-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PBiac0978A1OF1y4iEyvpskVug4ftb6GNOa1tH4KXqGLCS2ZDWWMMRmLo911EYTE cCuFA55KtoNqLPJeGYLfxA== 0000950129-96-000226.txt : 19960229 0000950129-96-000226.hdr.sgml : 19960229 ACCESSION NUMBER: 0000950129-96-000226 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 37 FILED AS OF DATE: 19960228 EFFECTIVENESS DATE: 19960228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM INTERNATIONAL FUNDS INC CENTRAL INDEX KEY: 0000880859 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 760352823 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-44611 FILM NUMBER: 96526670 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06463 FILM NUMBER: 96526671 BUSINESS ADDRESS: STREET 1: 11 GREENWAY PLAZA STE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: AIM INTERNATIONAL FUNDS INC STREET 2: 11 GREENWAY PLAZA SUITE 1919 CITY: HOUSTON STATE: TX ZIP: 77210-4333 485BPOS 1 AIM INTERNATIONAL FUNDS,INC. 1 As filed with the Securities and Exchange Commission on February 28, 1996 1933 Act Reg. No. 33-44611 1940 Act Reg. No. 811-6463 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X ----- Pre-Effective Amendment No. ---- ----- Post-Effective Amendment No. 9 X ---- ----- and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 11 X ----- ----- (Check appropriate box or boxes.) AIM INTERNATIONAL FUNDS, INC. -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) 11 Greenway Plaza, Suite 1919, Houston, TX 77046 ---------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (713) 626-1919 -------------- Charles T. Bauer 11 Greenway Plaza, Suite 1919, Houston, TX 77046 ------------------------------------------------ (Name and Address of Agent for Service) Copy to: P. Michelle Grace, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll 11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Amendment It is proposed that this filing will become effective (check appropriate box) immediately upon filing pursuant to paragraph (b) - ----- X on March 1, 1996 pursuant to paragraph (b) - ----- 60 days after filing pursuant to paragraph (a)(1) - ----- on (date) pursuant to paragraph (a)(1) - ----- 75 days after filing pursuant to paragraph (a)(2) - ----- on (date) pursuant to paragraph (a)(2) of rule 485 - ----- (continued on next page) 2 If appropriate, check the following box: this post-effective amendment designates a new effective date for a - ----- previously filed post-effective amendment. Registrant continues its election to register an indefinite number of its shares of Common Stock pursuant to Rule 24f-2 under the Investment Company Act of 1940 and accordingly, filed its Rule 24f-2 Notice for the fiscal year ended October 31, 1995, on December 22, 1995. 3 CROSS REFERENCE SHEET (AS REQUIRED BY RULE 495) I. AIM INTERNATIONAL EQUITY FUND
N-1A ITEM NO. PROSPECTUS LOCATION - ------------- ------------------- PART A Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . Financial Highlights; Performance Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary; Investment Objective and Policies; Hedging Strategies and Other Investment Techniques; Risk Factors; Investment Restrictions; General Information; Management Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management; General Information Item 5A. Management's Discussion of the Fund . . . . . . . . . . . . . . . . . . . [included in annual report] Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions and Tax Matters; General Information Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . How to Purchase Shares; Terms and Conditions of Purchase of the AIM Funds; Determination of Net Asset Value; Management Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . How to Redeem Shares Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable STATEMENT OF ADDITIONAL INFORMATION LOCATION -------------------------------------------- PART B Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents Item 12. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction; General Information About the Company; Miscellaneous Information Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . Hedging Strategies and Other Investment Techniques; Investment Restrictions Item 14. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Information Item 16. Investment Advisory and Other Services . . . . . . . . . . . . Management; The Distribution Plans Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Brokerage Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . General Information about the Company; Miscellaneous Information Item 19. Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase and Redeem Shares; Net Asset Value Determination Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions, and Tax Matters Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management; The Distributor Item 22. Calculations of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
4 CROSS REFERENCE SHEET (AS REQUIRED BY RULE 495) II. AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND
N-1A ITEM NO. PROSPECTUS LOCATION - ------------- ------------------- PART A Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . Financial Highlights; Performance Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary; Investment Objectives and Policies; Hedging Strategies; Other Investment Techniques; Risk Factors; Investment Restrictions; General Information; Management Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management; General Information Item 5A. Management's Discussion of Fund Performances . . . . . . . . . . . . . . . [included in annual report] Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions and Tax Matters; General Information Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . How to Purchase Shares; Terms and Conditions of Purchase of the AIM Funds; Determination of Net Asset Value; Management Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . How to Redeem Shares Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable STATEMENT OF ADDITIONAL INFORMATION LOCATION -------------------------------------------- PART B Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents Item 12. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction; General Information About the Company; Miscellaneous Information Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . Hedging Strategies and Other Investment Techniques; Investment Restrictions Item 14. Management of the Fund Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Information Item 16. Investment Advisory and Other Services . . . . . . . . . . . . Management; The Distribution Plans Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Brokerage Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . General Information about the Company; Miscellaneous Information Item 19. Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase and Redeem Shares; Net Asset Value Determination Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions, and Tax Matters Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management; The Distributor Item 22. Calculations of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
5 PART C Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. 6 APPLICATION INSIDE [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R) AIM INTERNATIONAL EQUITY FUND (A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.) PROSPECTUS MARCH 1, 1996 AIM INTERNATIONAL EQUITY FUND (the "Fund") is a diversified, series investment portfolio of AIM International Funds, Inc. (the "Company"), an open-end, series, management investment company. The Fund seeks to provide long-term growth of capital by investing in a diversified portfolio of international equity securities, the issuers of which are considered by the Fund's investment advisor to have strong earnings momentum. Under normal market conditions, at least 80% of the Fund's total assets will be invested in equity securities of companies located outside the United States which, with their predecessors, have been in continuous operation for three years or more and which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. In addition, under normal market conditions, the Fund will be invested in securities of issuers located in at least four foreign countries. There is no assurance that the Fund will attain its investment objective. This Prospectus sets forth basic information about the Fund that prospective investors should know before investing. It should be read and retained for future reference. A Statement of Additional Information, dated March 1, 1996, has been filed with the United States Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. The Statement of Additional Information is available without charge upon written request to the Company at P.O. Box 4739, Houston, Texas 77210-4739. THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 7 TABLE OF CONTENTS
PAGE ---- SUMMARY.................................. 2 THE FUND................................. 4 Table of Fees and Expenses............. 4 Financial Highlights................... 5 Performance............................ 6 Investment Objective and Policies...... 6 Hedging Strategies and Other Investment Techniques.......................... 7 Risk Factors........................... 9 Investment Restrictions................ 10 Management............................. 10 Organization of the Company............ 12 PAGE ---- INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS(R)............................... A-1 Introduction to The AIM Family of Funds............................... A-1 How to Purchase Shares................. A-1 Terms and Conditions of Purchase of the AIM Funds............................... A-2 Special Plans.......................... A-8 Exchange Privilege..................... A-10 How to Redeem Shares................... A-12 Determination of Net Asset Value....... A-15 Dividends, Distributions and Tax Matters............................. A-16 General Information.................... A-18 APPLICATION INSTRUCTIONS................. B-1
SUMMARY - -------------------------------------------------------------------------------- THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland corporation organized as an open-end, series, management investment company. Currently the Company offers four separate series portfolios. This Prospectus relates to AIM International Equity Fund (the "Fund"). The other portfolios of the Company are offered to investors pursuant to a separate prospectus. The investment objective of the Fund is to provide long-term growth of capital by investing in a diversified portfolio of international equity securities the issuers of which are considered by the Fund's investment advisor to have strong earnings momentum. Any income realized by the Fund will be incidental and will not be an important criterion in the selection of portfolio securities. Under normal market conditions, the Fund will invest at least 80% of its total assets in marketable equity securities (including common and preferred stocks, depositary receipts for stock and securities convertible into or exchangeable for stock) of companies located outside the United States ("foreign companies") which, with their predecessors, have been in continuous operation for three years or more and which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. In addition, under normal market conditions, the Fund's assets will be invested in the securities of foreign companies located in at least four countries outside the United States. The Fund will emphasize investment in foreign companies in the developed countries of Western Europe and the Pacific Basin and may also invest to a limited extent in the securities of companies located in developing countries in various regions of the world. Over the past 30 years, securities of foreign companies ("foreign securities") have offered generally higher levels of capital growth than similar investments in the United States. The Fund's investment advisor believes that investment in foreign securities offers significant potential for long-term capital appreciation. Also, foreign equity markets often do not move in step with each other or with domestic equity markets. The Fund's investment advisor believes that a portfolio invested in a number of markets worldwide should thus achieve better long-term results for investors than one which is subject to the movements of a single market. The Fund intends to achieve its investment objective by using a fully managed investment policy providing for the selection of securities. The Fund will also seek to spread its investments among countries or regions in accordance with the investment advisor's assessment of prospects for relative economic growth, political conditions, currency exchange fluctuations and other relevant factors. For more complete information on the Fund's investment objective, policies and strategies, see "Investment Objective and Policies" and "Hedging Strategies and Other Investment Techniques." RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND ECONOMIC RISK, REGULATORY RISK AND MARKET RISK. IT IS NOT DESIGNED AS A COMPLETE INVESTMENT PROGRAM. FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS." MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment advisor pursuant to an investment advisory agreement (the "Advisory Agreement"). AIM, together with its affiliates, manages or advises 39 investment company portfolios. As of February 1, 1996, the total assets advised or managed by AIM or its affiliates were approximately $47.2 billion. Under the terms of the Advisory Agreement, AIM supervises all aspects of the Fund's operations and provides investment advisory services to the Fund. As compensation for these services, AIM receives a fee based on the Fund's average daily net assets. Under an Administrative Services Agreement, AIM may be reimbursed by the Fund for its costs of performing, or arranging for the performance of, certain accounting, shareholder servicing and other administrative services for the Fund. Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc. ("AFS"), AIM's wholly-owned subsidiary and a registered transfer agent, receives a fee for its provision of transfer agency, dividend distribution and disbursement and shareholder services for the Fund. 2 8 MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A or Class B shares of the Fund which are offered by this Prospectus at an offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Class A Shares -- Shares are offered at net asset value plus any applicable initial sales charge. Class B Shares -- Shares are offered at net asset value, without an initial sales charge, and are subject to a maximum contingent deferred sales charge of 5% on certain redemptions made within six years of the date on which a purchase was made. Class B shares automatically convert to Class A shares of the Fund eight years following the end of the calendar month in which a purchase was made. Class B shares are subject to higher expenses than Class A shares. SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an investor to choose the method of purchasing shares that is most beneficial given the amount of the purchase, the length of time the shares are expected to be held, whether dividends will be paid in cash or reinvested in additional shares of the Fund and other circumstances. Investors should consider whether, during the anticipated life of their investment in the Fund, the accumulated distribution fees and any applicable contingent deferred sales charges on Class B shares prior to conversion would be less than the initial sales charge and accumulated distribution fees on Class A shares purchased at the same time, and to what extent such differential would be offset by the higher return on Class A shares. To assist investors in making this determination, the table under the caption "Table of Fees and Expenses" sets forth examples of the charges applicable to each class of shares. Class A shares will normally be more beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as described below. Therefore, A I M Distributors, Inc. will reject any order for purchase of more than $250,000 for Class B shares. PURCHASING SHARES. Initial investments in either class of shares must be at least $500 and additional investments must be at least $50. The minimum initial investment is modified for investments through tax-qualified retirement plans and accounts initially established with an Automatic Investment Plan. The distributor of the Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans." EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM Distributors (collectively, "The AIM Family of Funds"). Class A and Class B shares of the Fund may be exchanged for shares of other funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See "Exchange Privilege." REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of their shares at net asset value on any business day, generally without charge. A contingent deferred sales charge of 1% may apply to certain redemptions of Class A shares, where purchases of $1 million or more are made at net asset value. See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." Holders of Class B shares may redeem all or a portion of their shares at net asset value on any business day, less a contingent deferred sales charge for redemptions made within six years following the date on which a purchase was made. Class B shares redeemed after six years following the date of purchase will not be subject to any contingent deferred sales charge. See "How to Redeem Shares -- Multiple Distribution System." DISTRIBUTIONS. The Fund declares and pays dividends from net investment income, if any, and makes distributions of realized capital gains, if any, on an annual basis. Dividends and distributions paid with respect to Class A shares of the Fund may be paid by check, may be reinvested in additional Class A shares of the Fund or, subject to certain conditions, in Class A shares (or shares which normally involve payment of initial sales charges) of other funds in The AIM Family of Funds at current net asset value (without payment of a sales charge). Dividends and distributions paid with respect to Class B shares of the Fund may be paid by check or reinvested in additional Class B shares of the Fund or Class B shares of other funds in The AIM Family of Funds, subject to certain conditions. See "Dividends, Distributions and Tax Matters" and "Special Plans." The AIM Family of Funds, The AIM Family of Funds and Design (i.e, the AIM logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks of A I M Management Group Inc. 3 9 THE FUND - -------------------------------------------------------------------------------- TABLE OF FEES AND EXPENSES The following table is designed to help an investor in the Fund understand the various costs that an investor will bear, both directly and indirectly. The fees and expenses set forth in the table are based on the average net assets of the respective classes of the Fund for the year ended October 31, 1995. The rules of the SEC require that the maximum sales charge be reflected in the table, even though certain investors may qualify for reduced sales charges. See "How to Purchase Shares."
