Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the 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 Trust on behalf of the Shares shall, suspend its efforts to effectuate such sales at any time when, in the opinion of the Distributor or of the Trust, no sales should be made because of market or other economic considerations or abnormal circumstances of any kind;
(B) the Trust may withdraw the offering of the 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; and
(C) the Distributor, as agent, does not undertake to sell any specific amount of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset value per share of the applicable 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 of each Portfolio. Such schedule of contingent deferred sales charges may reflect variations in or waivers of such charges on redemptions of 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). The Distributor and the Trust 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 Distributor may pay to investment dealers and other financial institutions through whom 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 the Trust to the Distributor or by the Trust 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 Trust pursuant to Rule 12b-1 under the 1940 Act.
(D) The Trust shall redeem the 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 the Shares shall be equal to the net asset value of the Shares being redeemed ("gross redemption proceeds"), less any applicable contingent deferred sales charge, calculated pursuant to the then applicable schedule of contingent deferred sales charges ("net redemption proceeds"). The Distributor shall be entitled to receive the amount of the contingent deferred sales charge that has been subtracted from gross redemption proceeds (the "CDSC"), provided that the Shares being redeemed were (i) issued by a Portfolio during the term of this Agreement and any predecessor Agreement between the Trust or its predecessor and the Distributor or Distributor's predecessor, GT Global, Inc. ("GT Global"), or (ii) issued by a Portfolio during or after the term
of this Agreement or any predecessor Agreement between the Trust or its predecessor and the Distributor or GT Global in one or a series of free exchanges of Shares for Class B shares of another portfolio, which can be traced to Shares or Class B shares of another portfolio initially issued by a Portfolio or such other portfolio during the term of this Agreement, any predecessor Agreement or any other distribution agreement with the Distributor or GT Global with respect to such other portfolio (the "Distributor's Earned CDSC"). The Trust shall pay or cause the Trust's transfer agent to pay the Distributor's Earned CDSC to the Distributor on the date net redemption proceeds are payable to the redeeming shareholder.
(E) The Distributor shall maintain adequate books and records to identify Shares (i) issued by a Portfolio during the term of this Agreement and any predecessor Agreement between the Trust or its predecessor and the Distributor or GT Global or (ii) issued by a Portfolio during or after the term of this Agreement or any predecessor Agreement between the Trust or its predecessor and the Distributor or GT Global in one or a series of free exchanges of Shares for class B shares of another portfolio, which can be traced to Shares or class B shares of another portfolio initially issued by a Portfolio or such other portfolio during the term of this Agreement, any predecessor Agreement or any other distribution agreement with the Distributor or GT Global with respect to such other portfolio and shall calculate the Distributor's Earned CDSC, if any, with respect to such Shares, upon their redemption. The Trust shall be entitled to rely on Distributor's books, records and calculations with respect to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Trust in connection with the sale and redemption of Shares. Except with respect to such sales and redemptions, the Distributor shall act as principal in all matters relating to the promotion of the sale of 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 the 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 or financial institution shall act as a principal, and not as an agent, of the Trust.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of 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 Trust 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 prospectuses and statements of additional information for the Shares (including supplements thereto) relating to public offerings made by the Trust pursuant to such prospectuses (which shall not include those prospectuses and statements of additional information, and supplements thereto, to be distributed to existing shareholders of the Shares), 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) Subject to the limitations, if any, of applicable law including the
NASD Conduct Rules (formerly, the NASD Rules of Fair Practice) regarding
asset-based sales charges, the Trust shall pay to the Distributor as a
reimbursement for all or a portion of such expenses, or as reasonable
compensation for distribution of the Shares, an asset-based sales charge in an
amount equal to 0.75% per annum of the average daily net asset value of the
Shares of each Portfolio from time to time (the "Distributor's 12b-1 Share"),
such sales charge to be payable pursuant to the distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Distributor's 12b-1
Share shall be a percentage, which shall be recomputed periodically (but not
less than monthly) in accordance with Exhibit A to this Agreement. The
Distributor's 12b-1 Share shall accrue daily and be paid to the Distributor as
soon as practicable after the end of each calendar month within which it accrues
but in any event within 10 business days after the end of each such calendar
month (unless the Distributor shall specify a later date in written instructions
to the Trust) provided, however, that any notices and calculation required by
Section EIGHTH: (B) and (C) have been received by the Trust.
(C) The Distributor shall maintain adequate books and records to permit calculations periodically (but not less than monthly) of, and shall calculate on a monthly basis, the Distributor's 12b-1 Share to be paid to the Distributor. The Trust shall be entitled to rely on Distributor's books, records and calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or pledge ("Transfer") to one or more designees (each an "Assignee"), its rights to all or a designated portion of (i) the Distributor's 12b-1 Share (but not the Distributor's duties and obligations pursuant hereto or pursuant to the Plan), and (ii) the Distributor's Earned CDSC, free and clear of any offsets or claims the Trust may have against the Distributor. Each such Assignee's ownership interest in a Transfer of a designated portion of a Distributor's 12b-1 Share and a Distributor's Earned CDSC is hereinafter referred to as an "Assignee's 12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A Transfer pursuant to this Section EIGHTH: (A) shall not reduce or extinguish any claim of the Trust against the Distributor.
(B) The Distributor shall promptly notify the Trust in writing of each Transfer pursuant to Section EIGHTH: (A) by providing the Trust with the name and address of each such Assignee.
(C) The Distributor may direct the Trust to pay directly to an Assignee
such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such event,
Distributor shall provide the Trust with a monthly calculation of (i) the
Distributor's Earned CDSC and Distributor's 12b-1 Share and (ii) each Assignee's
12b-1 Portion and Assignee's CDSC Portion, if any, for such month (the "Monthly
Calculation"). The Monthly Calculation shall be provided to the Trust by the
Distributor promptly after the close of each month or such other time as agreed
to by the Trust and the Distributor which allows timely payment of the
Distributor's 12b-1 Share and Distributor's Earned CDSC and/or the Assignee's
12b-1 Portion and Assignee's CDSC Portion. The Trust shall not be liable for any
interest on such payments occasioned by delayed delivery of the Monthly
Calculation by the Distributor. In such event following receipt from the
Distributor of (i) notice of Transfer referred to in Section EIGHTH: (B) and
(ii) each Monthly Calculation, the Trust shall make all payments directly to the
Assignee or Assignees in accordance with the information provided in such notice
and Monthly Calculation, on the same terms and conditions as if such payments
were to be paid directly to the Distributor. The Trust shall be entitled to rely
on Distributor's notices, and Monthly Calculations in respect of amounts to be
paid pursuant to this Section EIGHTH: (B).
(D) Alternatively, in connection with a Transfer the Distributor may direct the Trust to pay all of such Distributor's 12b-1 Share and Distributor's Earned CDSC from time to time to a depository or collection agent designated by any Assignee, which depository or collection agent may be delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion and the balance of the Distributor's 12b-1 Share (such balance, when distributed to the Distributor by the depository or collection agent, the "Distributor's 12b-1 Portion") and of the Distributor's Earned CDSC (such balance, when distributed to the Distributor by the depository or collection agent, the "Distributor's Earned CDSC Portion"), in which case only the Distributor's 12b-1 Portion and Distributor's Earned CDSC Portion may be subject to offsets or claims the Trust may have against the Distributor.
(E) The Trust shall not amend the Plan to reduce the amount payable to the Distributor or any Assignee under Section SEVENTH: (B) hereof with respect to the Shares for any Shares which have been issued prior to the date of such amendment.
NINTH: The Distributor will accept orders for the purchase of 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.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor, as agent, shall enter into Shareholder Service Agreements with investment dealers (including itself acting as principal), financial institutions and certain 401(K) plan service providers (collectively "Service Providers") selected by the Distributor for the provision of certain continuing personal services to customers of such Service Providers who have purchased Shares. Such agreements shall authorize Service Providers to provide continuing personal shareholder services to their customers upon the terms and conditions set forth therein, which shall not be inconsistent with the provisions of this Agreement. Each Shareholder Service Agreement shall provide that the Service Provider shall act as principal, and not as an agent of the Trust.
(B) Shareholder Service Agreements may provide that the Service Providers may receive a service fee in the amount of 0.25% of the average daily net assets of the Shares held by customers of such Service Providers provided that such Service Providers furnish continuing personal shareholder services to their customers in respect of such Shares. The continuing personal services to be rendered by Service Providers under the Shareholder Service Agreements may include, but shall not be limited to, some or all of the following: distributing sales literature; answering routine customer inquiries concerning the Trust; assisting customers in changing dividend elections, options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of Shares; assisting in the establishment and maintenance of or establishing and maintaining customer accounts and records and the processing of purchase and redemption transactions; performing subaccounting; investing dividends and any capital gains distributions automatically in the Trust's shares; providing periodic statements showing a customer's account balance and the integration of such statements with those of other transactions and balances in the customer's account serviced by the Service Provider; forwarding applicable prospectus, proxy statements, reports and notices to customers who hold Shares and providing such other information and services as the Trust or the customers may reasonably request.
(C) The Distributor may advance service fees payable to Service Providers pursuant to the Plan or any other distribution plan adopted by the Trust with respect to Shares of one or
more of the Portfolios pursuant to Rule 12b-1 under the 1940 Act; and thereafter the Distributor may be reimbursed for such advances through retention of service fee payments during the period for which the service fees were advanced.
ELEVENTH: The Trust and the Distributor shall each comply with all applicable provisions of the 1940 Act, the Securities Act of 1933, as amended, and of all other federal and state laws, rules and regulations governing the issuance and sale of the Shares.
TWELFTH:
(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 Trust shall 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 Shares, 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 Trust in connection
therewith by or on behalf of the Distributor. The Distributor shall indemnify
the Trust and the Shares against any and all claims, demands, liabilities and
expenses which the Trust or the Shares may incur arising out of or based upon
(i) any act or deed of the Distributor or its sales representatives which has
not been authorized by the Trust in its prospectus or in this Agreement and (ii)
the Trust's reliance on the Distributor's books, records, calculations and
notices in Sections FOURTH: (E), SEVENTH: (C), EIGHTH: (B), EIGHTH: (C) and
EIGHTH: (D).
(B) The Distributor shall indemnify the Trust and the Shares against any and all claims, demands, liabilities and expenses which the Trust or the Shares may incur under the Securities Act of 1933, as amended, 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 Shares, 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 Trust 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 transfer agent(s) of the Shares, or for any failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Trust to take any action contrary to any provision of its Agreement and Declaration of Trust, as amended, or to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the Shares of each Portfolio upon its approval by the Board of Trustees of the Trust and by vote of a majority of the Trust's trustees who are not interested 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, shall continue in force and effect until June 30, 2001, and from year to year thereafter, provided, that such continuance is specifically approved with respect to the Shares of each Portfolio at least annually (a)(i) by the Board of Trustees of the Trust or (ii) by the vote of a majority of the outstanding Shares of such class of such Portfolio, and (b) by vote of a majority of the Trust'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.
FIFTEENTH:
(A) This Agreement may be terminated with respect to the Shares of any Portfolio, at any time, without the payment of any penalty, by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding Shares of such Portfolio, or by the Distributor, on sixty (60) days' written notice to the other party; and
(B) This Agreement shall also 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; provided, that, subject to the provisions of the
following sentence, if this Agreement is terminated for any reason, the
obligations of the Trust and the Distributor pursuant to Sections FOURTH: (D),
FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and TWELFTH:
(A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Trust pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to any
or all Shares of any or all Portfolios shall not affect the obligations of the
Trust pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D)
and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's 12b-1
Share or Distributor's Earned CDSC shall not cause a termination of this
Agreement or be deemed to be an assignment for purposes of Section FIFTEENTH:
(B) above.
SIXTEENTH: 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, the addresses of both the Trust and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
SEVENTEENTH: 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 or any Portfolio individually, but are binding only upon the assets and property of the Trust or such Portfolio 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.
EIGHTEENTH: This Agreement shall be deemed to be a contract made in the State of Delaware and governed by, construed in accordance with and enforced pursuant to the internal laws of the State of Delaware without reference to its conflicts of laws rules.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written.
AIM INVESTMENT FUNDS
By: /s/ CAROL F. RELIHAN
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Name: Carol F. Relihan
Title: Vice President
Attest:
/s/ OFELIA M. MAYO
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Name:
Title:
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A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
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Name: Michael J. Cemo
Title: President
Attest:
/s/ OFELIA M. MAYO
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Name:
Title:
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SCHEDULE A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM INVESTMENT FUNDS
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
As of June 1, 2000
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio shall be 100 percent until such time as the Distributor shall cease to serve as exclusive distributor of the Shares of such Portfolio and thereafter shall be a percentage, recomputed first on the date of any termination of the Distributor's services as exclusive distributor of Shares of any Portfolio and thereafter periodically (but not less than monthly), representing the percentage of Shares of such Portfolio outstanding on each such computation date allocated to the Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined terms used herein shall have the meaning assigned to such terms in the Distribution Agreement and the following terms shall have the following meanings:
"Commission Shares" shall mean shares of the Portfolio or another portfolio the redemption of which would, in the absence of the application of some standard waiver provision, give rise to the payment of a CDSC and shall include Commission Shares which due to the expiration of the CDSC period no longer bear a CDSC.
"Distributor" shall mean the Distributor.
"Other Distributor" shall mean each person appointed as the exclusive distributor for the Shares of the Portfolio after the Distributor ceases to serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's 12b-1 Share in respect of a particular Portfolio:
(a) There shall be allocated to the Distributor and each Other Distributor all Commission Shares of such Portfolio which were sold while such Distributor or such Other Distributor, as the case may be, was the exclusive distributor for the Shares of the Portfolio, determined in accordance with the transfer records maintained for such Portfolio.
(b) Reinvested Shares: On the date that any Shares are issued by a Portfolio as a result of the reinvestment of dividends or other distributions, whether ordinary income, capital gains or exempt-interest dividends or distributions ("Reinvested Shares"), Reinvested Shares shall be allocated to the Distributor and each Other Distributor in a number obtained by multiplying the total number of Reinvested Shares issued on such date by a fraction, the numerator of which is the total number of all Shares outstanding in such Portfolio as of the opening of business on such date and allocated to the Distributor or Other Distributor as of such date of determination pursuant to these allocation procedures and the denominator is the total number of Shares outstanding as of the opening of business on such date.
(c) Exchange Shares: There shall be allocated to the Distributor and each Other Distributor, as the case may be, all Commission Shares of such Portfolio which were issued during or after the period referred to in (a) as a consequence of one or more free exchanges of Commission Shares of the Portfolio or of another portfolio (other than Free Appreciation Shares) (the "Exchange Shares"), which in accordance with the transfer records maintained for such Portfolio can be traced to Commission Shares of the Portfolio or another
portfolio initially issued by the Trust or such other portfolio during the time the Distributor or such Other Distributor, as the case may be, was the exclusive distributor for the Shares of the Portfolio or such other portfolio.
(d) Free Appreciation Shares: Shares (other than Exchange Shares) that were acquired by the holders of such Shares in a free exchange of Shares of any other Portfolio, which represent the appreciated value of the Shares of the exiting portfolio over the initial purchase price paid for the Shares being redeemed and exchanged and for which the original purchase date and the original purchase price are not identified on an on-going basis, shall be allocated to the Distributor and each Other Distributor ("Free Appreciation Shares") daily in a number obtained by multiplying the total number of Free Appreciation Shares issued by the exiting portfolio on such date by a fraction, the numerator of which is the total number of all Shares outstanding as of the opening of business on such date allocated to the Distributor or such Other Distributor as of such date of determination pursuant to these allocation procedures and the denominator is the total number of Shares outstanding as of the opening of business on such date.
(e) Redeemed Shares: Shares (other than Reinvested Shares and Free Appreciation Shares) that are redeemed will be allocated to the Distributor and each Other Distributor to the extent such Share was previously allocated to the Distributor or such Other Distributor in accordance with the rules set forth in 2(a) or (c) above. Reinvested Shares and Free Appreciation Shares that are redeemed will be allocated to the Distributor and each Other Distributor daily in a number obtained by multiplying the total number of Free Appreciation Shares and Reinvested Shares being redeemed by such Portfolio on such date by a fraction, the numerator of which is the total number of all Free Appreciation Shares and Reinvested Shares of such Portfolio outstanding as of the opening of business on such date allocated to the Distributor or such Other Distributor as of such date of determination pursuant to these allocation procedures and the denominator is the total number of Free Appreciation Shares and Reinvested Shares of such Portfolio outstanding as of the opening of business on such date.
The Trust shall use its best efforts to assure that the transfer agents and sub-transfer agents for each Portfolio maintain the data necessary to implement the foregoing rules. If, notwithstanding the foregoing, the transfer agents or sub-transfer agents for such Portfolio are unable to maintain the data necessary to implement the foregoing rules as written, or if the Distributor shall cease to serve as exclusive distributor of the Shares of the Portfolio, the Distributor and the Portfolio agree to negotiate in good faith with each other, with the transfer agents and sub-transfer agents for such Portfolio and with any third party that has obtained an interest in the Distributor's 12b-1 Share in respect of such Portfolio with a view to arriving at mutually satisfactory modifications to the foregoing rules designed to accomplish substantially identical results on the basis of data which can be made available.
EXHIBIT e(11)
SELECTED DEALER AGREEMENT
[AIM LOGO APPEARS HERE] FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., is the exclusive national distributor of shares (the "Shares") of the registered investment companies for which we now or in the future act as underwriter, as disclosed in each Fund's prospectus, which may be amended from time to time by us (the "Funds"). You represent that you are a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that you agree to abide by all of the rules and regulations of the NASD for purposes of this Agreement (which you confirm by your signature below). In consideration of the mutual covenants and representations stated herein, you and we hereby agree as follows:
1. Sales of Shares through you will be at the public offering price of such Shares (the net asset value of the Shares plus any sales charge applicable to such Shares (the "Sales Charge")), as determined in accordance with the then effective prospectus or Statement of Additional Information used in connection with the offer and sale of Shares (collectively, the "Prospectus"), which public offering price may reflect scheduled variations in, or the elimination of, the Sales Charge on sales of the Funds' Shares either generally to the public or in connection with special purchase plans, as described in the Prospectus. You agree that you will apply any scheduled variation in, or elimination of, the Sales Charge uniformly to all offerees in the class specified in the Prospectus.
2. You agree to purchase Shares solely through us and only for the purpose of covering purchase orders already received from customers or for your own bona fide investment. You agree not to purchase for any other securities dealer unless you have an agreement with such other dealer or broker to handle clearing arrangements and then only in the ordinary course of business for such purpose and only if such other dealer has executed a Selected Dealer Agreement with us. You also agree not to withhold any customer order so as to profit therefrom.
3. The procedures relating to the handling of orders shall be subject to instructions which we will forward from time to time to all selected dealers with whom we have entered into a Selected Dealer Agreement. The minimum initial order shall be specified in the Funds' then current Prospectuses. All purchase orders are subject to receipt of Shares by us from the Funds concerned and to acceptance of such orders by us. We reserve the right in our sole discretion to reject any order.
4. With respect to the Funds, the Shares of which are indicated in that Fund's Prospectus as being sold with a Sales Charge (the "Load Funds"), you will be allowed the concessions from the public offering price provided in the Load Funds' Prospectus and/or periodic instruction from us. With respect to the Funds, the Shares of which are indicated in that Fund's Prospectus as being sold with a contingent deferred sales charge or early withdrawal charge (the "CDSC Funds"), you will be paid a commission as disclosed in the CDSC Fund's Prospectus and/or periodic instructions from us. With respect to the Funds whose Shares are indicated as being sold without a Sales Charge or a contingent deferred sales charge (the "No-Load Funds"), you may charge a reasonable administrative fee. For the purposes of this Agreement the term "Dealer Commission" means commissions or concessions payable to you as disclosed in the Funds' Prospectuses and the terms "Sales Charge" and "Dealer Commission" apply only to the Load Funds and the CDSC Funds. All
Dealer Commissions are subject to change without notice by us and will comply with any changes in regulatory requirements. You agree that you will not combine customer orders to reach breakpoints in commissions for any purpose whatsoever unless authorized by the Prospectus or by us in writing.
5. You agree that your transactions in Shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders or where
applicable, through tender offers. Redemptions by a Fund and repurchases by
us will be effected in the manner and upon the terms described in the
Prospectus. We will, upon your request, assist you in processing such
orders for redemptions or repurchases. To facilitate prompt payment
following a redemption or repurchase of Shares, the owner's signature shall
appear as registered on the Funds' records and, as described in the
Prospectus, it may be required to be guaranteed by a commercial bank, trust
company or a member of a national securities exchange.
6. Sales and exchanges of Shares may only be made in those states and jurisdictions where the Shares are registered or qualified for sale to the public. We agree to advise you currently of the identity of those states and jurisdictions in which the Shares are registered or qualified for sale, and you agree to indemnify us and/or the Funds for any claim, liability, expense or loss in any way arising out of a sale of Shares in any state or jurisdiction in which such Shares are not so registered or qualified.
7. We shall accept orders only on the basis of the then current offering price. You agree to place orders in respect of Shares immediately upon the receipt of orders from your customers for the same number of Shares. Orders which you receive from your customers shall be deemed to be placed with us when received by us. Orders which you receive prior to the close of business, as defined in the Prospectus, and placed with us within the time frame set forth in the Prospectus shall be priced at the offering price next computed after they are received by you. We will not accept from you a conditional order on any basis. All orders shall be subject to confirmation by us.
8. Your customer will be entitled to a reduction in the Sales Charge on purchases made under a Letter of Intent or Right of Accumulation described in the Prospectus. In such case, your Dealer Commission will be based upon such reduced Sales Charge; however, in the case of a Letter of Intent signed by your customer, an adjustment to a higher Dealer Commission will thereafter be made to reflect actual purchases by your customer if he should fail to fulfill his Letter of Intent. When placing wire trades, you agree to advise us of any Letter of Intent signed by your customer or of any Right of Accumulation available to him of which he has made you aware. If you fail to so advise us, you will be liable to us for the return of any Dealer Commission plus interest thereon.
9. You and we agree to abide by the Conduct Rules of the NASD and all other federal and state rules and regulations that are now or may become applicable to transactions hereunder. Your expulsion from the NASD will automatically terminate this Agreement without notice. Your suspension from
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the NASD or a violation by you of applicable state and federal laws and rules and regulations of authorized regulatory agencies will terminate this Agreement effective upon notice received by you from us. You agree that it is your responsibility to determine the suitability of any Shares as investments for your customers, and that AIM Distributors has no responsibility for such determination.