CLASS CLASS A B ----- ----- Shareholder Transaction Expenses Maximum sales load imposed on purchase of shares (as a % of offering price)................. 5.50% None Maximum sales load on reinvested dividends and distributions................................ None None Deferred sales load (as a % of original purchase price or redemption proceeds, whichever is lower).................................................................................... None* 5.0% Redemption fee.............................................................................. None None Exchange fee**.............................................................................. None None Annual Fund Operating Expenses (as a % of average net assets) Management fees*** (after fee waivers)...................................................... 0.94% 0.94% Rule 12b-1 distribution plan payments....................................................... 0.30% 1.00% Other expenses.............................................................................. 0.43% 0.61% ---- ---- Total fund operating expenses........................................................... 1.67% 2.55% ==== ====
- ------------ * Purchases of $1 million or more are not subject to an initial sales charge. However, a contingent deferred sales charge of 1% applies to certain redemptions made within 18 months from the date such shares were purchased. See the Investor's Guide, under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." ** No fee will be charged for exchanges among The AIM Family of Funds; however, a $5 service fee may be charged for exchanges by accounts of market timers. *** If management fees had not been waived, the management fees would have been 0.95%. EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000 investment in Class A shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the end of each time period: 1 year.................................................... $ 71 3 years................................................... $105 5 years................................................... $141 10 years.................................................. $242
The examples above assume payment of a sales charge at the time of purchase; actual expenses may vary for purchases of $1 million or more, which are made at net asset value and are subject to a contingent deferred sales charge for 18 months following the date such shares were purchased. An investor in the Fund would pay the following expenses on a $1,000 investment in Class B shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the end of each time period: 1 year................................................... $ 76 3 years.................................................. $109 5 years.................................................. $156 10 years.................................................. $267*
An investor in the Fund would pay the following expenses on the same $1,000 investment in Class B shares, assuming no redemption at the end of each time period. 1 year................................................... $ 26 3 years.................................................. $ 79 5 years.................................................. $136 10 years.................................................. $267*
- ------------ * Reflects the conversion to Class A shares eight years after purchase; therefore years nine and ten reflect Class A expenses. As a result of 12b-1 fees, a long-term shareholder in the Fund may pay more than the economic equivalent of the maximum front-end sales charges permitted by rules of the National Association of Securities Dealers, Inc. Given the maximum front-end sales charge applicable to Class A shares and the Rule 12b-1 fees applicable to Class A shares and Class B shares, it is estimated that it would require a substantial number of years to exceed the maximum permissible front-end sales charges. THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In addition, while the examples assume a 5% annual return, the Fund's actual performance will vary and may result in an actual return that is greater or less than 5%. The examples assume reinvestment of all dividends and distributions and that the percentage amounts for total fund operating expenses remain the same for each year. 4 10 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Shown below are per share income and capital changes for a Class A share of the Fund for the years ended October 31, 1995, 1994 and 1993 and the period April 7, 1992 (effective date of registration statement) through October 31, 1992, and for a Class B share of the Fund for the year ended October 31, 1995 and the period September 15, 1994 (date sales commenced) through October 31, 1994. The information has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report on the Fund's financial statements and the related notes appears in the Statement of Additional Information.
PERIOD APRIL 7, 1992 YEAR ENDED OCTOBER 31, THROUGH -------------------------------------- OCTOBER 31, 1995 1994 1993 1992 -------- -------- -------- ------------- CLASS A SHARE: Net asset value, beginning of period................................. $ 13.50 $ 12.18 $ 8.88 $ 8.74(a) Income from investment operations: Net investment income............................................ 0.01 0.02 0.02 0.01 Net gains or losses on securities (both realized and unrealized).................................................... 0.62 1.31 3.29 0.13 -------- -------- -------- -------- Total from investment operations................................. 0.63 1.33 3.31 0.14 -------- -------- -------- -------- Less distributions: Dividends from net investment income............................. (0.04) (0.01) (0.01) -- Distributions from capital gains................................. (0.44) -- -- -- -------- -------- -------- -------- Total distributions.............................................. (0.48) (0.01) (0.01) -- -------- -------- -------- -------- Net asset value, end of period....................................... $ 13.65 $ 13.50 $ 12.18 $ 8.88 ======== ======== ======== ======== Total return(b)...................................................... 5.24% 10.94% 37.36% 1.65% ======== ======== ======== ======== Ratios/supplemental data Net assets, end of period (000s omitted)........................... $654,764 $708,159 $372,282 $122,663 ======== ======== ======== ======== Ratio of expenses to average net assets............................ 1.67%(c)(d) 1.64% 1.78% 1.85%(e) ======== ======== ======== ======== Ratio of net investment income to average net assets............... 0.10%(c)(d) 0.22% 0.28% 0.27%(e) ======== ======== ======== ======== Portfolio turnover rate............................................ 68% 67% 62% 23% ======== ======== ======== ========
- --------------- (a) Net asset value at beginning of period has been restated to reflect a 1.1619 for 1 stock split, effected in the form of a dividend, on May 21, 1992. (b) Does not include sales charges and, for periods less than one year, total returns are not annualized. (c) Ratios are based on average net assets of $634,518,409. (d) After waiver of advisory fees. Ratios of expenses and net investment income prior to waiver of advisory fees are 1.68% and 0.09%, respectively. (e) Annualized. After waiver of advisory fees.
PERIOD SEPTEMBER 15, 1994 YEAR ENDED THROUGH OCTOBER 31, 1995 OCTOBER 31, 1994 ---------------- ------------------ CLASS B SHARE: Net asset value, beginning of period..................................................... $ 13.49 $13.42 Income from investment operations: Net investment income (loss)......................................................... (0.09) (0.01) Net gains or losses on securities (both realized and unrealized)..................... 0.61 0.08 ------- ------ Total from investment operations..................................................... 0.52 0.07 ------- ------ Less distributions: Dividends from net investment income................................................. (0.03) -- Distributions from capital gains..................................................... (0.44) -- ------- ------ Total distributions.................................................................. (0.47) -- ------- ------ Net asset value, end of period........................................................... $ 13.54 $13.49 ======= ====== Total return(a).......................................................................... 4.35% 0.52% ======= ====== Ratios/supplemental data Net assets, end of period (000s omitted)............................................... $51,964 $4,833 ======= ====== Ratio of expenses to average net assets(b)............................................. 2.55%(b)(c) 2.53%(d) ======= ====== Ratio of net investment income (loss) to average net assets(b)......................... (0.78)%(b)(c) (0.67)%(d) ======= ====== Portfolio turnover rate................................................................ 68% 67%
- --------------- (a) Total return is not annualized for periods less than one year and does not include contingent deferred sales charges. (b) Ratios are based on average net assets of $20,825,255. (c) After waiver of advisory fees. Ratios of expenses and net investment income (loss) prior to waiver of advisory fees are 2.56% and (0.79)%, respectively. (d) Annualized. 5 11 - -------------------------------------------------------------------------------- PERFORMANCE The Fund's performance may be quoted in advertising in terms of total return. All advertisements of the Fund will disclose the maximum sales charge (including deferred sales charge) to which investments in the Fund's shares may be subject. The Fund will also include performance data on Class A and Class B shares in any advertisement or promotional material which includes Fund performance data. 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. Standardized total return for Class A shares reflects the deduction of the Fund's maximum initial 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 assuming that all the Fund's dividends and capital gain distributions are reinvested and that all charges and expenses are deducted. 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. The stated period for quotations of average annual total return will be for periods of one year and the life of the Fund (commencing as of the effective date of its registration statement). From time to time and in its discretion, AIM may waive all or a portion of its advisory fees and/or assume certain expenses of the Fund. Such a practice will have the effect of increasing the Fund's total return. The performance of the Fund will vary from time to time, and past results are not necessarily representative 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 as well as by general 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. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND POLICIES The investment objective of the Fund, which is a fundamental policy that may be changed only with the approval of the Fund's shareholders, is to provide long-term growth of capital by investing in a diversified portfolio of international equity securities, the issuers of which are considered by AIM to have strong earnings momentum. Any income realized by the Fund will be incidental and will not be an important criterion in the selection of portfolio securities. There can be no assurance that the Fund will achieve its objective. The Board of Directors of the Company reserves the right to change any of the investment policies, strategies or practices of the Fund, as described below and elsewhere in this Prospectus and in the Statement of Additional Information, without approval of the Fund's shareholders, except in those instances in which shareholder approval is expressly required. Under normal market conditions the Fund will invest at least 80% of its total assets in marketable equity securities (including common and preferred stock, depositary receipts for stock and securities exchangeable for or convertible into stock) of foreign companies which, with their predecessors, have been in continuous operation for three years or more and which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. In addition, under normal market conditions, the Fund's assets will be invested in the securities of foreign companies located in at least four countries outside the United States. In managing the Fund, AIM seeks to apply to a diversified portfolio of international equity securities substantially the same investment strategy which it applies to several of its other managed portfolios which have similar investment objectives but which invest primarily in United States equities markets. The Fund will utilize to the extent practicable a fully managed investment policy providing for the selection of securities which meet certain quantitative standards determined by AIM. AIM reviews carefully the earnings history and prospects for growth of each company considered for investment by the Fund. It is expected that the Fund's portfolio, when fully invested, will generally be comprised of two basic categories of foreign companies: (1) "core" companies, which AIM considers to have experienced consistent long-term growth in earnings and to have strong prospects for outstanding future growth, and (2) companies that AIM believes are currently experiencing a greater than anticipated increase in earnings. If a particular foreign company meets the quantitative standards determined by AIM, its securities may be acquired by the Fund regardless of the location of the company or the percentage of the Fund's investments in the company's country or region. However, AIM will also consider other factors in making investment decisions for the Fund, including such factors as the prospects for relative economic growth among countries or regions, economic and political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. 6 12 AIM recognizes that often there is less public information about foreign companies than is available in reports supplied by domestic companies, that foreign companies are not subject to uniform accounting and financial reporting standards, and that there may be greater delays experienced by the Fund in receiving financial information supplied by foreign companies than comparable information supplied by domestic companies. For these and other reasons, AIM from time to time may encounter greater difficulty applying its disciplined stock selection strategy to an international equity investment portfolio than to a portfolio of domestic equity securities. The Fund normally will invest at least 80% of its total assets in marketable equity securities, including common and preferred stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company). The Fund may satisfy the foregoing requirement in part through the ownership of securities which are convertible into, or exchangeable for, common stocks, or by investment in the securities of foreign issuers which are in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. As a temporary defensive measure, and without regard to the Fund's investment objective, AIM may invest all or substantially all of the Fund's assets in cash or high-grade short-term securities, including repurchase agreements, denominated either in U.S. dollars or foreign currencies. To the extent that the Fund assumes a temporary defensive posture and holds cash or is invested in high-grade short-term securities, it will not be pursuing its investment objective of growth of capital. Under normal circumstances, the Fund will invest no more than 20% of the value of its total assets in high-grade short-term securities, including repurchase agreements. A repurchase agreement is an instrument under which the Fund acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of a bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including (a) a possible decline in the value of the underlying security during the period while the Fund seeks to enforce its rights thereto, (b) possible reduced levels of income and lack of access to income during this period and (c) expenses of enforcing its rights. The Fund intends to enter into repurchase agreements with sellers believed by AIM to present minimal credit risk. See "Investment Restrictions." Under normal market conditions, the Fund intends to invest in the securities of foreign companies