10. With respect to the Load Funds and the CDSC Funds, and unless otherwise agreed, settlement shall be made at the offices of the Funds' transfer agent within three (3) business days after our acceptance of the order. With respect to the No-Load Funds, settlement will be made only upon receipt by the Fund of payment in the form of federal funds. If payment is not so received or made within ten (10) business days of our acceptance of the order, we reserve the right to cancel the sale or, at our option, to sell the Shares to the Funds at the then prevailing net asset value. In this event, or in the event that you cancel the trade for any reason, you agree to be responsible for any loss resulting to the Funds or to us from your failure to make payments as aforesaid. You shall not be entitled to any gains generated thereby.
11. If any Shares of any of the Load Funds sold to you under the terms of this Agreement are redeemed by the Fund or repurchased for the account of the Funds or are tendered to the Funds for redemption or repurchase within seven (7) business days after the date of our confirmation to you of your original purchase order therefore, you agree to pay forthwith to us the full amount of the Dealer Commission allowed to you on the original sale and we agree to pay such amount to the Fund when received by us. We also agree to pay to the Fund the amount of our share of the Sales Charge on the original sale of such Shares.
12. Any order placed by you for the repurchase of Shares of a Fund is subject to the timely receipt by the Fund's transfer agent of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation, in which case you agree to be responsible for any loss resulting to the Fund or to us from such cancellation.
13. We reserve the right in our discretion without notice to you to suspend sales or withdraw any offering of Shares entirely, to change the offering prices as provided in the Prospectus or, upon notice to you, to amend or cancel this Agreement. You agree that any order to purchase Shares of the Funds placed by you after notice of any amendment to this Agreement has been sent to you shall constitute your agreement to any such amendment.
14. In every transaction, we will act as agent for the Fund and you will act as principal for your own account. You have no authority whatsoever to act as our agent or as agent for the Funds, any other Selected Dealer or the Funds' transfer agent and nothing in this Agreement shall serve to appoint you as an agent of any of the foregoing in connection with transactions with your customers or otherwise.
15. No person is authorized to make any representations concerning the Funds or their Shares except those contained in the Prospectus and any such information as may be released by us as information supplemental to the Prospectus. If you should make such unauthorized representation,
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you agree to indemnify the Funds and us from and against any and all claims, liability, expense or loss in any way arising out of or in any way connected with such representation.
16. We will supply you with copies of the Prospectuses of the Funds (including any amendments thereto) in reasonable quantities upon request. You will provide all customers with a prospectus prior to or at the time such customer purchases Shares. You will provide any customer who so requests a copy of the Statement of Additional Information within the time dictated by regulatory requirements, as they may be amended from time to time.
17. You shall be solely responsible for the accuracy, timeliness and completeness of any orders transmitted by you on behalf of your customers by wire or telephone for purchases, exchanges or redemptions, and shall indemnify us against any claims by your customers as a result of your failure to properly transmit their instructions.
18. No advertising or sales literature, as such terms are defined by the NASD, of any kind whatsoever will be used by you with respect to the Funds or us unless first provided to you by us or unless you have obtained our prior written approval. You agree to indemnify us against any and all claims, liability, expense or loss in any way arising out of your use of any such advertising or sales literature not so provided or approved.
19. You shall be responsible for complying with all applicable money laundering laws, regulations, and government guidance, including cash and suspicious activity reporting and recordkeeping requirements and to have adequate policies, procedures and internal controls in place to ensure compliance. You shall provide us, upon request and within a reasonable time, copies of your Bank Secrecy Act and/or anti-money laundering compliance programs or materials, including policies and procedures for complying with the Bank Secrecy Act and money laundering laws and regulations, "Know Your Customer" policies and procedures, and procedures for identifying and reporting suspicious transactions. This request of information shall not in any way be construed or impose any obligation upon us to review and ensure the accuracy or adequacy of any of your policies or procedures.
20. You represent that you have adopted and implemented procedures to safeguard customer information and records that are reasonably designed to: (i) insure the security and confidentiality of your customer records and information; (ii) protect against any anticipated threats or hazards to the security or integrity of customer records and information; (iii) protect against unauthorized access to or use of your customer records or information that could result in substantial harm or inconvenience to any customer; (iv) protect against unauthorized disclosure of non-public personal information to unaffiliated third parties; and (v) otherwise ensure your compliance with the Securities and Exchange Commission's Regulation S-P. You agree to indemnify us against any and all claims, liability, expense or loss in any way arising out of your failure to adopt and implement these and such other privacy or confidentiality procedures that may in the future be required by law or regulation.
21. You represent and acknowledge that you have read and understand the "Exchange Conditions" section, as disclosed in each Fund's Prospectus. You further represent and acknowledge your
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understanding that the "Exchange Conditions" are designed to deter and prevent excessive short-term trading and market-timing, and that these conditions will be strictly enforced.
22. All expenses incurred in connection with your activities under this Agreement shall be borne by you.
23. This Agreement shall not be assignable by you. This Agreement shall be constructed in accordance with the laws of the State of Texas without regard to its conflict of laws provisions.
24. Any notice to you shall be duly given if mailed or telegraphed to you at your address as registered from time to time with the NASD.
25. This Agreement constitutes the entire agreement between the undersigned and supersedes all prior oral or written agreements between the parties hereto.
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A I M DISTRIBUTORS, INC.
The undersigned accepts your invitation to become a Selected Dealer and agrees to abide by the foregoing terms and conditions. The undersigned acknowledges receipt of Prospectuses for use in connection with offers and sales of the Funds.
Date By: X
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Signature
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Print Name Title
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Dealer's Name
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Address
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City State Zip
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Telephone
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Please sign both copies and return one copy of each to:
A I M Distributors, Inc. 11 Greenway Plaza, Suite 100 Houston, Texas 77046-1173
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EXHIBIT g(2)(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.
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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
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Name: Carol F. Relihan
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Title: Senior Vice President
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ATTEST STATE STREET BANK AND TRUST COMPANY
By: /s/ STEPHANIE L. POSTER By: /s/ RONALD E. LOGUE
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Vice President
Name: Ronald E. Logue
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Title: Vice Chairman
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APPENDIX A
(AS REVISED JANUARY 1, 2001)
AIM ADVISOR FUNDS 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 Real Estate Fund o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
AIM EQUITY FUNDS o AIM V.I. Capital Development Fund
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 Utilities Fund
o AIM Capital Development Fund o AIM V.I. Government Securities Fund
o AIM Charter Fund o AIM V.I. Growth and Income Fund
o AIM Constellation Fund o AIM V.I. Growth Fund
o AIM Dent Demographic Trends Fund o AIM V.I. High Yield Fund
o AIM Emerging Growth Fund o AIM V.I. International Equity Fund
o AIM Large Cap Basic Value Fund o AIM V.I. Telecommunications and
o AIM Large Cap Growth Fund Technology Fund
o AIM Mid Cap Growth Fund o AIM V.I. Value Fund
o AIM Weingarten Fund
AIM FLOATING RATE FUND
AIM FUNDS GROUP
AIM GROWTH SERIES
o AIM Balanced Fund
o AIM European Small Company Fund o AIM Basic Value Fund
o AIM Global Utilities Fund o AIM Euroland Growth Fund
o AIM International Emerging Growth Fund o AIM Japan Growth Fund
o AIM New Technology Fund o AIM Mid Cap Equity Fund
o AIM Select Growth Fund o AIM Small Cap Growth Fund
o AIM Small Cap Equity Fund
o AIM Value Fund AIM INVESTMENT FUNDS
o AIM Value II Fund
o AIM Worldwide Spectrum Fund o AIM Developing Markets Fund
o AIM Global Consumer Products and
AIM INTERNATIONAL FUNDS, INC. Services Fund
o AIM Global Financial Services Fund
o AIM Asian Growth Fund o AIM Global Health Care Fund
o AIM European Development Fund o AIM Global Infrastructure Fund
o AIM Global Aggressive Growth Fund o AIM Global Resources Fund
o AIM Global Growth Fund o AIM Global Telecommunications and
o AIM Global Income Fund Technology Fund
o AIM International Equity Fund o AIM Latin American Growth Fund
o AIM Strategic Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM SERIES TRUST
o AIM High Yield Fund
o AIM High Yield Fund II o AIM Global Trends Fund
o AIM Income Fund
o AIM Intermediate Government Fund GLOBAL INVESTMENT PORTFOLIO
AIM SPECIAL OPPORTUNITIES FUNDS o Global Consumer Products and
Services Portfolio
o AIM Large Cap Opportunities Fund o Global Resources Portfolio
o AIM Mid Cap Opportunities Fund
o AIM Small Cap Opportunities Fund
AIM SUMMIT FUND
|
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(2)(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
(AS REVISED JANUARY 1, 2001)
AIM ADVISOR FUNDS 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 Real Estate Fund o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
AIM EQUITY FUNDS o AIM V.I. Capital Development Fund
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 Utilities Fund
o AIM Capital Development Fund o AIM V.I. Government Securities Fund
o AIM Charter Fund o AIM V.I. Growth and Income Fund
o AIM Constellation Fund o AIM V.I. Growth Fund
o AIM Dent Demographic Trends Fund o AIM V.I. High Yield Fund
o AIM Emerging Growth Fund o AIM V.I. International Equity Fund
o AIM Large Cap Basic Value Fund o AIM V.I. Telecommunications and
o AIM Large Cap Growth Fund Technology Fund
o AIM Mid Cap Growth Fund o AIM V.I. Value Fund
o AIM Weingarten Fund
AIM FLOATING RATE FUND
AIM FUNDS GROUP
AIM GROWTH SERIES
o AIM Balanced Fund
o AIM European Small Company Fund o AIM Basic Value Fund
o AIM Global Utilities Fund o AIM Euroland Growth Fund
o AIM International Emerging Growth Fund o AIM Japan Growth Fund
o AIM New Technology Fund o AIM Mid Cap Equity Fund
o AIM Select Growth Fund o AIM Small Cap Growth Fund
o AIM Small Cap Equity Fund
o AIM Value Fund AIM INVESTMENT FUNDS
o AIM Value II Fund
o AIM Worldwide Spectrum Fund o AIM Developing Markets Fund
o AIM Global Consumer Products and
AIM INTERNATIONAL FUNDS, INC. Services Fund
o AIM Global Financial Services Fund
o AIM Asian Growth Fund o AIM Global Health Care Fund
o AIM European Development Fund o AIM Global Infrastructure Fund
o AIM Global Aggressive Growth Fund o AIM Global Resources Fund
o AIM Global Growth Fund o AIM Global Telecommunications and
o AIM Global Income Fund Technology Fund
o AIM International Equity Fund o AIM Latin American Growth Fund
o AIM Strategic Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM SERIES TRUST
o AIM High Yield Fund
o AIM High Yield Fund II o AIM Global Trends Fund
o AIM Income Fund
o AIM Intermediate Government Fund GLOBAL INVESTMENT PORTFOLIO
AIM SPECIAL OPPORTUNITIES FUNDS o Global Consumer Products and
Services Portfolio
o AIM Large Cap Opportunities Fund o Global Resources Portfolio
o AIM Mid Cap Opportunities Fund
o AIM Small Cap Opportunities Fund
AIM SUMMIT FUND
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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
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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. --
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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 --
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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. --
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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 --
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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.
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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
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]
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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
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
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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
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)
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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
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
|
* 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.
|
EXHIBIT (h)(1)(f)
AMENDMENT NUMBER 5 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 2000 is made to the Transfer Agency and Service Agreement dated September 8, 1998, as amended (the "Agreement") between AIM Investment Funds (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 10 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 2 dated July 1, 1999 is hereby terminated.
AIM INVESTMENT FUNDS
By: /s/ ROBERT H. GRAHAM
------------------------------
President
ATTEST:
/s/ SAMUEL D. SIRKO
------------------------------
Secretary
|
A I M FUND SERVICES, INC.
By: /s/ TONY D. GREEN
------------------------------
President
ATTEST:
/s/ LISA A. MOSS
------------------------------
Assistant Secretary
|
EXHIBIT (h)(2)(i)
AMENDMENT NO. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNET(TM) SERVICES
THIS AMENDMENT, dated as of the 30th day of August, 1999 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. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial Planners to conduct certain account transactions through the use of the Internet and Investor Services Group desires to allow such access and provide certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of the date first referenced above, Investor Services Group 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) "End-User" shall mean any Shareholder or Financial Planner that accesses the Investor Services Group 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 Investor Services Group proprietary system consisting of the Investor Services Group Secure Net Gateway and the Investor Services Group 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) "Investor Services Group Secure Net Gateway" shall mean the system of computer hardware and software and network established by Investor Services Group to provide access between Investor Services Group recordkeeping system and the Internet.
(g) "Investor Services Group Web Transaction Engine" shall mean the system of computer hardware and software created and established by Investor Services Group 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 Investor Services Group. In addition to the services rendered by Investor Services Group as set forth in the Agreement, Investor Services Group 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 Investor Services Group, Investor Services Group shall,
through the use of the Investor Services Group Web Transaction Engine
and Secure Net Gateway enable End-Users to utilize the Internet to
access the Investor Services Group System in order to perform
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) (i) With respect to Shareholders, process the set up of personal identification numbers ("PIN") 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; and (ii) with respect to Financial Planners process the set up of digital certificates which shall include verification of initial digital certificates issued, reset and activate digital certificates and reissue digital certificates in connection with expired or terminated certificates.
(c) Installation services which shall include, review and sign off on the Fund's network requirements, recommending method of linking to the FDISG 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 Investor Services Group Secure Net
Gateway and the Investor Services Group 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 FDISG 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 FDISG to IMPRESSNet--Registered Trademark--
clients, as determined solely by FDISG; 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 Investor Services Group 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 Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group 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, Investor Services Group or other
Investor Services Group clients agree to share in the expense of
the enhancements.
b). At any time during the 9 months following implementation, Investor
Services Group or other Investor Services Group 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 FIRST DATA INVESTOR SERVICES Portfolios and Classes set forth in GROUP, INC. Exhibit 1 of the Agreement which may be amended from time to time. |
By: /s/ROBERT H. GRAHAM By: /s/DEBRLEE G. GOLDBERG
-------------------------------- -------------------------------
Name: Robert H. Graham Name: Debrlee G. Goldberg
------------------------------- ----------------------------
Title: President Title: SVP
------------------------------ ---------------------------
|
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
|
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 Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in Exhibit 1)
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 First Data 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(2)(j)
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
-------------------------------- -----------------------------
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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(2)(k)
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
---------------------------- --------------------------
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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(2)(l)
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.
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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
---------------------------- -------------------------
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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(2)(m)
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
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*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)
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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)(2)(n)
[PFPC LETTERHEAD AND LOGO]
DEBRALEE GOLDBERG
Senior Vice President
General Manager
August 17, 2000
Mr. Tony D. Green
AIM Fund Services
11 Greenway Plaza
Suite 100
Houston, TX 77046
Dear Tony:
This letter will confirm the commitment of PFPC Inc. ("PFPC") and each registered investment company (the "Fund") listed on Exhibit 1 of the Remote Access and Related Services Agreement dated December 23, 1994 to amend the IMPRESSNET Amendment No. 9, dated as of June 26, 2000, to this Agreement and also PFPC and A I M Advisors, Inc. ("AIM") to amend the DAZL Services Agreement dated June 26, 2000 (collectively the "Agreements"). The details which we have agreed upon are as follows:
1. Volume discounts based on the total revenue from the Fund's usage of both PFPC's IMPRESSNet and DAZL products shall apply to the Agreements. When the combined revenue of both products is greater than an average of $300,000 per year ($25,000 per month) DAZL fees shall be discounted at an additional 17.5% and IMPRESSNet fees shall be discounted at an additional 5%.
Please confirm our understanding by executing and returning the enclosed original copy of this letter. We look forward to our continued relationship.
Sincerely,
/s/ DEBRALEE GOLDBERG Debralee Goldberg Senior Vice President General Manager |
Tony D. Green [PFPC LOGO]
AIM LOI
Acknowledged and Agreed to this 22nd day of August, 2000
On behalf of the Funds and respective
Portfolios and Classes set forth in
Exhibit 1 of the Remote Access and
Related Services Agreement which may
be amended from time to time.
By: /s/ TONY D. GREEN
-------------------------
Title: President
-------------------------
Date: August 22, 2000
-------------------------
|
AIM Funds Services, Inc.
By:
Date:
EXHIBIT (h)(5)(b)
AMENDMENT NO. 1
TO
MASTER ACCOUNTING SERVICES AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M ADVISORS, INC.
The Master Accounting Services Agreement between AIM Investment Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation, (the "Agreement"), dated as of July 1, 1999 is hereby amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"AIM INVESTMENT FUNDS
APPENDIX A
TO
MASTER ACCOUNTING SERVICES AGREEMENT
AIM Developing Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: June 12, 2000
AIM INVESTMENT FUNDS
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT (h)(5)(c)
AMENDMENT NO. 2
TO
MASTER ACCOUNTING SERVICES AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M ADVISORS, INC.
The Master Accounting Services Agreement between AIM Investment Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation, (the "Agreement"), dated as of July 1, 1999 is hereby amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"AIM INVESTMENT FUNDS
APPENDIX A
TO
MASTER ACCOUNTING SERVICES AGREEMENT
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: June 19, 2000
AIM INVESTMENT FUNDS
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT (h)(5)(d)
AMENDMENT NO. 3
TO
MASTER ACCOUNTING SERVICES AGREEMENT
BETWEEN
AIM INVESTMENT FUNDS
AND
A I M ADVISORS, INC.
The Master Accounting Services Agreement between AIM Investment Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation, (the "Agreement"), dated as of July 1, 1999, as amended, is hereby amended as follows:
Appendix A to the Agreement is hereby deleted in its entirety and replaced with the following:
"AIM INVESTMENT FUNDS
APPENDIX A
TO
MASTER ACCOUNTING SERVICES AGREEMENT
AIM Developing Markets Fund
AIM Global Consumer Products and Services Fund
AIM Global Health Care Fund
AIM Global Resources Fund
AIM Global Telecommunications and Technology Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: September 11, 2000
AIM INVESTMENT FUNDS
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------ ------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT (h)(8)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 19th day of June, 2000 between AIM Investment Funds (the "Company"), on behalf of the funds 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 Company and AIM agree as follows:
The Company and AIM agree until the date set forth on the attached Exhibit "A" that AIM will waive its fees or reimburse expenses to the extent that the expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items, and increases in expenses due to expense offset arrangements, if any) of a class of a Fund exceed the rate set forth on Exhibit "A" of the average daily net assets allocable to such class. Neither the Company nor AIM may remove or amend the expense limitations to the Company's detriment prior to the date set forth on Exhibit "A." AIM will not have any right to reimbursement of any amount so waived or reimbursed.
The Company and AIM agree to review the then-current expense limitations for each class of each Fund listed on Exhibit "A" on a date prior to the date listed on that Exhibit to determine whether such limitations should be amended, continued or terminated. Unless the Company, by vote of its Board of Trustees, or AIM terminates the limitations, or the Company and AIM are unable to reach an agreement on the amount of the limitations to which the Company and AIM desire to be bound, the limitations will continue for additional one-year terms at the rate to which the Company and AIM mutually agree. Exhibit "A" will be amended to reflect that rate and the new date through which the Company and AIM agree to be bound.
It is expressly agreed that the obligations of the Company hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Company personally, but shall only bind the assets and property of the Funds, as provided in the Company's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Company, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Company acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Company's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Company and AIM have entered into this Memorandum of Agreement as of the date first above written.
AIM Investment Funds, on behalf of each Fund listed in Exhibit "A" to this Memorandum of Agreement
By: /s/ ROBERT H. GRAHAM
----------------------------------------
Title: President
------------------------------------
|
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
----------------------------------------
Title: President
------------------------------------
|
EXHIBIT "A"
AIM INVESTMENT FUNDS
AIM DEVELOPING MARKETS FUND
CLASS EXPENSE CAP FIRST POTENTIAL TERMINATION DATE ----- ----------- -------------------------------- A Class 1.75% June 30, 2001 B Class 2.40% June 30, 2001 C Class 2.40% June 30, 2001 |
EXHIBIT (h)(9)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 1st day of July, 2000 between AIM Investment Funds (the "Trust"), on behalf of the funds 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 Trust and AIM agree as follows:
The Trust and AIM agree until the date set forth on the attached Exhibit "A" that AIM will waive its fees or reimburse expenses to the extent that the expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of a class of a Fund exceed the rate set forth on Exhibit "A" of the average daily net assets allocable to such class. Neither the Trust nor AIM may remove or amend the expense limitations to the Trust's detriment prior to the date set forth on Exhibit "A." AIM will not have any right to reimbursement of any amount so waived or reimbursed.
The Trust and AIM agree to review the then-current expense limitations for each class of each Fund listed on Exhibit "A" on a date prior to the date listed on that Exhibit to determine whether such limitations should be amended, continued or terminated. Unless the Trust, by vote of its Board of Trustees, or AIM terminates the limitations, or the Trust and AIM are unable to reach an agreement on the amount of the limitations to which the Trust and AIM desire to be bound, the limitations will continue for additional one-year terms at the rate to which the Trust and AIM mutually agree. Exhibit "A" will be amended to reflect that rate and the new date through which the Trust and AIM agree to be bound.
It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall only bind the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Trust and AIM have entered into this Memorandum of Agreement as of the date first above written.
AIM Investment Funds, on behalf of each Fund listed in Exhibit "A" to this Memorandum of Agreement
By: /s/ CAROL F. RELIHAN
----------------------------------------
Title: Vice President
-------------------------------------
|
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
----------------------------------------
Title: President
-------------------------------------
|
EXHIBIT "A"
AIM INVESTMENT FUNDS
FUND EXPENSE LIMITATION COMMITTED UNTIL
---- ------------------ ---------------
AIM Global Consumer Products and Services Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Global Financial Services Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Global Health Care Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Global Infrastructure Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Global Resources Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Global Telecommunications and Technology Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Latin American Growth Fund
Class A 2.00% June 30, 2001
Class B 2.50% June 30, 2001
Class C 2.50% June 30, 2001
AIM Strategic Income Fund
Class A 1.05% June 30, 2001
Class B 1.70% June 30, 2001
Class C 1.70% June 30, 2001
|
EXHIBIT (h)(10)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of the date indicated on Exhibit "A" between AIM Growth Series and AIM Investment Funds (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 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 GROWTH SERIES
AIM INVESTMENT FUNDS
By: /s/ ROBERT H. GRAHAM
-------------------------------
Title: President
|
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Title: President
|
EXHIBIT "A"
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM Basic Value Fund June 5, 2000 AIM Small Cap Growth Fund September 11, 2000 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- -------------- --------------- AIM Global Financial Services Fund September 11, 2000 AIM Global Infrastructure Fund September 11, 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 (h)(11)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made this 11th day of September, 2000 by and between A I M ADVISORS, INC., a Delaware corporation (the "Administrator") and AIM INVESTMENT 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 monthly 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/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
AIM INVESTMENT FUNDS
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
|
APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM INVESTMENT FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM Global Financial Services Fund September 11, 2000 AIM Global Infrastructure Fund September 11, 2000 |
Date: September 11, 2000
EXHIBIT i(1)
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE 202-778-9000
February 23, 2001
AIM Investment Funds
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Ladies and Gentlemen:
We have acted as counsel to AIM Investment Funds, a Delaware business trust (the "Trust"), in connection with Post-Effective Amendment No. 59 ("PEA") to the Trust's Registration Statement on Form N-1A (File No. 33-19338) relating to the issuance and sale of Shares of the Trust. You have requested our opinion with respect to the matters set forth below.