located in at least four countries outside the United States. The Fund will emphasize investment in foreign companies in the developed countries of Western Europe (such as Germany, France, Switzerland, the Netherlands and the United Kingdom) and the Pacific Basin (such as Japan, Hong Kong and Australia), and the Fund may also invest in the securities of companies located in developing countries (such as Turkey, Malaysia and Mexico) in various regions of the world. A "developing country" is a country in the initial stages of its industrial cycle. Investment in the equity markets of developing countries involves exposure to securities exchanges that may have substantially less trading volume and greater price volatility, economic structures that are less diverse and mature, and political systems that may be less stable than the equity markets of developed countries. At the present time, AIM does not intend to invest more than 20% of the Fund's total assets in foreign companies located in developing countries. - -------------------------------------------------------------------------------- HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES The Fund may, at such times as AIM deems appropriate and consistent with the investment objective of the Fund, write (sell) covered put or call options on its portfolio securities. The Fund may also purchase and sell (i) options on domestic and foreign securities and currencies, (ii) stock index options, (iii) stock, currency and interest rate futures, (iv) options on stock, currency, stock index and interest rate futures and (v) foreign forward currency exchange contracts. The purpose of such transactions is to hedge against changes in the market value of the Fund's portfolio securities caused by fluctuating interest rates, fluctuating currency exchange rates and changing market conditions, and to close out or offset existing positions in such options or futures contracts as described below. The Fund will not engage in such transactions for speculative purposes. The Fund does not intend to hedge against currency, investment and interest rate risks during the coming year. Any change to such policy must be submitted by AIM to the Company's Board of Directors prior to the effectiveness of such change. To a limited extent the Fund may employ certain investment techniques intended to provide liquidity for temporary or emergency purposes, provide flexibility in the purchase of new issues of securities, protect the Fund from a decline in the market value of its securities and permit the Fund to invest all of its assets. Those techniques include entering into reverse repurchase agreements, lending portfolio securities, purchasing securities on a "when-issued" basis, short sales "against the box" and investing in closed-end investment companies. OPTIONS. The Fund may purchase options issued by the Options Clearing Corporation. Such options give the Fund the right for a fixed period of time to sell (in the case of purchase of a put option) or to buy (in the case of purchase of a call option) the number of units of the underlying security or obligation covered by the option at a fixed or determinable exercise price. Buying a put option hedges against the risk of a market decline. Buying a call option hedges against a market advance. Prior to its expiration, a put or call option may be sold in a closing sale transaction. Gain or loss from such a sale will depend on whether the amount received is more or less than the premium paid for the option plus the related transaction costs. The Fund also may write (sell) put or call options, but only if such options are covered and remain covered as long as the Fund is obligated as a writer of the option (seller). A call option is "covered" if the Fund owns the underlying security covered by the call. A put option is "covered" if the Fund segregates with its custodian cash, U.S. Treasury bills or other high-grade short-term debt obligations with a value equal to the exercise price of the put option. If a "covered" call or put option expires unexercised, the writer realizes 7 13 a gain in the amount of the premium received. If the covered call option is exercised, the writer realizes either a gain or loss from the sale or purchase of the underlying security with the proceeds to the writer being increased by the amount of the premium. If the covered put option is exercised, the writer's cost of purchasing the underlying security is reduced by the amount of the premium received from the initial sale of the put option. Prior to its expiration, a put or call option may be closed out by means of a purchase of an identical option. Any gain or loss from such transaction will depend on whether the amount paid is more or less than the premium received for the option plus related transaction costs. The Fund may also purchase and write options in combination with each other to adjust the risk and return characteristics of certain portfolio security positions. This technique is commonly referred to as a "straddle." Options are subject to certain risks, including the risk of imperfect correlation between the option and the Fund's portfolio securities and the risk that there might not be a liquid secondary market for the option when the Fund seeks to hedge against adverse market movements. In general, options whose strike prices are close to their underlying securities' current values will have the highest trading value, while options whose strike prices are further away may be less liquid. The liquidity of options may also be affected if options exchanges impose trading halts, particularly when markets are volatile. The Fund will not write options if, immediately after such sale, the aggregate value of the securities or obligations underlying the outstanding options exceeds 25% of the Fund's total assets. The Fund will not purchase put options (including options on securities indices and futures contracts) if, at the time of investment, the aggregate premiums paid for such options will exceed 5% of its total assets. FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held by the Fund may be denominated in foreign currencies, the value of the Fund's portfolio will be affected by changes in exchange rates between currencies (including the U.S. dollar), as well as by changes in the market value of the securities themselves. The Fund may enter into interest rate, exchange rate and currency futures contracts and related options, or it may purchase or sell stock index futures contracts and related options in order to mitigate the effects of such changes. Futures contracts obligate the seller to deliver a specific type of security called for in the contract, at a specified future time and for a specified price. Futures contracts are traded on U.S. and foreign exchanges and generally contain standardized strike prices and expiration dates. Certain futures contracts may be satisfied by actual delivery of the securities or, more typically, by entering into an offsetting transaction. An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a position in a futures contract. In addition to purchasing or selling futures contracts on currencies and specific securities, interest rates and exchange rates, the Fund may purchase or sell stock index futures contracts. A stock index futures contract is an agreement to take or make delivery of an amount of cash based on the difference between the value of a stock index at the beginning and at the end of the contract period. No more than 5% of the Fund's total assets will be committed to initial margin deposits required pursuant to futures contracts. Percentage investment limitations on the Fund's investment in options on futures contracts are set forth above under "Options." Although the Fund is authorized to invest in futures contracts and related options with respect to foreign securities, stock indices, interest rates and currencies, it will limit such investments to those which have been approved by the Commodity Futures Trading Commission for investment by United States investors. In attempting to manage its currency exposure, the Fund may buy and sell currencies, either in the spot (cash) market or in the forward market (through forward contracts generally expiring within one year). The Fund may also enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When the Fund purchases a security for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Unlike futures contracts, forward contracts are generally individually negotiated and privately traded. A forward contract obligates the seller to sell a specific security or currency at a specified price on a future date, which may be any fixed number of days from the date of the contract. The Fund may enter into transaction hedging forward contracts with respect to all or a substantial portion of its trades. There are risks associated with the use of futures and forward contracts and options thereon for hedging purposes. During certain market conditions, sales of futures contracts may not completely offset a decline or rise in the value of the Fund's portfolio securities or currency against which the futures or forward contract or options thereon are being sold. In the futures and options on futures markets, it may not always be possible to execute a buy or sell order at the desired price, or to close out an open position due to market conditions, limits on open positions and/or daily price fluctuations. Risks in the use of futures contracts and options thereon also result from the possibility that changes in the market value of securities or currency may differ substantially from the changes anticipated by the Fund when hedged positions were established. Successful use of futures and forward contracts and options thereon is dependent upon AIM's ability to predict correctly movements in the direction of the applicable markets. No assurance can be given that AIM's judgment in this respect will be correct. Accordingly, the Fund may lose the expected benefit of futures and forward transactions and options thereon if markets move in an unanticipated manner. OTHER HEDGING TECHNIQUES. For hedging purposes, the Fund may also purchase foreign currencies in the form of bank deposits as well as other foreign money market instruments, including, but not limited to, bankers' acceptances, certificates of deposit, commercial paper, short-term government and corporate obligations and repurchase agreements. REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase agreements. A reverse repurchase agreement is the same as a repurchase agreement, except that the Fund acts as the seller and repurchaser of the subject security. Reverse repurchase agreements are considered to be borrowings under the Investment Company Act of 1940, as amended (the "1940 Act"). The 8 14 Fund will enter into a reverse repurchase agreement only when the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Any investment gains made by the Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the investment performance resulting from the investment of borrowings obtained through reverse repurchase agreements fails to cover the cost of such borrowings to the Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. The Fund currently intends to enter into reverse repurchase agreements only for temporary or emergency purposes and not as a means of increasing income. LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend securities from its portfolio, with a value not exceeding 33-1/3% of its total assets, to banks, brokers and other financial institutions, and receive in return collateral in the form of cash or securities issued or guaranteed by the U.S. Government which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. During the period of the loan, the Fund receives the income on both the loaned securities and the collateral and thereby increases its yield. In the event that the borrower defaults on its obligation to return loaned securities because of insolvency or otherwise, the Fund could experience delays and costs in gaining access to the collateral and could suffer a loss to the extent that the value of the collateral falls below the market value of the loaned securities. WHEN-ISSUED SECURITIES. The Fund may sometimes purchase new issues of securities on a "when-issued" basis. The price of when-issued securities is established at the time the commitment to purchase is made. Delivery of and payment for these securities typically occur 15 to 45 days after the commitment to purchase. The value of securities purchased on a when-issued basis could decline before the Fund completes the transaction, which could cause a loss to the Fund. A separate account for the Fund consisting of cash or high-quality liquid debt securities in an amount at least equal to the when-issued commitments will be established and maintained with the Fund's custodian for payment for securities on a when-issued basis. SHORT SALES. The Fund may make short sales "against the box." A short sale is a transaction in which a party sells a security it does not own in anticipation of a decline in the market value of that security. A short sale is "against the box" to the extent that the Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment of any further consideration. The Fund will enter into such transactions only to the extent the aggregate value of all securities sold short does not represent more than 10% of the Fund's assets at any given time. ILLIQUID SECURITIES AND RULE 144A SECURITIES. The Fund will not invest more than 15% of its assets in illiquid securities, including restricted securities which are illiquid. Although securities which may be resold only to "qualified institutional buyers" in accordance with the provisions of Rule 144A under the Securities Act of 1933 are unregistered securities, the Fund may purchase Rule 144A securities without regard to the 15% limitation described above provided that a determination is made that such securities have a readily available trading market. AIM will determine the liquidity of Rule 144A securities under the supervision of the Company's Board of Directors. The liquidity of Rule 144A securities will be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its assets in illiquid securities. See the Statement of Additional Information. - -------------------------------------------------------------------------------- RISK FACTORS There can be no assurance that the Fund's investment objective will be attained. The Fund is designed for investors seeking international diversification, and is not intended as a complete investment program. In addition, investing in securities of foreign companies generally involves greater risks than investing in securities of domestic companies. Investors should consider carefully the following special factors before investing in the Fund. CURRENCY RISK. The value of the Fund's foreign investments may be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security generally decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and tends to increase when the value of the U.S. dollar falls against such currency. POLITICAL AND ECONOMIC RISK. The economies of many of the countries in which the Fund may invest are not as developed as the United States economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Fund's investments. REGULATORY RISK. Foreign companies are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Fund may be reduced by withholding tax at the source which would reduce dividend income payable to the Fund's shareholders. MARKET RISK. The securities markets in many of the countries in which the Fund invests will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in 9 15 foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States. - -------------------------------------------------------------------------------- INVESTMENT RESTRICTIONS The following restrictions may not be changed without approval of the Fund's shareholders. The Fund may not: 1. Purchase a security if, as a result, with respect to 75% of the value of the Fund's total assets, taken at market value, more than 5% of the value of the Fund's total assets, taken at market value, would be invested in securities of any one issuer (including repurchase agreements with any one entity), except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. 2. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by the Fund. 3. Purchase a security if, as a result, 25% or more of the value of the Fund's total assets, taken at market value, would be invested in the securities of issuers having their principal business activities in the same industry. This restriction does not apply to obligations issued or guaranteed by the U.S. Government or by any of its agencies or instrumentalities but will apply to foreign government obligations unless the SEC permits their exclusion. 4. Purchase a security if, as a result, the Fund would own securities of an issuer (including predecessors and unconditional guarantors) which has a record of less than three years of continuous operations. 5. Borrow money, except that the Fund may borrow from banks (including the Fund's custodian bank) and enter into reverse repurchase agreements as a temporary defensive measure for extraordinary or emergency purposes, and then only in amounts not exceeding 10% of its total assets, taken at market value, and may pledge amounts of up to 20% of its total assets, taken at market value, to secure such borrowings. Whenever bank borrowings and the value of the Fund's reverse repurchase agreements exceed 5% of the value of the Fund's total assets, the Fund will not make any additional purchases of securities for investment purposes. A complete listing of investment restrictions applicable to the Fund, some of which may be changed by the Board of Directors without shareholder approval, is contained in the Statement of Additional Information. - -------------------------------------------------------------------------------- MANAGEMENT The overall management of the business and affairs of the Fund is vested with the Company's Board of Directors. The Board of Directors approves all significant agreements between the Fund and persons or companies furnishing services to the Fund, including the investment advisory agreement with AIM, the administrative services agreement with AIM, the agreement with AIM Distributors regarding distribution of the Fund's shares, the agreement with State Street Bank and Trust Company as custodian and accounting agent, and the agreement with A I M Fund Services, Inc. as transfer agent. The day-to-day operations of the Fund are delegated to the officers of the Company and to AIM, subject always to the objective and policies of the Fund and to the general supervision of the Board of Directors. Certain directors and officers of the Company are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM Management is a holding company engaged in the financial services business. Information concerning the Board of Directors may be found in the Statement of Additional Information. INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to an investment advisory agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 39 investment company portfolios (including the Fund). As of February 1, 1996, the total assets advised or managed by AIM or its affiliates were approximately $47.2 billion. Under the terms of the Advisory Agreement, AIM supervises all aspects of the Fund's operations and provides investment advisory services to the Fund. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Fund. The Advisory Agreement also provides that, upon the request of the Board of Directors, AIM may perform or arrange for certain accounting, shareholder servicing and other administrative services for the Fund which are not required to be performed by AIM under the Advisory Agreement. The Board of Directors has made such a request. As a result, AIM and the Company have entered into an Administrative Services Agreement, dated as of October 18, 1993, pursuant to which AIM is entitled to receive from the Fund reimbursement of its costs or such reasonable compensation as may be approved by the Board of Directors. Currently, AIM is reimbursed for the services of the Fund's principal financial officer and his staff, and any expenses related to such services. In addition, pursuant to the terms of a Transfer Agency and Service Agreement A I M Fund Services, Inc. ("AFS"), a wholly-owned subsidiary of AIM and registered transfer agent, receives a fee for its provision of transfer agency, dividend distribution and disbursement and shareholder services to the Fund. For a discussion of AIM's brokerage allocation policies and practices, see "Portfolio Transactions and Brokerage" in the Statement of Additional Information. In accordance with policies established by the Board of Directors, AIM may take into account sales of shares of the Fund and other funds advised by AIM in selecting broker-dealers to effect portfolio transactions on behalf of the Fund. 10 16 PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment strategy in providing investment advisory services to all its accounts, including the Fund. AIM's investment staff consists of 92 individuals. While individual members of AIM's investment staff are assigned primary responsibility for the day-to-day management of each of AIM's accounts, all accounts are reviewed on a regular basis by AIM's Investment Policy Committee to ensure that they are being invested in accordance with the accounts' and AIM's investment policies. The individuals on the investment team who are primarily responsible for the day-to-day management of the Fund are A. Dale Griffin, III, Paul A. Rogge, Barrett K. Sides and Dominic H. R. Moross. Mr. Griffin is Vice President of A I M Capital Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM, and has been responsible for the Fund since its inception in 1992. Mr. Griffin has been associated with AIM since 1989 and has a total of nine years of experience as an investment professional. Mr. Rogge is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1992. Mr. Rogge has been associated with AIM since 1991 and has a total of five years of experience as an investment professional. Mr. Sides is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. Mr. Sides has been associated with AIM since 1990 and has a total of six years of experience as an investment professional. Mr. Moross is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. Mr. Moross has been associated with AIM since 1993 and has a total of two years of experience as an investment professional. Prior to joining AIM, he was a management graduate trainee with Maxwell Communications PLC. FEES AND EXPENSES. For the year ended October 31, 1995, the Fund paid AIM an amount for its advisory services which represented 0.94% of the Fund's average daily net assets. Although the fee payable to AIM under the Advisory Agreement is higher than that paid by most mutual funds which invest in domestic securities, it is competitive with such fees paid by mutual funds which invest primarily in foreign securities. The Company believes such fee is justified due to the higher costs and additional expenses associated with managing and operating a fund holding primarily foreign equity securities. For the year ended October 31, 1995, the Fund reimbursed AIM for administrative services costs pursuant to the Administrative Services Agreement an amount which represented 0.01% of the Fund's average daily net assets. The Class A shares' total expenses for such year were 1.67% of the Class A share's average daily net assets. The Class B shares' total expenses for such year were 2.55% of the Class B share's average daily net assets. In addition, the Company and AFS, P.O. Box 4739, Houston, TX 77210-4739, a wholly-owned subsidiary of AIM and registered transfer agent, have entered into a Transfer Agency and Service Agreement, pursuant to which AFS provides transfer agency, dividend distribution and disbursement, and shareholder services to the Fund. FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees, while retaining its ability to be reimbursed for such fee prior to the end of each fiscal year. Fee waivers or reductions, other than those contained in the Advisory Agreement, may be modified or terminated at any time and without notice to investors. AIM has voluntarily agreed to waive its advisory fees under the Advisory Agreement in order to achieve the following annual fee structure for the Fund: 0.95% of the first $500 million of the Fund's average daily net assets; 0.90% of the next $500 million of the Fund's average daily net assets; and 0.85% of the Fund's average daily net assets exceeding $1 billion. For the fiscal year ended October 31, 1995, AIM waived advisory fees for the Fund which represented .01% of the Fund's average daily net assets. DISTRIBUTOR. The Company has entered into Master Distribution Agreements on behalf of the Fund (the "Distribution Agreements") with A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the distributor of Class A and Class B shares of the Fund. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77021-4739. Certain directors and officers of the Company are affiliated with AIM Distributors. 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 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. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset based sales charges in respect of the outstanding Class B shares attributable to AIM Distributors; provided, however, that a complete termination of the Class B shares master distribution plan (as defined in the plan) would terminate all payments to AIM Distributors. Termination of the Class B shares distribution plan or Distribution Agreement does not affect the obligation of Class B shareholders to pay Contingent Deferred Sales Charges. DISTRIBUTION PLANS. The Company has adopted a master distribution plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Class A Plan, the Fund pays compensation of 0.30% per annum of the average daily net assets attributable to the Class A shares to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs, and to implement a program which provides periodic payments to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Fund. 11 17 The Company has also adopted a master distribution plan applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of such amount, the Fund pays a service fee of 0.25% of the average daily net assets attributable to the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. 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. Activities that may be financed under the Class A Plan and the Class B Plan (collectively, the "Plans") include, but are 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, supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements and the cost of administering the Plans. These amounts payable by a Fund under the Plans need not be directly related to the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Company will not be obligated to pay more than that fee, and, if AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Payments pursuant to the Plans are subject to any applicable limitations imposed by the rules of the National Association of Securities Dealers, Inc. Each of the Plans may be terminated at any time by a vote of the majority of those directors who are not "interested persons" of the Company or by a vote of the holders of the majority of the outstanding shares of the applicable class. Under the Plans, AIM Distributors may in its discretion from time to time agree to waive voluntarily all or any portion of its fee that has not been assigned or transferred, while retaining its ability to be reimbursed for such fee prior to the end of each fiscal year. 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 such payments. The Fund will obtain a representation from such financial institutions that they will either be licensed as dealers as required under applicable state law, or that they will not engage in activities which would constitute acting as a "dealer" as defined under applicable state law. 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. For additional information concerning the operation of the Plans see the Statement of Additional Information. - -------------------------------------------------------------------------------- ORGANIZATION OF THE COMPANY The Company was organized in 1991 as a Maryland corporation, and is registered with the SEC as an open-end series management investment company. The Company currently consists of four investment portfolios: the Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund. The Board of Directors may authorize additional portfolios in the future. Shares of the Fund are offered to investors pursuant to this Prospectus, while shares of the Company's other portfolios are offered to investors pursuant to a separate prospectus. The authorized capital stock of the Company consists of 2,000,000,000 shares of common stock with a par value of $0.001 per share, of which 200,000,000 shares are designated Class A shares and 200,000,000 shares are designated Class B shares of the Fund, and the balance of which are designated shares of the Company's other portfolios or are unclassified. Class A shares and Class B shares of the Fund represent interests in the 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. Except as specifically noted above, shareholders of the Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the Class A shares and Class B shares of the Fund. However, on matters affecting one portfolio of the Company or one class of shares, a separate vote of shareholders of that portfolio or class is required. Shareholders of a portfolio or class are not entitled to vote on any matter which does not affect that portfolio or class but which requires a separate vote of another portfolio or class. An example of a matter which would be voted on separately by shareholders of a portfolio is the approval of an advisory agreement, and an example of a matter which would be voted on separately by shareholders of a class of shares is approval of a distribution plan. When issued, shares of the Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Other than the automatic conversion of Class B shares to Class A shares, there are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect directors, holders of more than 50% of the shares voting for the election of directors can elect all of the directors of the Company, and the holders of less than 50% of the shares voting for the election of directors will not be able to elect any directors. Under Maryland law and the Company's By-Laws, the Company need not hold an annual meeting of shareholders unless a meeting is otherwise required under the 1940 Act to elect directors. Shareholders may remove directors from office, and a meeting of shareholders may be called at the request of the holders of 10% or more of the Company's outstanding shares. 12 18 THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER ASSISTANCE IS (800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME). INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS(R) - -------------------------------------------------------------------------------- INTRODUCTION TO THE AIM FAMILY OF FUNDS THE AIM FAMILY OF FUNDS consists of the following mutual funds: AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES AIM CONSTELLATION FUND AIM MONEY MARKET FUND* AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND* AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES AIM GROWTH FUND AIM VALUE FUND AIM HIGH YIELD FUND AIM WEINGARTEN FUND AIM INCOME FUND