In this opinion letter, the term "Shares" refers to the Class A, Class B, and Class C shares of beneficial interest in each series of the Trust listed in Schedule A attached to this opinion letter (each, a "Portfolio"), that may be issued during the time that the PEA is effective and has not been superseded by another post-effective amendment.
In connection with rendering the opinions set forth below, we have examined copies, believed by us to be genuine, of the Trust's Agreement and Declaration of Trust dated as of May 7, 1998 (the "Agreement"), and Bylaws, and any amendments thereto, and such other documents relating to its organization and operation as we have deemed relevant to our opinions, as set forth herein. With respect to matters governed by the laws of the State of Delaware (excluding the securities laws thereof), we have relied solely on the opinion letter of Potter Anderson & Corroon LLP, special Delaware counsel to the Trust, an executed copy of which is appended hereto as Exhibit A.
The opinions set forth in this letter are limited to the laws and facts in existence on the date hereof, and are further limited to the laws (other than laws relating to choice of law) of the State of Delaware that in our experience are normally applicable to the issuance of shares of beneficial interest by business trusts and to the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the Securities and Exchange Commission (the "SEC") thereunder.
Based on and subject to the foregoing, and the additional qualifications and other matters set forth below, it is our opinion that as of the date hereof the Shares, when sold in accordance with the terms contemplated by the PEA, including receipt by the Trust of full payment for the Shares and compliance with the 1933 Act and 1940 Act, will have been validly issued and will be fully paid and non-assessable.
AIM Investment Funds
February 23, 2001
We are furnishing this opinion letter to you solely in connection with the issuance of the Shares. You may not rely on this opinion letter in any other connection, and it may not be furnished to or relied upon by any other person for any purpose, without specific prior written consent.
The foregoing opinions are rendered as of the date of this letter, except as otherwise indicated. We assume no obligation to update or supplement our opinions to reflect any changes of law or fact that may occur.
We hereby consent to this opinion letter accompanying the PEA when it is filed with the SEC and to the reference to our firm in the statements of additional information that are being filed as part of such PEA.
Very truly yours,
/s/ KIRKPATRICK & LOCKHART LLP KIRKPATRICK & LOCKHART LLP |
SCHEDULE A
AIM INVESTMENT FUNDS
AIM Developing Markets Fund
AIM Latin American Growth Fund
AIM Global Consumer Products and Services Fund AIM Global Financial Services Fund AIM Global Health Care Fund AIM Global Infrastructure Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund AIM Strategic Income Fund
EXHIBIT i(2)
February 23, 2001
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
Re: AIM Investment Funds
Ladies and Gentlemen:
We have acted as special Delaware counsel for AIM Investment Funds, a Delaware business trust (the "Trust"), in connection with the proposed issuance of shares (collectively, the "Shares") of Class A, Class B, and Class C (collectively, the "Classes") in each series of the Trust referred to in Schedule A attached hereto (each, a "Portfolio"). Initially capitalized terms used herein and not otherwise defined are used herein as defined in that certain Agreement and Declaration of Trust dated as of May 7, 1998, entered into among William J. Guilfoyle, C. Derek Anderson, Frank S. Bayley, Arthur C. Patterson, and Ruth H. Quigley, as Trustees, and the Shareholders of the Trust, (the "Original Declaration").
For purposes of giving the opinions hereinafter set forth, we have examined only the following documents and have conducted no independent factual investigation of our own:
1. The Certificate of Trust for the Trust, dated as of May 7, 1998, as filed in the Office of the Secretary of State of the State of Delaware (the "Secretary of State") on May 7, 1998;
2. The Original Declaration;
3. The First Amendment to the Original Declaration dated as of September 8, 1998 (the "First Amendment");
4. The Second Amendment to the Original Declaration dated as of December 10, 1998 (the "Second Amendment");
Kirkpatrick & Lockhart LLP
February 23, 2001
5. The Third Amendment to the Original Declaration dated as of February 4, 1999 (the "Third Amendment");
6. The Fourth Amendment to the Original Declaration dated as of February 14, 1999 (the "Fourth Amendment");
7. The Fifth Amendment to the Original Declaration dated as of February 11, 2000 (the "Fifth Amendment");
8. The Sixth Amendment to the Original Declaration effective as of May 24, 2000 (the "Sixth Amendment");
9. The Seventh Amendment to the Original Declaration effective as of June 12, 2000 (the "Seventh Amendment");
10. The Eighth Amendment to the Original Declaration effective as of June 19, 2000 (the "Eighth Amendment");
11. The Ninth Amendment to the Original Declaration effective as of December 5, 2000 (the "Ninth Amendment", together with the Original Declaration, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, and the Eighth Amendment, collectively, the "Declaration");
12. Schedule A to the Declaration as in effect on the date hereof;
13. The By-laws of the Trust as in effect on the date hereof;
14. Resolutions of the Trustees as in effect on the date hereof designating and eliminating, as the case may be, Classes and approving the issuance of the Shares (collectively, the "Share Resolutions");
15. Resolutions of the Trustees (the "18f-3 Resolutions" and, together with the Share Resolutions, the "Resolutions") adopting that certain plan pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the "18f-3 Plan");
16. A Certificate of the Secretary of the Trust dated as of February 23, 2001 certifying as to the organizational documents of the Trust, certain authorizing resolutions, the Resolutions, and the signatures of the Trust's officers (the "Officer's Certificate");
17. A Certificate of Good Standing for the Trust, dated February 23, 2001 obtained from the Secretary of State; and
18. The Post-Effective Amendment No. 59 (the "PEA") to registration statement on Form N-1A (the "Form N-1A") to be filed with the Securities and Exchange Commission on
Kirkpatrick & Lockhart LLP
February 23, 2001
or about February 27, 2001, pursuant to the Securities Act of 1933, as amended, covering the Shares (the PEA together with the Form N-1A, the "Registration Statement").
As to certain facts material to the opinions expressed herein, we have relied upon the representations and warranties contained in the documents examined by us.
Based upon the foregoing, and upon an examination of such questions of law of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act.
2. Each Portfolio has been duly created and is validly existing as a series under Section 3804 of the Delaware Act.
3. The Declaration constitutes the legal, valid and binding obligation of the Trustees, enforceable against the Trustees, in accordance with its terms.
4. Subject to the other qualifications set forth herein (including, without limitation, paragraph 5 below), the Shares have been duly authorized and when the Shares shall have been otherwise issued and sold in accordance with the Declaration, the Resolutions, the 18f-3 Plan, and the By-laws, such Shares will be validly issued, fully paid, and non-assessable undivided beneficial interests in the assets of the respective Portfolios of which such Shares form a part, as the case may be.
5. When and if the actions referred to in paragraph 4 have occurred, the holders of the Shares as beneficial owners of the Shares will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware, except that such holders of Shares may be obligated to provide indemnity and/or security in connection with the issuance of replacement certificates for lost or destroyed certificates, if any, representing such Shares, if such holders request certificates in accordance with the By-laws and such certificates are lost.
In addition to the assumptions and qualifications set forth above, all of the foregoing opinions contained herein are subject to the following assumptions, qualifications, limitations and exceptions:
a. The foregoing opinions are limited to the laws of the State of Delaware presently in effect, excluding the securities laws thereof. We have not considered and express no opinion on the laws of any other jurisdiction, including, without limitation, federal laws and rules and regulations relating thereto.
b. We have assumed the legal capacity of any natural persons who are parties to any of the documents examined by us.
Kirkpatrick & Lockhart LLP
February 23, 2001
c. The foregoing opinion regarding the enforceability of the Declaration is subject to (i) applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, fraudulent transfer and similar laws relating to or affecting creditors rights generally including, without limitation, the Delaware Uniform Fraudulent Conveyance Act, the provisions of the United States Bankruptcy Code and the Delaware insolvency statutes, (ii) principles of equity including, without limitation, concepts of materiality, good faith, fair dealing, conscionability and reasonableness (regardless of whether such enforceability is considered in a proceeding in equity or at law), (iii) applicable law relating to fiduciary duties, and (iv) public policy limitations with respect to exculpation, contribution and indemnity provisions.
d. We have assumed that all signatures on documents examined by us are genuine, that all documents submitted to us as originals are authentic and that all documents submitted to us as copies conform with the originals.
e. We have assumed that the Declaration, the By-laws, the Resolutions and the 18f-3 Plan, collectively, constitute the entire agreement with respect to the subject matter thereof, including (i) with respect to the creation, dissolution and winding up of the Trust and each Portfolio, (ii) the terms applicable to the Shares, and (iii) the power and authority of the Trustees.
f. We have assumed that to the extent any additional rights and/or preferences are stated in the 18f-3 Plan, such additional rights and/or preferences (x) are enforceable in accordance with their terms, and (y) do not conflict with the Certificate of Trust, the Declaration, the By-laws, or any statute, rule or regulation applicable to the Trust or any Portfolio.
g. We have assumed that no event set forth in Section 9.3(a) of the Declaration has occurred with respect to the Trust or any Portfolio.
h. Notwithstanding any provision in the Declaration to the contrary, we note that upon the occurrence of an event set forth in Section 9.3(a) thereof, with respect to the Trust or a Portfolio, as the case may be, the Trust or such Portfolio, as applicable, cannot make any payments or distributions to the Shareholders thereof until their respective creditors' claims are either paid in full or reasonable provision for payment thereof has been made.
i. With respect to the enforceability of any provision of the Declaration wherein the parties provide for the appointment of a liquidator, we note that upon the application of any beneficial owner, the Delaware Court of Chancery has the power, upon cause shown, to wind up the affairs of a Delaware business trust or Portfolio thereof and in connection therewith to appoint a liquidating trustee other than the one agreed to by the beneficial owners thereof.
j. We have assumed that none of the By-laws, the Resolutions, or the 18f-3 Plan has been amended, modified, or revoked in any manner from the date of its adoption,
Kirkpatrick & Lockhart LLP
February 23, 2001
and that each of the By-laws, the Resolutions, and the 18f-3 Plan remains in full force and effect on the date hereof.
k. We have assumed that the Trust maintains separate and distinct records for each Portfolio and that the Trust and the Trustees hold and account for the assets belonging to each such Portfolio separately from the other assets of any other Portfolio and the assets of the Trust generally, if any.
l. We note that we do not assume responsibility for the contents of the Registration Statement.
This opinion is rendered solely for your benefit in connection with the matters set forth herein and, without our prior written consent, may not be furnished (except that it may be furnished to any federal, state or local regulatory agencies or regulators having appropriate jurisdiction and entitled to such disclosure) or quoted to, or relied upon by, any other person or entity for any purpose. AIM Investment Funds and Kirkpatrick & Lockhart LLP may rely on this opinion with respect to the matters set forth herein in connection with their opinions being delivered on even date herewith.