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET FUND, are offered to investors at net asset value, without payment of a sales charge, as described below. Other funds, including the Class A and Class B shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or subject to a contingent deferred sales charge upon redemption, as described below. IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS. - -------------------------------------------------------------------------------- HOW TO PURCHASE SHARES HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family of Funds ("AIM Funds"), an investor must submit a fully completed new Account Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM Distributors") to sell shares of the AIM Funds. Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will be subject to backup withholding. See the Account Application for applicable Internal Revenue Service penalties. The minimum initial investment is $500, except for accounts initially established through an Automatic Investment Plan, which requires a special authorization form (see "Special Plans") and for certain retirement accounts. The minimum initial investment for accounts established with an Automatic Investment Plan is $50. The minimum initial investment for an Individual Retirement Account ("IRA") is $250. There are no minimum initial investment requirements applicable to money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation) plans (except that the minimum initial investment for salary deferrals for such plans is $25), or for investment of dividends and distributions of any of the AIM Funds into any existing AIM Funds account. AFS' mailing address is: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 For additional information or assistance, investors should call the Client Services Department of AFS at one of the following telephone numbers: (713) 626-1919 Extension 5224 (in Houston) (800) 959-4246 (elsewhere) Shares of any AIM Funds not named on the cover of this Prospectus are offered pursuant to separate prospectuses. Copies of other prospectuses may be obtained by calling (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). MCF 02/96 A-1 19 HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent purchases is $50. The minimum employee salary deferral investment for participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is $25. There are no such minimum investment requirements for investment of dividends and distributions of any of the AIM Funds into any other existing AIM Funds account. Additional shares may be purchased directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. Direct investments may be made by mail or by wiring payment to AFS as follows: SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and the name of the Fund being purchased. The remittance slip from a confirmation statement should be used for this purpose, and sent to AFS. PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his dealer should call AFS' Client Services Department at (800) 959-4246 prior to sending a wire to receive a reference number for the wire. The following wire instructions should be used: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: AIM Fund Services, Inc. RFB: Fund name, Reference Number (16 charter limit) OBI: Shareholder Name, Shareholder Account Number (70 character limit)
If wires are received after 4:00 p.m. Eastern Time or during a bank holiday, purchases will be confirmed at the price determined on the next business day of the applicable AIM Fund. - -------------------------------------------------------------------------------- TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS Shares of the AIM Funds, including Class A shares (the "Class A shares") of AIM AGGRESSIVE GROWTH FUND, AIM BALANCED FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM VALUE FUND and AIM WEINGARTEN FUND (other than AIM AGGRESSIVE GROWTH FUND and AIM CONSTELLATION FUND, collectively, the "Multiple Class Funds") may be purchased at their respective net asset value plus a sales charge as indicated below, except that shares of AIM TAX-EXEMPT CASH FUND and Class C shares (the "Class C shares") of AIM MONEY MARKET FUND are sold without a sales charge and Class B shares (the "Class B shares") of the Multiple Class Funds are sold at net asset value subject to a contingent deferred sales charge payable upon certain redemptions. These contingent deferred sales charges are described under the caption "How to Redeem Shares -- Multiple Distribution System." Securities dealers and other persons entitled to receive compensation for selling or servicing shares of a Multiple Class Fund may receive different compensation for selling or servicing one particular class of shares over another class in the same Multiple Class Fund. Factors an investor should consider prior to purchasing Class A or Class B shares (or, if applicable, Class C shares) of a Multiple Class Fund are described below under "Special Information Relating to Multiple Class Funds." For information on purchasing any of the AIM Funds and to receive a prospectus, please call (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). As described below, the sales charge otherwise applicable to a purchase of shares of a fund may be reduced if certain conditions are met. In order to take advantage of a reduced sales charge, the prospective investor or his dealer must advise AIM Distributors that the conditions for obtaining a reduced sales charge have been met. Net asset value is determined in the manner described under the caption "Determination of Net Asset Value." The following tables show the sales charge and dealer concession at various investment levels for the AIM Funds. MCF 02/96 A-2 20 SALES CHARGES AND DEALER CONCESSIONS GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM WEINGARTEN FUND.
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 $ 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
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are at net asset value, subject to a contingent deferred sales charge of 1% if shares are redeemed prior to 18 months from the date such shares were purchased, as described under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds are: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
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
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are at net asset value, subject to a contingent deferred sales charge of 1% if shares are redeemed prior to 18 months from the date such shares were purchased, as described under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." GROUP III. Certain AIM Funds are currently sold with a sales charge ranging from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000. These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- ----------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE - ---------------------------------- ------------ ---------- -------- Less than $ 100,000 1.00% 1.01% 0.75% $100,000 but less than $ 250,000 0.75 0.76 0.50 $250,000 but less than $1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. MCF 02/96 A-3 21 ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933. In addition to amounts paid to dealers as a dealer concession out of the initial sales charge paid by investors, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers who sell a minimum dollar amount of the shares of the AIM Funds during a specified period of time. In some instances, these incentives may be offered only to certain dealers who have sold or may sell significant amounts of shares. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See "Contingent Deferred Sales Charge Programs for Large Purchases." AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1,000,000 or more of shares which normally involve payment of initial sales charges, and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE INTERMEDIATE SHARES. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund (other than the Money Market Funds, as described below) received by dealers prior to 4:00 p.m. Eastern Time on any business day of an AIM Fund and either received by AIM Distributors in its Houston, Texas office prior to 5:00 p.m. Central Time on that day or transmitted by dealers to the Transfer Agent through the facilities of the National Securities Clearing Corporation ("NSCC") by 7:00 p.m. Eastern Time on that day, will be confirmed at the price determined as of the close of that day. Orders received by dealers after 4:00 p.m. Eastern Time will be confirmed at the price determined on the next business day of the AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to AIM Distributors or to the Transfer Agent through the facilities of NSCC. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. Please see "How to Purchase Shares -- Purchases by Wire" for information on obtaining a reference number for wire orders, which will facilitate the handling of such orders and ensure prompt credit to an investor's account. A "business day" of an AIM Fund is any day on which the New York Stock Exchange ("NYSE") is open for business. It is expected that the NYSE will be closed during the next twelve months on Saturdays and Sundays and on the days on which New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE. An investor who uses a check to purchase shares will be credited with the full number of shares purchased at the time of receipt of the purchase order, as previously described. However, in the event of a redemption or exchange of such shares, the investor may be required to wait up to ten business days before the redemption proceeds are sent. This delay is necessary in order to ensure that the check has cleared. If the check does not clear, or if any investment order must be cancelled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors. SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds, other than AIM MONEY MARKET FUND, currently offer two classes of shares, and AIM MONEY MARKET FUND currently offers three classes of shares, through separate distribution systems (the "Multiple Distribution System"). Although the Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C shares) of a particular Multiple Class Fund represent an interest in the same portfolio of investments, each class is subject to a different distribution structure and, as a result, differing expenses. This Multiple Distribution System allows investors to select the class that is best suited to the investor's needs and objectives. In considering the options afforded by the Multiple Distribution System, investors should consider both the applicable initial sales charge or contingent deferred sales charge, as well as the ongo- MCF 02/96 A-4 22 ing expenses borne by Class A or Class B shares and, if applicable, Class C shares, and other relevant factors, such as whether his or her investment goals are long-term or short-term. CLASS A SHARES are sold subject to the initial sales charges described above and are subject to the other fees and expenses described herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of an investor who wishes to establish a dollar cost averaging program, pursuant to which Class A shares an investor owns may be exchanged at net asset value for Class A shares of another Multiple Class Fund or shares of another AIM Fund which is not a Multiple Class Fund, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." CLASS B SHARES are sold without an initial sales charge. Thus, the entire purchase price of Class B shares is immediately invested in Class B shares. Class B shares are subject, however, to Class B Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class B shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class B shares redeemed within six years from the date such shares were purchased are subject to a contingent deferred sales charge ranging from 5% for redemptions made within the first year to 1% for redemptions made within the sixth year. No contingent deferred sales charge will be imposed if Class B shares are redeemed after six years from the date such shares were purchased. Redemptions of Class B shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." Class B shares will automatically convert into Class A shares of the same Multiple Class Fund (together with a pro rata portion of all Class B shares acquired through the reinvestment of dividends and distributions) eight years from the end of the calendar month in which the purchase of Class B shares was made. Following such conversion of their Class B shares, investors will be relieved of the higher Class B Plan payments associated with Class B shares. See "Management -- Distribution Plans." CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales charge and are not subject to a contingent deferred sales charge. Such shares are, however, subject to the other fees and expenses described in the prospectus for AIM MONEY MARKET FUND. SPECIAL INFORMATION RELATING TO MONEY MARKET FUNDS. Shares of AIM MONEY MARKET FUND or AIM TAX-EXEMPT CASH FUND (the "Money Market Funds") are purchased or exchanged at the net asset value next determined after acceptance of an order for purchase or exchange in proper form, except for Class A shares of AIM MONEY MARKET FUND, which are sold with a sales charge. Net asset value is normally determined at 12:00 noon and 4:00 p.m. Eastern Time on each business day of AIM MONEY MARKET FUND and at 4:00 p.m. Eastern Time on each business day of AIM TAX-EXEMPT CASH FUND. Because each Money Market Fund uses the amortized cost method of valuing the securities it holds and rounds its per share net asset value to the nearest whole cent, it is anticipated that the net asset value of the shares of such funds will remain constant at $1.00 per share. However, there is no assurance that either Money Market Fund can maintain a $1.00 net asset value per share. In order to earn dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase is made, purchase payments in the form of federal funds must be received by the Transfer Agent before 12:00 noon Eastern Time on that day. See "How to Purchase Shares -- Purchases by Wire." Purchases made by payments in any other form, or payments in the form of federal funds received after such time, will begin to earn dividends on the next business day following the date of purchase. The Money Market Funds generally will not issue share certificates but will record investor holdings in noncertificate form and regularly advise the shareholder of his ownership position. Class B shares of AIM MONEY MARKET FUND are designed for temporary investment as part of an investment program in the Class B shares and, unlike shares of most money market funds, are subject to a contingent deferred sales charge as well as Rule 12b-1 distribution fees and service fees. SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon written request by a shareholder to AIM Distributors or the Transfer Agent. Otherwise, such shares will be held on the shareholder's behalf by the applicable AIM Fund(s) and be recorded on the books of such fund(s). See "Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares -- Redemptions by Telephone" for restrictions applicable to shares issued in certificate form. Please note that certificates will not be issued for shares held in prototype retirement plans. MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect for at least one year and the shareholder has not made an additional purchase in that account within the preceding six calendar months and (2) the value of such account drops below $500 for three consecutive months as a result of redemptions or exchanges, the fund has the right to redeem the account, after giving the shareholder 60 days' prior written notice, unless the shareholder makes additional investments within the notice period to bring the account value up to $500. 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 shares of AIM TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares of the Multiple Class Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. MCF 02/96 A-5 23 The term "purchaser" means: - an individual and his or her spouse and minor children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) Plan (unless such 403(b) plan qualifies as the purchaser as defined below); - a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), provided that: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; - a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code, SEP, Salary Reduction and other Elective Simplified Employee Pension accounts ("SARSEP")) and 457 plans, although more than one beneficiary or participant is involved; - any other organized group of persons, whether incorporated or not, provided the organization has been in existence for at least six months and has some purpose other than the purchase at a discount of redeemable securities of a registered investment company; or - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M Capital Management, Inc. ("AIM Capital"). Investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled, by virtue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. (1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. MCF 02/96 A-6 24 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) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish AFS with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made. PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at net asset value (without payment of an initial sales charge) may be made in connection with: (a) the reinvestment of dividends and distributions from a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a fund. Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A shares of the particular AIM Fund(s) whose shares they owned on such date, at net asset value (without payment of a sales charge) for as long as they continuously own Class A shares of such AIM Fund(s) having a market value of at least $500. In addition, discretionary advised clients of any investment advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM CHARTER FUND on November 17, 1986, and have held such Class A shares at all times subsequent to such date, may purchase Class A shares of the applicable AIM Fund(s) at the net asset value of such shares. The following persons may purchase shares of the AIM Funds through AIM Distributors without payment of an initial sales charge: (a) A I M Management Group Inc. ("AIM Management") and its affiliated companies; (b) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, of AIM Management or its affiliates or of certain mutual funds which are advised or managed by AIM, or any trust established exclusively for the benefit of such persons; (c) any employee benefit plan established for employees of AIM Management or its affiliates; (d) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, or of CIGNA Corporation or of any of its affiliated companies, or of First Data Investor Services Group (formerly The Shareholders Services Group, Inc.); (e) any investment company sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the benefit of its directors' deferred compensation plans; (f) discretionary advised clients of AIM or AIM Capital; (g) registered representatives and employees of dealers who have entered into agreements with AIM Distributors (or financial institutions that have arrangements with such dealers with respect to the sale of shares of the AIM Funds) and any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, provided that purchases at net asset value are permitted by the policies of such person's employer; and (h) certain broker-dealers, investment advisers or bank trust departments that provide asset allocation, similar specialized investment services or investment company transaction services for their customers, that charge a minimum annual fee for such services, and that have entered into an agreement with AIM Distributors with respect to their use of the AIM Funds in connection with such services. In addition, shares of any AIM Fund may be purchased at net asset value, without payment of a sales charge, by pension, profit-sharing or other employee benefit plans created pursuant to a plan qualified under Section 401 of the Code or plans under Section 457 of the Code, or employee benefit plans created pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of the Code. Such plans will qualify for purchases at net asset value provided that (1) the initial amount invested in the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an employer-sponsored plan with at least 100 eligible employees, or (4) all of the plan's transactions are executed through a single omnibus account per fund. Section 403(b) plans sponsored by public educational institutions will not be eligible for net asset value purchases based on the aggregate investment made by the plan or the number of eligible employees. Participants in such plans will be eligible for reduced sales charges based solely on the aggregate value of their individual investments in the applicable AIM Fund. MCF 02/96 A-7 25 PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment dealers or other financial service firms up to 1.00% of the net asset value of any shares of the Load Funds (as defined on page A-10 herein) up to 0.10% of the net asset value of any shares of AIM LIMITED MATURITY TREASURY SHARES, and up to 0.25% of the net asset value of any shares of all other AIM Funds sold at net asset value to an employee benefit plan in accordance with this paragraph. Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be deposited at net asset value, without payment of a sales charge, in G/SET series unit investment trusts, whose portfolios consist exclusively of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States Treasury issued notes or bonds bearing no current interest ("Treasury Obligations"). Class A shares of such funds may also be purchased at net asset value by other unit investment trusts approved by the Board of Directors of AIM Equity Funds, Inc. Unit holders of such trusts may elect to invest cash distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net asset value, including: (a) distributions of any dividend income or other income received by such trusts; (b) distributions of any net capital gains received in respect of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts; and (c) proceeds from the maturity of the Treasury Obligations at the termination dates of such trusts. Prior to the termination dates of such trusts, a unit holder may invest the proceeds from the redemption or repurchase of his units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net asset value, provided: (a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such redemption or repurchase; and (b) that the unit holder or his dealer provides AIM Distributors with a letter which: (i) identifies the name, address and telephone number of the dealer who sold to the unit holder the units to be redeemed or repurchased; and (ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the proceeds from the redemption or repurchase of units of such trusts. FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund named on the cover page, AIM Distributors and its agents will use their best efforts to provide notice of any such actions through correspondence with broker-dealers and existing shareholders, supplements to the AIM Funds' prospectuses, or other appropriate means, and will provide sixty (60) days' notice in the case of termination or material modification to the exchange privilege discussed under the caption "Exchange Privilege." - -------------------------------------------------------------------------------- SPECIAL PLANS Except as noted below, each AIM Fund provides the special plans described below for the convenience of its shareholders. Once established, there is no obligation to continue to invest through a plan, and a shareholder may terminate a plan at any time. Special plan applications and further information, including details of any fees which are charged to a shareholder investing through a plan, may be obtained by written request, directed to AFS at the address provided under "How to Purchase Shares," or by calling the Client Services Department of AFS at the phone numbers provided under "How to Purchase Shares." IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN SUCH A PLAN. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder who owns Class A shares of a Multiple Class Fund, Class C shares of AIM Money Market Fund, or shares of another AIM Fund can arrange for monthly, quarterly or annual checks in any amount (but not less than $50) to be drawn against the balance of his account in the designated AIM Fund. Shareholders who own Class B shares of a Multiple Class Fund can only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal Plan. Payment of this amount is normally made on or about the tenth or the twenty-fifth day of each month in which a payment is to be made. A minimum account balance of $5,000 is required to establish a Systematic Withdrawal Plan, but there is no requirement thereafter to maintain any minimum investment. No contingent deferred sales charge with respect to Class B shares of a Multiple Class Fund will be imposed on withdrawals made under a Systematic Withdrawal Plan, provided that the amounts withdrawn under such a plan do not exceed on an annual basis 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to Class B shares that exceed on an annual basis 12% of such account will be subject to a contingent deferred sales charge on the amounts exceeding 12% of the initial account value. 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 MCF 02/96 A-8 26 imposed on additional purchases of shares (other than Class B Shares and Class C Shares of the Multiple Class Funds), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. The Systematic Withdrawal Plan may be terminated at any time upon 10 days' prior notice to AFS. Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee for each withdrawal (not to exceed its cost), but there is no present intent to do so. AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly investments may establish an Automatic Investment Plan. Under this plan, on or about the tenth and/or twenty-fifth day of the applicable month, a draft is drawn on the shareholder's bank account in the amount specified by the shareholder (minimum $50 per investment, per account). The proceeds of the draft are invested in shares of the designated AIM Fund at the applicable offering price determined on the date of the draft. An Automatic Investment Plan may be discontinued upon 10 days' prior notice to the Transfer Agent or AIM Distributors. AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all dividends and distributions declared by an AIM Fund paid in cash or invested at net asset value, without payment of an initial sales charge, either in shares of the same AIM Fund or invested in shares of another AIM Fund. For each of the Multiple Class Funds, dividends and distributions attributable to Class A shares may be reinvested in Class A shares of the same fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund; dividends and distributions attributable to Class B shares may be reinvested in Class B shares of the same fund or in Class B shares of another Multiple Class Fund; and dividends and distributions attributable to Class C shares of AIM MONEY MARKET FUND may be reinvested in additional shares of such fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a description of payment dates for these options. In order to qualify to have dividends and distributions of one AIM Fund invested in shares of another AIM Fund, the following conditions must be satisfied: (a) the shareholder must have an account balance in the dividend paying fund of at least $5,000; (b) the account must be held in the name of the shareholder (i.e., the account may not be held in nominee name); and (c) the shareholder must have requested and completed an authorization relating to the reinvestment of dividends into another AIM Fund. An authorization may be given on the account application or on an authorization form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum account value requirement if the shareholder has an account in the fund selected to receive the dividends and distributions with a value of at least $500. DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount automatically exchanged, either monthly or quarterly (on or about the 10th or 25th day of the applicable month), from one of their accounts into one or more AIM Funds, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." The account from which exchanges are to be made must have a value of at least $5,000 when a shareholder elects to begin this program, and the exchange minimum is $50 per transaction. All of the accounts that are part of this program must have identical registrations. The net asset value of shares purchased under this program may vary, and may be more or less advantageous than if shares were not exchanged automatically. There is no charge for entering the Dollar Cost Averaging program. Sales charges may apply, as described under the caption "Exchange Privilege." PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype retirement plans available to corporations, individuals and employees of non-profit organizations and public schools: combination money- purchase/profit-sharing plans; 403(b) plans; IRA plans; and SEP plans (collectively, "retirement accounts"). Information concerning these plans, including the custodian's fees and the forms necessary to adopt such plans, can be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also available for investment through existing 401(k) plans (for both individuals and employers) adopted under the Code. The plan custodian currently imposes an annual $10 maintenance fee with respect to each retirement account for which it serves as the custodian. This fee is generally charged in December. Each AIM Fund and/or the custodian reserve the right to change this maintenance fee and to initiate an establishment fee (not to exceed its cost). MCF 02/96 A-9 27 - -------------------------------------------------------------------------------- EXCHANGE PRIVILEGE TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may participate in an exchange privilege as described below. The exchange privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds, which represent a range of different investment objectives and policies. As set forth under the caption "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM Funds, including the Class A shares of the Multiple Class Funds, referred to herein as the "Load Funds," are sold at a public offering price that includes a maximum sales charge of 5.50% or 4.75% of the public offering price of such shares; shares of certain of the AIM Funds, referred to herein as the "Lower Load Funds," are sold at a public offering price that includes a maximum sales charge of 1.00% of the public offering price of such shares; and shares of certain other funds, including the Class C shares of AIM MONEY MARKET FUND, referred to herein as the "No Load Funds," are sold at net asset value, without payment of a sales charge. LOAD FUNDS: LOWER LOAD FUNDS: ----------- ----------------- AIM AGGRESSIVE GROWTH AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES AIM BALANCED FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM CHARTER FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS: AIM CONSTELLATION AIM INTERNATIONAL EQUITY -------------- FUND -- CLASS A FUND -- CLASS A AIM MONEY MARKET FUND AIM GLOBAL AGGRESSIVE GROWTH AIM MONEY MARKET -- CLASS C FUND -- CLASS A FUND -- CLASS A AIM TAX-EXEMPT CASH FUND AIM GLOBAL GROWTH AIM MUNICIPAL BOND FUND -- CLASS A FUND -- CLASS A AIM GLOBAL INCOME AIM TAX-EXEMPT BOND FUND FUND -- CLASS A OF CONNECTICUT AIM GLOBAL UTILITIES AIM VALUE FUND -- CLASS A FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A AIM GROWTH FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund, except that (i) Load Fund share purchases of $1,000,000 or more which are subject to a contingent deferred sales charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND; (ii) Lower Load Fund share purchases of $1,000,000 or more and No Load Fund purchases may be exchanged for Load Fund shares in amounts of $1,000,000 or more which will then be subject to a contingent deferred sales charge; however, for purposes of calculating the contingent deferred sales charge on the Load Fund shares acquired, the 18-month period shall be computed from the date of such exchange; (iii) Class A shares and shares of all other AIM Funds may not be exchanged for Class B shares; (iv) Class B shares may be exchanged only for Class B shares; and (v) Class C shares of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or for Class B shares. For shares initially purchased prior to November 20, 1995, the exchange conditions in (i) and (ii) above will apply effective January 16, 1996. DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
MULTIPLE CLASS LOWER LOAD NO LOAD FUNDS: FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B - ---------------- ------------------------------------- --------------------- ---------------- ------------- Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable Lower Load Net Asset Value if shares were held Net Asset Value Net Asset Value Not Funds......... for at least 30 days; or if shares Applicable were acquired upon exchange of any Load Fund; or if shares were acquired upon exchange from any Lower Load Fund and such shares were held for at least 30 days. (No exchange privilege is available for the first 30 days following the purchase of the Lower Load Fund shares.)