We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Potter Anderson & Corroon LLP |
AIM Developing Markets Fund AIM Latin American Growth Fund AIM Global Consumer Products and Services Fund AIM Global Financial Services Fund AIM Global Health Care Fund AIM Global Infrastructure Fund AIM Global Resources Fund AIM Global Telecommunications and Technology Fund AIM Strategic Income Fund
EXHIBIT (i)(3)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated December 18, 2000, relating to the financial statements and financial highlights which appears in the October 31, 2000 Annual Report to Shareholders of the AIM Investment Funds (consisting of the AIM Developing Markets Fund, the AIM Global Infrastructure Fund, the AIM Global Consumer Products and Services Fund, the AIM Global Telecommunications and Technology Fund, the AIM Global Resources Fund, the AIM Latin American Growth Fund, the AIM Global Financial Services Fund, the AIM Strategic Income Fund, and the AIM Global Health Care Fund), which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Highlights", "Independent Accountants" and "Financial Statements" in such Registration Statement.
PricewaterhouseCoopers LLP
February 23, 2001
EXHIBIT (m)(4)
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS A SHARES AND CLASS C SHARES)
SECTION 1. AIM Investment 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 and Class C 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, as amended (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 FUNDS
(on behalf of its Class A and
Class C Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
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Effective as of July 1, 1999, as amended as of June 12, 2000 and June 19, 2000.
Amended and restated for all Portfolios as of July 1, 2000.
APPENDIX A
TO
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS A SHARES AND CLASS C 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 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
FUND BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS A SHARES CHARGE FEE FEE
-------------- -------- ------- ---------
AIM Developing Markets Fund 0.25% 0.25% 0.50%
AIM Global Consumer Products and Services Fund 0.25% 0.25% 0.50%
AIM Global Financial Services Fund 0.25% 0.25% 0.50%
AIM Global Health Care Fund 0.25% 0.25% 0.50%
AIM Global Infrastructure Fund 0.25% 0.25% 0.50%
AIM Global Resources Fund 0.25% 0.25% 0.50%
AIM Global Telecommunications and Technology Fund 0.25% 0.25% 0.50%
AIM Latin American Growth Fund 0.25% 0.25% 0.50%
AIM Strategic Income Fund 0.10% 0.25% 0.35%
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MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
CLASS C SHARES CHARGE FEE FEE
-------------- -------- ------- ---------
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Consumer Products and Services Fund 0.75% 0.25% 1.00%
AIM Global Financial Services Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Global Infrastructure Fund 0.75% 0.25% 1.00%
AIM Global Resources Fund 0.75% 0.25% 1.00%
AIM Global Telecommunications and Technology Fund 0.75% 0.25% 1.00%
AIM Latin American Growth Fund 0.75% 0.25% 1.00%
AIM Strategic Income Fund 0.75% 0.25% 1.00%
|
* 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)(5)(d)
AMENDMENT NO. 3
DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS B SHARES)
The Distribution Plan (the "Plan"), dated as of September 8, 1998, pursuant to Rule 12b-1 of AIM Investment 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
DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
SALES CHARGE FEE FEE
Class B Shares
-------------- ------------ --- ---
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Emerging Markets Debt Fund 0.75% 0.25% 1.00%
AIM Global Consumer Products and Services Fund 0.75% 0.25% 1.00%
AIM Global Financial Services Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Global Infrastructure Fund 0.75% 0.25% 1.00%
AIM Global Resources Fund 0.75% 0.25% 1.00%
AIM Global Telecommunications and Technology Fund 0.75% 0.25% 1.00%
AIM Latin American Growth Fund 0.75% 0.25% 1.00%
AIM Strategic Income Fund 0.75% 0.25% 1.00%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: June 12, 2000
AIM INVESTMENT FUNDS
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT N. GRAHAM
------------------------- -----------------------------------
Assistant Secretary President
|
EXHIBIT (m)(5)(e)
AMENDMENT NO. 4
DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS B SHARES)
The Distribution Plan (the "Plan"), dated as of September 8, 1998, pursuant to Rule 12b-1 of AIM Investment 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
DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
Class B Shares SALES CHARGE FEE FEE
-------------- ------------ --- ---
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Consumer Products and Services Fund 0.75% 0.25% 1.00%
AIM Global Financial Services Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Global Infrastructure Fund 0.75% 0.25% 1.00%
AIM Global Resources Fund 0.75% 0.25% 1.00%
AIM Global Telecommunications and Technology Fund 0.75% 0.25% 1.00%
AIM Latin American Growth Fund 0.75% 0.25% 1.00%
AIM Strategic Income Fund 0.75% 0.25% 1.00%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: June 19, 2000
AIM INVESTMENT FUNDS
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT N. GRAHAM
--------------------------- -----------------------------
Assistant Secretary President
|
EXHIBIT m(6)
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM Investment Funds, a Delaware business trust (the "Fund"), on behalf of the series of beneficial interest set forth in Schedule A to this plan (the "Portfolios"), may pay for distribution of the Class B Shares of such Portfolios (the "Shares") which the Fund issues from time to time, 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 expenses for and pay any institution selected to act as the Fund's agent for distribution of the Shares of any Portfolio from time to time (each, a "Distributor") at the rates set forth in Schedule A hereto based on the average daily net assets of each class of Shares subject to any applicable limitations imposed by the Conduct Rules of the NASD Regulation, Inc. in effect from time to time (the "Conduct Rules"). All such payments are the legal obligation of the Fund and not of any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 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 and running advertising programs, payment of 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, payment of overhead and supplemental payments to dealers and other institutions as asset-based sales charges. Amounts set forth in Section 2 may also be used to finance payments of service fees under a shareholder service arrangement, which may be established by each 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 the Distributor for any such expense, such amounts may be treated as compensation for the Distributor's distribution-related services. 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.
(b) Subject to the provisions in Sections 8 and 9 hereof,
amounts payable pursuant to Section 2 in respect of Shares of each
Portfolio shall be paid by the Fund to the Distributor in respect of
such Shares or, if more than one institution has acted or is acting as
Distributor in respect of such Shares, then amounts payable pursuant to
Section 2 in respect of such Shares shall be paid to each such
Distributor in proportion to the number of such Shares sold by or
attributable to such Distributor's distribution efforts in respect of
such Shares in accordance with allocation provisions of each
Distributor's distribution agreement (the "Distributor's 12b-1 Share")
notwithstanding that such Distributor's distribution agreement with the
Fund may have been terminated. The Distributor's 12b-1 Share shall
include amounts payable pursuant to Section 2 in respect
of Shares sold by or attributable to distribution efforts of GT Global, Inc. That portion of the amounts paid under the Plan that is not paid to the Distributor, or paid or advanced by the Distributor to dealers or other institutions for providing personal continuing shareholder service as a service fee pursuant to Section 4 shall be deemed as asset-based sales charge.
(c) Any Distributor may assign, transfer or pledge ("Transfer") to one or more designees (each an "Assignee"), its rights to all or a designated portion of its Distributor's 12b-1 Share from time to time (but not such Distributor's duties and obligations pursuant hereto or pursuant to any distribution agreement in effect from time to time, if any, between such Distributor and the Fund), free and clear of any offsets or claims the Fund may have against such Distributor. Each such Assignee's ownership interest in a Transfer of a specific designated portion of a Distributor's 12b-1 Share is hereafter referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant to this Section 3(c) shall not reduce or extinguish any claims of the Fund against the Distributor.
(d) Each Distributor shall promptly notify the Fund in writing of each such Transfer by providing the Fund with the name and address of each such Assignee.
(e) A Distributor may direct the Fund to pay an Assignee's 12b-1 Portion directly to the Assignee. In such event, the Distributor shall provide the Fund with a monthly calculation of the amount of (i) the Distributor's 12b-1 Share, and (ii) each Assignee's 12b-1 Portion, if any, for such month (the "Monthly Calculation"). In such event, the Fund shall, upon receipt of such notice and Monthly Calculation from the Distributor, make all payments required under such distribution agreement directly to the Assignee in accordance with the information provided in such notice and Monthly Calculation upon the same terms and conditions as if such payments were to be paid to the Distributor.
(f) Alternatively, in connection with a Transfer, a Distributor may direct the Fund to pay all of such Distributor's 12b-1 Share from time to time to a depository or collection agent designated by any Assignee, which depository or collection agent may be delegated the duty of dividing such Distributor's 12b-1 Share between the Assignee's 12b-1 Portion and the balance of the Distributor's 12b-1 Share (such balance, when distributed to the Distributor by the depository or collection agent, the "Distributor's 12b-1 Portion"), in which case only the Distributor's 12b-1 Portion may be subject to offsets or claims the Fund may have against such Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part for the implementation by the Distributor of shareholder service arrangements with respect to the Shares. The maximum service fee payable to any provider of such shareholder service shall be twenty-five one-hundredths of one percent (0.25%) per annum of the daily net assets of the Shares attributable to the customers of such service provider. All such payments are the legal obligation of the Fund and not of any Distributor or its designee.
(b) Pursuant to this Plan, the Distributor 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 the Distributor for the provision of continuing shareholder services in connection with Shares held by such Dealers' clients and customers ("Customers") who may from time to time directly or beneficially own Shares. The personal continuing shareholder services to be rendered by Dealers under the Service Agreements may include, but shall not be limited to, some or all of 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 in 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; (vi) performing sub-accounting; (vii) providing periodic statements showing a Customer's shareholder account balance and the integration of such statements with those of other transactions and balances in the Customer's account serviced by such institution; (viii) forwarding applicable prospectuses, proxy statements, reports and notices to Customers who hold Shares; and (ix) providing such other information and administrative services as the Fund or the Customer may reasonably request.
(c) The Distributor may also enter into Bank Shareholder Service Agreements substantially in the form attached hereto as Exhibit B ("Bank Agreements") with selected banks and financial institutions 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) The Distributor may also enter into Agency Pricing Agreements substantially in the form attached hereto as Exhibit C ("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.
(e) The Distributor may also enter into Shareholder Service Agreements substantially in the form attached hereto as Exhibit D ("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.
(f) The Distributor, as agent of the Portfolios, may also enter in a Shareholder Service Agreement substantially in the form attached hereto as Exhibit E (the "Agreement") with the Distributor, acting as principal. The Distributor, acting as principal, will provide some or all of the shareholder services to Portfolio shareholders for which the Distributor is the broker of record, as set forth in the Agreement.
SECTION 5. This Plan shall not take effect with respect to any Shares of any Portfolio until (i) it has been approved, together with any related agreements, by votes of the majority of both (a) the Board of Trustees of the Fund, and (b) 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 "Disinterested Trustees"), cast in person at a meeting called for the purpose of voting on this Plan or such agreements, and (ii) the execution by the Fund and A I M Distributors, Inc. of a Master Distribution Agreement in respect of the Shares of such Portfolio.
SECTION 6. Unless sooner terminated pursuant to Section 8, 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 5.
SECTION 7. Each Distributor shall provide the Fund's Board of Trustees and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended for distribution of the Shares and the purposes for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the Shares of any Portfolio at any time by vote of a majority of the Disinterested Trustees, or by a vote of a majority of outstanding Shares of such Portfolio. Upon termination of this Plan with respect to any or all such classes, the obligation of the Fund to make payments pursuant to this Plan with respect to such classes shall terminate, and the fund shall not be required to make payments hereunder beyond such termination date with respect to expenses incurred in connection with Shares sold prior to such termination date, provided, in each case that each of the requirements of a Complete Termination of the Plan in respect of such class, as defined below, are met. A termination of this Plan with respect to any or all Shares of any or all Portfolios shall not affect the obligation of the Fund to withhold and pay to any Distributor contingent deferred sales changes to which such distributor is entitled pursuant to any distribution agreement. For purposes of this Section 8, a "Complete Termination" of this Plan in respect of any Portfolio shall mean a termination of this Plan in respect of such Portfolio, provided that: (i) the Disinterested Trustees of the Funds shall have acted in good faith and shall have determined that such termination is in the best interest of the Fund and the shareholders of such Portfolio; (ii) the Fund does not alter the terms of the contingent deferred sales charges applicable to Shares outstanding at the time of such termination; and (iii) unless the applicable Distributor at the time of such termination was in material breach under the distribution agreement in respect of such Portfolio, the Fund shall not, in respect of such Portfolio, pay to any person or entity, other than such Distributor or its designee, either the asset-based sales charge or the service fee (or any similar fee) in respect of the Shares sold by such Distributor prior to such termination.
SECTION 9. Any agreement related to this Plan shall be made in writing, and shall provide:
(a) that such agreement may be terminated with respect to the Shares of any or all Portfolios at any time, without payment of any penalty, by vote of a majority of the Disinterested Trustees or by a vote of the majority of the outstanding Shares of such Portfolio, on not more than sixty (60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment; provided, however, that, subject to the
provisions of Section 8 hereof, if such agreement is terminated for any
reason, the obligation of the Fund to make payments of (i) the
Distributor's 12b-1 Share in accordance with the directions of the
Distributor pursuant to Section 3(e) or (f) hereof if there exist
Assignees for all or any portion of such Distributor's 12b-1 Share, and
(ii) the remainder of such Distributor's 12b-1 Share to such
Distributor if there are no Assignees for such Distributor's Share,
pursuant to such agreement and this Plan will continue with respect to
the Shares until such Shares are redeemed or automatically converted
into another class of shares of the Fund.
SECTION 10. This Plan may not be amended with respect to the shares of any Portfolio to increase materially the amount of distribution expenses provided for in Section 2 hereof unless such amendment is approved by a vote of at least a "majority of the outstanding voting securities" (as defined in the 1940 Act) of the Shares of such Portfolio, and no material amendment to the Plan with respect to the shares of any Portfolio shall be made unless approved in the manner provided for in Section 5 hereof.
AIM INVESTMENT FUNDS
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
--------------------------- ---------------------------------
Assistant Secretary Vice President
|
Effective as of September 8, 1998, and as amended as of March 18, 1999, June 1, 1999, June 12, 2000 and June 19, 2000.
Amended and restated for all Portfolios as of December 31, 2000.
SCHEDULE A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INVESTMENT FUNDS
(CLASS B SHARES)
MAXIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
SALES CHARGE FEE FEE
------------ ------------- -----------
AIM Developing Markets Fund 0.75% 0.25% 1.00%
AIM Global Consumer Products and Services Fund 0.75% 0.25% 1.00%
AIM Global Financial Services Fund 0.75% 0.25% 1.00%
AIM Global Health Care Fund 0.75% 0.25% 1.00%
AIM Global Infrastructure Fund 0.75% 0.25% 1.00%
AIM Global Resources Fund 0.75% 0.25% 1.00%
AIM Global Telecommunications and Technology Fund 0.75% 0.25% 1.00%
AIM Latin American Growth Fund 0.75% 0.25% 1.00%
AIM Strategic Income Fund 0.75% 0.25% 1.00%
|
EXHIBIT m(7)(c)
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Contractholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant to said Rule. This Agreement, being made between A I M Distributors, Inc. ("Distributors") and the authorized insurance company, sets forth the terms for the provision of specialized services to holders of Group Annuity Contracts (the "Contracts") issued by insurance company separate accounts to employers for their pension, stock bonus or profit-sharing plans qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where amounts contributed under such plans are invested pursuant to the Contracts in shares of one or more of the series portfolios of the AIM - managed mutual funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix A, attached hereto, which may be amended from time to time by Distributors. Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of Contracts who have selected the Fund(s) for purposes of their Group Annuity Contracts ("Contractholders") you will receive payment pursuant to the distribution plan adopted by each of the Funds. Such services to Group Contractholders may include, without limitation, some or all of the following: answering inquiries regarding the Fund(s); performing sub-accounting for Contractholders; establishing and maintaining Contractholder accounts and records; processing and bunching purchase and redemption transactions; providing periodic statements of Contract account balances; forwarding such reports and notices to Contractholders relative to the Fund(s) as we deem necessary; generally, facilitating communications with Contractholders concerning investments in the Fund(s) on behalf of Plan participants; and performing such other administrative services as we deem to be necessary or desirable, to the extent permitted by applicable statute, rule or regulation. You represent that you will accept a fee hereunder only so long as you continue to provide personal services to Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your name and you may exercise all applicable rights of a holder of such Shares. You agree to transmit to the Funds, in a timely manner, all purchase orders and redemption requests and to forward to each of your Contractholders as you deem necessary, periodic shareholder reports and other communications received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3) business days of the placing of a purchase order, federal funds in an amount equal to the amount of all purchase orders placed by you on behalf of your Contractholders and accepted by the Funds (net of any redemption orders placed by you on behalf of your Contractholders).
4. You shall provide such facilities and personnel (which may be all or any part of the facilities currently used in your business, or all or any personnel employed by you) as may be necessary or beneficial in carrying out the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between Distributors and you, neither you nor any of your employees or agents are authorized to assist in the distribution of any shares of the Fund(s) to the public or to make any representations to Contractholders
concerning the Fund(s) except those contained in the then current prospectus applicable to the Fund(s). Neither the Funds, A I M Advisors, Inc. ("Advisors"), Distributors nor any of their affiliates will be a party, nor will they be represented as a party, to any Group Annuity Contract agreement between you and the Contractholders nor shall the Funds, Advisors, Distributors or any of their affiliates participate, directly or indirectly, in any compensation that you may receive from Contractholders and their Plans' participants.
6. In consideration of the services and facilities described herein, you shall receive an annual fee, payable quarterly, as set forth in Appendix A, of the aggregate average net asset value of shares of the Fund(s) owned by you during each quarterly period for the benefit of Contractholders' Plans' participants. You understand that this Agreement and the payment of such distribution fees have been authorized and approved by the Boards of Directors/Trustees of the Fund(s). You further understand that this Agreement and the fees payable hereunder are subject to limitations imposed by applicable rules of the National Association of Securities Dealers, Inc.
7. The Funds reserve the right, at their discretion and without notice, to suspend the sale of their shares or to withdraw the sale of their shares.
8. This Agreement may be amended at any time without your consent by mailing a copy of an amendment to you at the address set forth below. Such amendment shall become effective on the date set forth in such amendment unless you terminate this Agreement as set forth below within thirty (30) days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than 60 days' written notice to you at your principal place of business. You may terminate this Agreement on 60 days' written notice addressed to us at our principal place of business. We may also terminate this Agreement for cause on violation by you of any of the provisions of this Agreement, said termination to become effective on the date of mailing notice to you of such termination. Our failure to terminate for any cause shall not constitute a waiver of our right to terminate at a later date for any such cause.
This Agreement may be terminated with respect to any Fund at any time without payment of any penalty by the vote of a majority of the directors/trustees of such Fund who are Dis-interested Directors/Trustees, as defined in the 1940 Act, or by a vote of a majority of the Fund's outstanding shares, on sixty (60) days' written notice. It will be terminated by any act which terminates either the Fund's Distribution Agreement with us, the Selected Dealer Agreement between your firm and us or the Fund's Distribution Plan, and in any event, it shall terminate automatically in the event of its assignment as that term is defined in the 1940 Act.
10. All communications to us shall be sent to 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if mailed, telegraphed or sent by facsimile to you at the address shown on this Agreement.
11. This Agreement shall become effective as of the date when it is executed and dated below by us. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
------------------------------- ---------------------------------
Signature
------------------------------------
|
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date:
----------------------------------- ------------------------------------
(Firm Name)
------------------------------------
(Address)
------------------------------------
(City) / (State) / (County)
By:
---------------------------------
Name:
-------------------------------
Title:
-----------------------------
|
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
FUND FEE RATE*
---- --------
AIM Advisor Funds (Class A and Class C Shares)
----------------------------------------------------
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds (Class A and Class C Shares)
---------------------------------------------
AIM Aggressive Growth Fund .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Dent Demographic Trends Fund .25%
AIM Emerging Growth Fund .25%
AIM Large Cap Basic Value Fund .25%
AIM Large Cap Growth Fund .25%
AIM Mid Cap Growth Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A and Class C Shares)
--------------------------------------------
AIM Balanced Fund .25%
AIM European Small Company Fund .25%
AIM Global Utilities Fund .25%
AIM International Emerging Growth Fund .25%
AIM New Technology Fund .25%
AIM Select Growth Fund .25%
AIM Small Cap Equity Fund .25%
AIM Value Fund .25%
AIM Value II Fund .25%
AIM Worldwide Spectrum Fund .25%
AIM Growth Series (Class A and Class C Shares)
----------------------------------------------
AIM Basic Value Fund .25%
AIM Euroland Growth Fund .25%
AIM Japan Growth Fund .25%
AIM Mid Cap Equity Fund .25%
AIM Small Cap Growth Fund(1) .25%
--------------
|
* Frequency of Payments: Quarterly.
(1) AIM Small Cap Growth Fund is closed to new investors.
AIM International Funds, Inc. (Class A and Class C Shares)
-----------------------------------------------------------
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Funds (Class A and Class C Shares)
-------------------------------------------------
AIM Developing Markets Fund .25%
AIM Global Consumer Products and Services Fund .25%
AIM Global Financial Services Fund .25%
AIM Global Health Care Fund .25%
AIM Global Infrastructure Fund .25%
AIM Global Resources Fund .25%
AIM Global Telecommunications and Technology Fund .25%
AIM Latin American Growth Fund .25%
AIM Strategic Income Fund .25%
AIM Investment Securities Funds (Class A and Class C Shares)
------------------------------------------------------------
AIM Limited Maturity Treasury Fund(2) .15%
AIM High Yield Fund II .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Series Trust (Class A and Class C Shares)
---------------------------------------------
AIM Global Trends Fund .25%
AIM Special Opportunities Funds (Class A and Class C Shares)
------------------------------------------------------------
AIM Small Cap Opportunities Fund(3) .25%
AIM Large Cap Opportunities Fund(4) .25%
AIM Mid Cap Opportunities Fund(3) .25%
------------------
(2) AIM Limited Maturity Treasury Fund offers Class A Shares only.
|
(3) AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund are
closed to new investors.
(4) AIM Large Cap Opportunities Fund intends to close to new investors on the
earlier of reaching $750 million in assets or September 29, 2000.
EXHIBIT m(7)(f)
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
AIM Worldwide Spectrum Fund A Shares 0.25 December 29, 2000
AIM Worldwide Spectrum Fund B Shares 0.25 December 29, 2000
AIM Worldwide Spectrum Fund C Shares 1.00** December 29, 2000
|
*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 (n)(2)
MULTIPLE CLASS PLAN
OF
AIM INVESTMENT FUNDS
AIM GROWTH SERIES
AIM SERIES TRUST
(TO BE EFFECTIVE FEBRUARY 11, 2000)
1. This Multiple Class Plan ("Plan") adopted in accordance with Rule 18f-3 under the Act shall govern the terms and conditions under which the Funds may issue separate Classes of Shares representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the meanings ascribed to them below:
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of Shares during which such Shares may be assessed a CDSC upon redemption.
d. Class - a class of Shares of a Fund representing an interest in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A Shares in the Fund's organizing documents, as well as those Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C Shares in the Fund's organizing documents, as well as those Shares deemed to be Class C Shares for purposes of this Plan. Class C Shares may not be available for each Fund.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as defined in a Plan of Distribution and/or agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management Company, as applicable.
l. Fund - each of AIM Investment Funds, AIM Growth Series and AIM Series Trust.
m. Plan of Distribution - any plan adopted under Rule 12b-1 under the Act with respect to payment of a Distribution Fee.
n. Portfolio - a series of the Shares of a Fund constituting a separate investment portfolio of the Fund.
o. Service Fee - a fee paid to financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts.
p. Share - a share of beneficial interest in a Fund.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear directly any and all Distribution Fees and/or Service Fees payable by such Class pursuant to a Plan of Distribution adopted by the Fund with respect to such Class.
b. Allocation of Other Expenses - Each Class shall bear proportionately all other expenses incurred by a Fund based on the relative net assets attributable to each such Class.
c. Allocation of Income, Gains and Losses - Except to the extent provided in the following sentence, each Portfolio will allocate income and realized and unrealized capital gains and losses to a Class based on the relative net assets of each Class. Notwithstanding the foregoing, each Portfolio that declares dividends on a daily basis will allocate income on the basis of settled shares.
d. Waiver and Reimbursement of Expenses - A Portfolio's adviser, underwriter or any other provider of services to the Portfolio may waive or reimburse the expenses of a particular Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and servicing arrangements identified below will apply for the following Classes offered by a Fund with respect to a Portfolio. The provisions of the Fund's prospectus describing the distribution and servicing arrangements in detail are incorporated herein by this reference.
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
which may be reduced or eliminated for certain money market
fund shares, for larger purchases, under a combined purchase
privilege, under a right of accumulation, under a letter of
intent or for certain categories of purchasers as permitted by
Section 22(d) of the Act and as set forth in the Fund's
prospectus. Class A Shares that are not subject to a front-end
sales charge as a result of the foregoing shall be subject to
a CDSC for the CDSC Period set forth in Section 5(a) of this
Plan if so provided in the Fund's prospectus. The offering
price of Shares subject to a front-end sales charge shall be
computed in accordance with Rule 22c-1 and Section 22(d) of
the Act and the rules and regulations thereunder. Class A
Shares shall be subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Directors
and set forth in the Fund's prospectus.
b. Class B Shares. Class B Shares shall be (i) offered at net asset value, (ii) subject to a CDSC for the CDSC Period set forth in Section 5(b), (iii) subject to ongoing Service Fees and Distribution Fees approved from time to time by the Directors and set forth in the Fund's prospectus, and (iv) to the extent provided for in the Fund's prospectus, converted to Class A Shares eight years from the end of the calendar month in which the
shareholder's order to purchase was accepted as set forth in the Fund's prospectus, except that Class B shares of AIM Series Trust which were acquired prior to June 1, 1998 shall convert to Class A Shares as of the close of business of the last business day of the month in which the seventh anniversary of the initial issuance of such Class B Shares occurs.
c. Class C Shares. Class C Shares shall be (i) offered at net asset value, (ii) subject to a CDSC for the CDSC Period set forth in Section 5(c), and (iii) subject to ongoing Service Fees and Distribution Fees approved from time to time by the Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not incur a front-end sales charge and of Class B Shares and Class C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be the period set forth in the Fund's prospectus. The CDSC rate shall be as set forth in the Fund's prospectus, the relevant portions of which are incorporated herein by this reference. No CDSC shall be imposed on Class A Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall be six years. The CDSC rate for the Class B Shares shall be as set forth in the Fund's prospectus, the relevant portions of which are incorporated herein by this reference.
c. Class C Shares. The CDSC Period for the Class C Shares shall be one year. The CDSC rate for the Class C Shares shall be as set forth in the Fund's prospectus, the relevant portions of which are incorporated herein by this reference.
d. Method of Calculation. The CDSC shall be assessed on an amount equal to the lesser of the then current market value or the cost of the Shares being redeemed. No CDSC shall be imposed on increases in the net asset value of the Shares being redeemed above the initial purchase price. No CDSC shall be assessed on Shares derived from reinvestment of dividends or capital gains distributions. The order in which Shares are to be redeemed when not all of such Shares would be subject to a CDSC shall be determined by the Distributor in accordance with the provisions of Rule 6c-10 under the Act.
e. Waiver. The Distributor may in its discretion waive a CDSC otherwise due upon the redemption of Shares and disclosed in the Fund's prospectus or statement of additional information and, for the Class A Shares, as allowed under Rule 6c-10 under the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted as follows:
a. Class A Shares may be exchanged for Class A Shares of such other mutual funds as are disclosed in the Fund's prospectus, subject to such terms and limitations as disclosed in the Fund's prospectus and statement of additional information.
b. Class B Shares may be exchanged for Class B Shares of such other mutual funds as are disclosed in the Fund's prospectus, subject to such terms and limitations as disclosed in the Fund's prospectus and statement of additional information.
c. Class C Shares may be exchanged for Class C Shares of such other mutual funds as are disclosed in the Fund's prospectus, subject to such terms and limitations as disclosed in the Fund's prospectus and statement of additional information.
d. Depending upon the Portfolio from which and into which an exchange is being made and when the shares were purchased, shares being acquired in an exchange may be acquired at their offering price, at their net asset value or by paying the difference in sales charges, as disclosed in the Fund's prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A Shares, Class B Shares, and Class C Shares subject to a CDSC shall be computed in the manner described in the Fund's prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee applicable to any Class shall be those set forth in the Fund's prospectus, relevant portions of which are incorporated herein by this reference. All other terms and conditions with respect to Service Fees and Distribution Fees shall be governed by the Plan of Distribution adopted by the Fund with respect to such fees and Rule 12b-1 under the Act.
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and Distributions - Shares purchased through the reinvestment of dividends and distributions paid on Shares subject to conversion shall be treated as if held in a separate sub-account. Each time any Shares in a shareholder's account (other than Shares held in the sub-account) convert to Class A Shares, a proportionate number of Shares held in the sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All conversions shall be effected on the basis of the relative net asset values of the two Classes without the imposition of any sales load or other charge.
c. Amendment to Plan of Distribution for Class A Shares - If any amendment is proposed to the Plan of Distribution under which Service Fees and Distribution Fees are paid with respect to Class A Shares of a Fund that would increase materially the amount to be borne by those Class A Shares, then no Class B Shares shall convert into Class A Shares of that Fund until the holders of Class B Shares of that Fund have also approved the proposed amendment. If the holders of such Class B Shares do not approve the proposed amendment, the Directors of the Fund and the Distributor shall take such action as is necessary to ensure that the Class voting against the amendment shall convert into another Class identical in all material respects to Class A Shares of the Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a Fund, including a majority of the Directors who are not interested persons of the Fund, shall find that the Plan, as proposed and including the expense allocations, is in the best interests of each Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
EXHIBIT p(2)
CODE OF ETHICS
OF
AIM INVESTMENT FUNDS
WHEREAS, AIM INVESTMENT 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 March 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, officer, or advisory person of the Company; provided, however, that any person who is an access person of any investment advisor of, or principal underwriter for, any registered investment company and who is required by Rule 17j-1 of the 1940 Act to report his or her securities transactions to such investment advisor or principal underwriter, shall not be deemed an access person of the Company.
B. "Advisory person" means
1. any employee of the Company, its investment advisor or administrator (or of any entity in a control relationship with the Company, its investment advisor or administrator, as defined in Section I.D. hereof), who, in connection with his or her regular functions or duties, makes, participates in, or obtains information (other than publicly available information) regarding the purchase or sale of a security by the Company, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and
2. any natural person directly or indirectly owning, controlling, or holding with power to vote, 25% or more of the outstanding voting securities of any of the Company, its investment advisor or administrator, who obtains information (other than publicly available information) concerning recommendations made by the Company, its investment advisor or administrator with regard to the purchase or sale of a security.
C. "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.C.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.
D. "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.
E. "Security" means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt of, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing; provided, however, that "security" shall not mean securities issued or guaranteed by the Government of the United States, its agencies or instrumentalities, bankers' acceptances, bank certificates of deposit, commercial paper and shares of registered open-end investment companies.
F. "Purchase or sale of a security" includes the writing of an option to purchase or sell a security.
G. "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.
H. "Beneficial ownership of a security" by any person includes securities held by:
1. a spouse, minor children or relatives who share the same home with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of such person's immediate family have a vested interest in the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the power to revoke the trust without the consent of all the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares of the corporation) of which such person is an officer, director or 10% stockholder;
6. any other person if, by reason of contract, understanding, relationship, agreement or other arrangement, such person obtains therefrom benefits substantially equivalent to those of ownership; or
7. such person's spouse or minor children or any other person, if, even though such person does not obtain therefrom the above-mentioned benefits of ownership, such person can vest or re-vest title in himself at once or at some future time.
A beneficial owner of a security also includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power and/or investment power with respect to such security. Voting power includes the power to vote, or to direct the voting of such security, and investment power includes the power to
dispose, or to direct the disposition of such security. A person is the beneficial owner of a security if he has the right to acquire beneficial ownership of such security at any time within sixty (60) days.
II. Identification of access persons
A. The Company will maintain a list of all access persons and will notify each access person in writing that such person is an access person. Once a person has been so identified, he/she shall continue to be an access person until otherwise notified in writing by the Company; provided, however, if such person is an access person solely because he/she is a director/trustee of the Company, such person shall cease to be an access person at the time such person ceases to be a director/trustee.
B. Each access person will be given a copy of the Code at the time such person becomes an access person.
III. 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.
IV. 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.
B. If any access person should obtain information concerning the Company's portfolio (including the consideration by the Company of acquiring or recommending any security for the Company's portfolio), whether in the course of such person's duties or otherwise, such person shall respect the confidential nature of this information and shall not divulge it to anyone unless it is properly part of such person's services to the Company to do so or such person is specifically authorized to do so by the President of the Company.
V. 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 its employees 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.
VI. 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 VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the access person has no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of either the access person or the Company.
3. Purchases that are part of an automatic dividend reinvestment plan.
4. 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.
5. 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 VI, 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 VI.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
VII.B. hereof.
VII. Reporting Procedures
A. Except as provided by Sections VII.C. and VII.D. hereof, every access person shall report to the Board of Directors/Trustees the information described in Section VII.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 VII.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, and 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 VII.A. and VII.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 VII.A. and VII.B. 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.
VIII. Review Procedures
A. The reports submitted by access persons pursuant to Section VII.B. hereof shall be reviewed at least quarterly by 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 that a violation of this Code has occurred and that the person violating this Code has purchased or sold a security at a more advantageous price than that obtained by the Company, such person shall be required to offer to sell to or purchase from the Company, as the case may be, such security at the more advantageous price. If this cannot be consummated, then the Board of Directors/Trustees shall take such other course of action as it may deem appropriate. With respect to any violation of this Code, the Board of Directors/Trustees may take any preventive, remedial or other action that it may deem appropriate. In determining whether or not there has been, or may be, a conflict of interest between the Company and any person subject to this Code, the Board of Directors/Trustees shall consider all of the relevant facts and circumstances.
EXHIBIT (p)(3)
AIM FUNDS
CODE OF ETHICS
OF
AIM INVESTMENT FUNDS
WHEREAS, AIM Investment 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 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 notwithstanding that only access persons who are independent directors/trustees, as defined in Section I.I. below, are covered under the 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.
F. "PURCHASE OR SALE OF A SECURITY" includes the writing of an option to purchase or sell a security.
G. "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.
H. "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.
I. "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
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 its employees 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% of 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 or unit investment trusts, 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 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
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.
IX. RECORDS RETENTION
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)(4)
AIM FUNDS
CODE OF ETHICS
OF
AIM INVESTMENT FUNDS
WHEREAS, AIM Investment 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 28, 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.