(Table continued on following page) MCF 02/96 A-10 28
MULTIPLE CLASS LOWER LOAD NO LOAD FUNDS: FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B - ---------------- ------------------------------------- --------------------- ---------------- ------------- No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not directly purchased. Net Asset Value Load shares were Applicable if No Load shares were acquired upon acquired upon exchange of shares of any Load Fund exchange of shares of or any Lower Load Fund; Net Asset any Load Fund or any Value if No Load shares were acquired Lower Load Fund; upon exchange of Lower Load Fund otherwise, shares and were held for at least 30 Offering Price. days following the purchase of the Lower Load Fund shares. (No exchange privilege is available for the first 30 days following the acquisition of the Lower Load Fund shares.) Multiple Class Funds: Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS: Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Funds......... acquired upon exchange of any Load Applicable Fund. Otherwise, difference in sales charge will apply. No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not directly purchased. Net Asset Value Load shares were Applicable if No Load shares were acquired upon acquired upon exchange of shares of any Load Fund. exchange of shares of Difference in sales charge will apply any Load Fund or any if No Load shares were acquired upon Lower Load Fund; exchange of Lower Load Fund shares. otherwise, Offering Price. Multiple Class Funds: Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
An exchange is permitted only in the following circumstances: (a) if the funds offer more than one class of shares, the exchange must be between the same class of shares (e.g., Class A and Class B shares of a Multiple Class Fund cannot be exchanged for each other), except that Class C shares of AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class Fund; (b) the dollar amount of the exchange must be at least equal to the minimum investment applicable to the shares of the fund acquired through such exchange; (c) the shares of the fund acquired through exchange must be qualified for sale in the state in which the shareholder resides; (d) the exchange must be made between accounts having identical registrations and addresses; (e) the full amount of the purchase price for the shares being exchanged must have already been received by the fund; (f) the account from which shares have been exchanged must be coded as having a certified taxpayer identification number on file or, in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must have been received by the fund; (g) newly acquired shares (through either an initial or subsequent investment) are held in an account for at least ten business days, and all other shares are held in an account for at least one day, prior to the exchange; and (h) certificates representing shares must be returned before shares can be exchanged. THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER. THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE. There is no fee for exchanges among the AIM Funds. A service fee of $5 per transaction may, however, be charged by AIM Distributors on accounts of market timing investment firms to help to defray the costs of maintaining an automated exchange service. This service fee will be charged against the market timing account from which shares are being exchanged. Shares to be exchanged are redeemed at their net asset value as determined at the close of business on the day that an exchange request in proper form (described below) is received by AFS in its Houston, Texas office, provided that such request is received prior to 4:00 p.m. Eastern Time. Exchange requests received after this time will result in the redemption of shares at their net asset value as determined at the close of business on the next business day. 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 by AIM Distributors, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends (See "Dividends, Distributions and Tax Matters -- Dividends and Distributions," below), and MCF 02/96 A-11 29 the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. Shares purchased by check may not be exchanged until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." In the event of unusual market conditions, AIM Distributors reserves the right to reject any exchange request, if, in the judgment of AIM Distributors, the number of requests or the total value of the shares that are the subject of the exchange places a material burden on a fund. For example, the number of exchanges by investment managers making market timing exchanges may be limited. EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a written request to AFS. The request should contain the account registration and account number, the dollar amount or number of shares to be exchanged, and the names of the funds from which and into which the exchange is to be made. The request should comply with all of the requirements for redemption by mail, except those required for redemption of IRAs. See "How to Redeem Shares." EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange by telephone. If a shareholder does not wish to allow telephone exchanges by any person in his account, he should decline that option on the account application. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at the appropriate telephone number indicated under the caption "How to Purchase Shares." 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 applicable fund(s) as long as such request is received prior to 4:00 p.m. Eastern Time. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone exchange request that they reasonably believe to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXCHANGES OF CLASS B SHARES. A contingent deferred sales charge will not be imposed in connection with exchanges among Class B shares of Multiple Class Funds. For purposes of determining a shareholder's holding period of Class B shares in the calculation of the applicable contingent deferred sales charge, the period of time during which Class B shares were held prior to an exchange will be added to the holding period of Class B shares acquired in an exchange. - -------------------------------------------------------------------------------- HOW TO REDEEM SHARES Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the obligation of the fund(s) named on the cover page to redeem shares, AIM Distributors also repurchases shares. Although a contingent deferred sales charge may be applicable to certain redemptions, as described below, there is no redemption fee imposed when shares are redeemed or repurchased; however, dealers may charge service fees for handling repurchase transactions. MULTIPLE DISTRIBUTION SYSTEM. Class B shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less the applicable contingent deferred sales charge shown in the table below. No deferred sales charge will be imposed (i) on redemptions of Class B shares following six years from the date such shares were purchased, (ii) on Class B shares acquired through reinvestments of dividends and distributions attributable to Class B shares or (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class B shares.
YEAR CONTINGENT DEFERRED SINCE SALES CHARGE AS PURCHASE %OF DOLLAR AMOUNT MADE SUBJECT TO CHARGE -------- --------------------- First...................................................... 5% Second..................................................... 4% Third...................................................... 3% Fourth..................................................... 3% Fifth...................................................... 2% Sixth...................................................... 1% Seventh and Following...................................... None
In determining whether a contingent deferred sales charge is applicable, it will be assumed that a redemption is made first, of any shares held in the shareholder's account that are not subject to such charge; second, of shares derived from reinvestment of dividends MCF 02/96 A-12 30 and distributions; third, of shares held for more than six years from the date such shares were purchased; and fourth, of shares held less than six years from the date such shares were purchased. The applicable sales charge will be applied against the lesser of the current market value of shares redeemed or their original cost. Contingent deferred sales charges on Class B shares will be waived on redemptions (1) following the registered shareholder's (or in the case of joint accounts, all registered joint owners') death or disability, as defined in Section 72(m)(7) of the Code (provided AIM Distributors is notified of such death or disability at the time of the redemption request and is provided with satisfactory evidence of such death or disability), (2) in connection with certain distributions from individual retirement accounts, custodial accounts maintained pursuant to Code Section 403(b), deferred compensation plans qualified under Code Section 457 and plans qualified under Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class B shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to liquidate a shareholder's account if the aggregate net asset value of shares held in the account is less than the designated minimum account size described in the prospectus of such Multiple Class Fund and (5) effected by AIM of its investment in Class B shares. Waiver category (1) above applies only to redemptions: (i) made within one year following death or initial determination of disability and (ii) of Class B shares held at the time of death or initial determination of disability. Waiver category (2) above applies only to redemptions resulting from: (i) required minimum distributions to plan participants or beneficiaries who are age 70 1/2 or older, and only with respect to that portion of such distributions which does not exceed 12% annually of the participant's or beneficiary's account value; (ii) in kind transfers of assets where the participant or beneficiary notifies AIM Distributors of such transfer no later than the time such transfer occurs; (iii) tax-free rollovers or transfers of assets to another Retirement Plan invested in Class B shares of one or more Multiple Class Funds; (iv) tax-free returns of excess contributions or returns of excess deferral amounts; and (v) distributions upon the death or disability (as defined in the Code) of the participant or beneficiary. CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for purchases of Class B shares of a Multiple Class Fund and purchases of shares of the No Load Funds and Lower Load Funds, a contingent deferred sales charge of 1% applies to purchases of $1,000,000 or more that are redeemed within 18 months of the date of purchase. For a description of the AIM Funds participating in this program, see "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the lesser of the value of the shares redeemed (excluding reinvested dividends and capital gain distributions) or the total original cost of such shares. In determining whether a contingent deferred sales charge is payable, and the amount of any such charge, shares not subject to the contingent deferred sales charge are redeemed first (including shares purchased by reinvested dividends and capital gains distributions and amounts representing increases from capital appreciation), and then other shares are redeemed in the order of purchase. No such charge will be imposed upon exchanges unless the shares acquired by exchange are redeemed within 18 months of the date the shares were originally purchased. For purposes of computing this 18-month period (i) shares of any Load Fund or Class C shares of AIM MONEY MARKET FUND which were acquired through an exchange of shares which previously were subject to the 1% contingent deferred sales charge will be credited with the period of time such exchanged shares were held, and (ii) shares of any Load Fund which are subject to the 1% contingent deferred sales charge and which were acquired through an exchange of shares of a Lower Load Fund or a No Load Fund which previously were not subject to the 1% contingent deferred sales charge will not be credited with the period of time such exchanged shares were held. The charge will be waived in the following circumstances: (1) redemptions of shares by employee benefit plans ("Plans") qualified under Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the Code and sponsored by nonprofit organizations as defined under Section 501(c)(3) of the Code, where (a) the initial amount invested by a Plan in one or more of the AIM Funds is at least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being redeemed were purchased by an employer-sponsored Plan with at least 100 eligible employees; provided, however, that Plans created under Section 403(b) of the Code which are sponsored by public educational institutions shall qualify under (a), (b) or (c) above on the basis of the value of each Plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the Plan or on the number of eligible employees; (2) redemptions of shares following the registered shareholder's (or in the case of joint accounts, all registered joint owners') death or disability, as defined in Section 72(m)(7) of the Code; (3) redemptions of shares purchased at net asset value by private foundations or endowment funds where the initial amount invested was at least $1,000,000; and (4) redemptions of shares purchased by an investor in amounts of $1,000,000 or more where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payments otherwise payable to the dealer as described in the third paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds." REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the Transfer Agent. Upon receipt of a redemption request in proper form, payment will be made as soon as practicable, but in any event will normally be made within seven days after receipt. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." Requests for redemption must include: (a) original signatures of each registered owner exactly as the shares are registered; (b) the Fund and the account number of shares to be redeemed; (c) share certificates, either properly endorsed or accompanied by a MCF 02/96 A-13 31 duly executed stock power, for the shares to be redeemed if such certificates have been issued and the shares are not in the custody of the Transfer Agent; (d) signature guarantees, as described below; and (e) any additional documents that may be required for redemption by corporations, partnerships, trusts or other entities. The burden is on the shareholder to inquire as to whether any additional documentation is required. Any request not in proper form may be rejected and in such case must be renewed in writing. In addition to these requirements, shareholders who have invested in a fund to establish an IRA, should include the following information along with a written request for either partial or full liquidation of fund shares: (a) a statement as to whether or not the shareholder has attained age 59 1/2; and (b) a statement as to whether or not the shareholder elects to have federal income tax withheld from the proceeds of the liquidation. REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone. If a shareholder does not wish to allow telephone redemptions by any person in his account, he should decline that option on the account application. The telephone redemption feature can be used only if: (a) the redemption proceeds are to be mailed to the address of record or wired to the pre-authorized bank account as indicated on the account application; (b) there has been no change of address of record on the account within the preceding 30 days; (c) the shares to be redeemed are not in certificate form; (d) the person requesting the redemption can provide proper identification information; and (e) the proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for the telephone redemption option. AIM Distributors has made arrangements with certain dealers and investment advisors to accept telephone instructions for the redemption of shares. AIM Distributors reserves the right to impose conditions on these dealers and investment advisors, including the condition that they enter into agreements (which contain additional conditions with respect to the redemption of shares) with AIM Distributors. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth at that item of the account application if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that same business day. If the redemption order is received after 11:30 a.m. and prior to 4:00 p.m. Eastern Time, the redemption will be made at the net asset value determined at 4:00 p.m. Eastern Time and payment will generally be transmitted on the next business day. REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY MARKET FUND). After completing the appropriate authorization form, shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement accounts or qualified plans. Checks may be drawn in any amount of $250 or more. Checks drawn against insufficient shares in the account, against shares held less than ten business days, or in amounts of less than the applicable minimum will be returned to the payee. The payee of the check may cash or deposit it in the same way as an ordinary bank check. When a check is presented to the Transfer Agent for payment, the Transfer Agent will cause a sufficient number of shares of such fund to be redeemed to cover the amount of the check. Shareholders are entitled to dividends on the shares redeemed through the day on which the check is presented to the Transfer Agent for payment. TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds are redeemed at their net asset value next computed after a request for redemption in proper form (including signature guarantees and other required documentation for written redemptions) is received by the Transfer Agent, except that Class B shares of the Multiple Class Funds, and Class A shares of the Multiple Class Funds and shares of the other AIM Funds that are subject to the contingent deferred sales charge program for large purchases described above, may be subject to the imposition of deferred sales charges that will be deducted from the redemption proceeds. See "Multiple Distribution System" and "Contingent Deferred Sales Charge Program for Large Purchases." Orders for the redemption of shares received in proper form by dealers prior to 4:00 p.m. Eastern Time on any business day of an AIM Fund and either received by the Transfer Agent in its Houston, Texas office prior to 5:00 p.m. Central Time on that day or transmitted by dealers to the Transfer Agent through the facilities of NSCC by 7:00 p.m. Eastern Time on that day, will be confirmed at the price determined as of the close of that day. Orders received by dealers after 4:00 p.m. Eastern Time will be confirmed at the price determined on the next business day of an AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent through the facilities of NSCC. Any resulting loss from the dealer's failure to submit a request for redemption within the prescribed time frame will be borne by that dealer. Telephone redemption requests must be made by 4:00 p.m. Eastern Time on any business day of an AIM Fund and will be confirmed at the price determined as of the close of that day. No AIM Fund will accept requests which specify a particular date for redemption or which specify any special conditions. Payment of the proceeds of redeemed shares is normally mailed within seven days following the redemption date. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special handling (such as wiring of funds or expedited delivery services) may be made by the Transfer Agent. The right of redemption may not be suspended or the date of payment upon redemption postponed except under unusual circumstances such as when trading on MCF 02/96 A-14 32 the NYSE is restricted or suspended. Payment of the proceeds of redemptions relating to shares for which checks sent in payment have not yet cleared will be delayed until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. SIGNATURE GUARANTEES. A signature guarantee is designed to protect the investor, the AIM Funds, AIM Distributors, and their agents by verifying the signature of each investor seeking to redeem, transfer, or exchange shares of an AIM Fund. Examples of when signature guarantees are required are: (1) redemptions by mail in excess of $50,000; (2) redemptions by mail if the proceeds are to be paid to someone other than the name(s) in which the account is registered; (3) written redemptions requesting proceeds to be sent by wire to other than the bank of record for the account; (4) redemptions requesting proceeds to be sent to a new address or an address that has been changed within the past 30 days; (5) requests to transfer the registration of shares to another owner; (6) telephone exchange and telephone redemption authorization forms; (7) changes in previously designated wiring instructions; and (8) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $50,000 or the proceeds are to be sent to the address of record. These requirements may be waived or modified upon notice to shareholders. Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission ("SEC"), and further provided that such guarantor institution is listed in one of the reference guides contained in the Transfer Agent's current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. The Transfer Agent will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS. REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption, a shareholder may invest all or part of the redemption proceeds in shares of the AIM Fund from which the redemption was made at the net asset value next computed after receipt by the Transfer Agent of the funds to be reinvested. The shareholder must ask the Transfer Agent for such privilege at the time of reinvestment. A realized gain on the redemption is taxable, and reinvestment will not alter any capital gains payable. If there has been a loss on the redemption, all of the loss may not be tax deductible, depending on the timing and amount reinvested. Under the Code, if the redemption proceeds of fund shares on which a sales charge was paid are reinvested in (or exchanged for) shares of the same fund within 90 days of the payment of the sales charge, the shareholder's basis in the fund shares redeemed may not include the amount of the sales charge paid, thereby reducing the loss or increasing the gain recognized from the redemption. Each AIM Fund may amend, suspend or cease offering this privilege at any time as to shares redeemed after the date of such amendment, suspension or cessation. This privilege may only be exercised once each year by a shareholder with respect to each AIM Fund. Shareholders who are assessed a contingent deferred sales charge in connection with the redemption of Class A shares of the Multiple Class Funds or shares of any other AIM Fund, and who subsequently reinvest a portion or all of the value of the redeemed shares in shares of the same AIM Fund within 90 days after such redemption may do so at net asset value if such privilege is claimed at the time of reinvestment. Such reinvested proceeds will not be subject to either a front-end sales charge at the time of reinvestment or an additional contingent deferred sales charge upon subsequent redemption. In order to exercise this reinvestment privilege, the shareholder must notify the Transfer Agent of his or her intent to do so at the time of reinvestment. This reinvestment privilege does not apply to Class B shares. - -------------------------------------------------------------------------------- DETERMINATION OF NET ASSET VALUE The net asset value per share (or share price) of each AIM Fund is determined as of 4:00 p.m. Eastern Time (12:00 noon and 4:00 p.m. Eastern Time with respect to AIM MONEY MARKET FUND), on each "business day" of a fund as previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of an AIM Fund's share will be determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available 15 minutes after the close of trading of the NYSE will generally be used. The net asset value per share is calculated by subtracting a class' liabilities from its assets and dividing the result by the total number of class shares outstanding. The determination of net asset value per share is made in accordance with generally accepted accounting principles. Among other items, liabilities include accrued expenses and dividends payable, and total assets include portfolio securities valued at their market value, as well as income accrued but not yet received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the fund's officers and in accordance with methods which are specifically authorized by its governing Board of Directors or Trustees. Short-term obligations with maturities of 60 days or less, and the securities held by the Money Market Funds, are valued at amortized cost as reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. MCF 02/96 A-15 33 Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of an AIM Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which the values of the securities are determined and the close of the NYSE which will not be reflected in the computation of an AIM Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the applicable AIM Fund. - -------------------------------------------------------------------------------- DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS DIVIDENDS AND DISTRIBUTIONS Each AIM Fund's policy regarding the payment of dividends and distributions is set forth below.
DISTRIBUTIONS DISTRIBUTIONS OF NET OF NET DIVIDENDS FROM REALIZED REALIZED NET INVESTMENT SHORT-TERM LONG-TERM FUND INCOME CAPITAL GAINS CAPITAL GAINS - ----- ----------------------- --------------- --------------- AIM AGGRESSIVE GROWTH FUND.............. declared and paid annually annually annually AIM BALANCED FUND....................... declared and paid annually annually quarterly AIM CHARTER FUND........................ declared and paid annually annually quarterly AIM CONSTELLATION FUND.................. declared and paid annually annually annually AIM GLOBAL AGGRESSIVE GROWTH FUND....... declared and paid annually annually annually AIM GLOBAL GROWTH FUND.................. declared and paid annually annually annually AIM GLOBAL INCOME FUND.................. declared daily; paid annually annually monthly AIM GLOBAL UTILITIES FUND............... declared daily; paid annually annually monthly AIM GROWTH FUND......................... declared and paid annually annually annually AIM HIGH YIELD FUND..................... declared daily; paid annually annually monthly AIM INCOME FUND......................... declared daily; paid annually annually monthly AIM INTERMEDIATE GOVERNMENT FUND........ declared daily; paid annually annually monthly AIM INTERNATIONAL EQUITY FUND........... declared and paid annually annually annually AIM LIMITED MATURITY TREASURY SHARES.... declared daily; paid quarterly annually monthly AIM MONEY MARKET FUND................... declared daily; paid at least annually monthly annually AIM MUNICIPAL BOND FUND................. declared daily; paid annually annually monthly AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........................... declared daily; paid annually annually monthly AIM TAX-EXEMPT CASH FUND................ declared daily; paid at least annually monthly annually AIM TAX-FREE INTERMEDIATE SHARES........ declared daily; paid annually annually monthly AIM VALUE FUND.......................... declared and paid annually annually annually AIM WEINGARTEN FUND..................... declared and paid annually annually annually
In determining the amount of capital gains, if any, available for distribution, net capital gains are offset against available net capital losses, if any, carried forward from previous fiscal periods. All dividends and distributions of an AIM Fund are automatically reinvested on the payment date in full and fractional shares of such fund, unless the shareholder has made an alternate election as to the method of payment. Dividends and distributions attributable to Class A, Class B or Class C shares are reinvested in additional shares of such Class, absent an election by a shareholder to receive cash or to have such dividends and distributions reinvested in Class A or Class B shares of another Multiple Class Fund, to the extent permitted. For funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date. Shareholders may elect, by written notice to the Transfer Agent, to receive such distributions, or the dividend portion thereof, in cash, or to invest such dividends and distributions in shares of another fund in the AIM Funds; provided that (i) dividends and distributions attributable to Class B shares may only be reinvested in Class B shares, (ii) dividends and distributions attributable to Class A shares may not be reinvested in Class B shares, and (iii) dividends and distributions attributable to the Class C shares of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in any Class B shares. Investors who have not previously selected such a reinvestment option on the account application form may contact the Transfer Agent at any time to obtain a form to authorize such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales charges, and shares so purchased are automatically credited to the account of the shareholder. MCF 02/96 A-16 34 Dividends on Class B shares are expected to be lower than those for Class A or Class C shares because of higher distribution fees paid by Class B shares. Dividends on Class A, Class B and Class C 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, as discussed below. TAX MATTERS Each AIM Fund has qualified and intends to qualify for treatment as a regulated investment company under Subchapter M of the Code. As long as a fund qualifies for this tax treatment, it is not subject to federal income taxes on net investment income and capital gains that are distributed to shareholders. Each fund, for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M, is treated as a separate corporation. Therefore, no fund may offset its gains against another fund's losses and each fund must individually comply with all of the provisions of the Code which are applicable to its operations. TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to distribute substantially all of its net investment income and net realized capital gains to its shareholders, it is not expected that any such fund will be required to pay any federal income tax. Each AIM Fund also intends to meet the distribution requirements of the Code to avoid the imposition of a non-deductible 4% excise tax calculated as a percentage of certain undistributed amounts of taxable ordinary income and capital gain net income. Nevertheless, shareholders normally are subject to federal income taxes, and any applicable state and local income taxes, on the dividends and distributions received by them from a fund whether in the form of cash or additional shares of a fund, except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE INTERMEDIATE SHARES (the "Tax-Exempt Funds") which are exempt from federal tax. Dividends paid by a fund (other than capital gain distributions) may qualify for the federal 70% dividends received deduction for corporate shareholders to the extent of the qualifying dividends received by the fund on domestic common or preferred stock. It is not likely that dividends received from AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly after the end of each year, shareholders will receive information regarding the amount and federal income tax treatment of all distributions paid during the year. No gain or loss will be recognized by shareholders upon the automatic conversion of Class B shares of a Multiple Class Fund into Class A shares of such Fund. For each redemption of a fund's shares by a non-exempt shareholder, the fund or the securities dealer effecting the transaction is required to file an information return with the IRS. TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON. Under existing provisions of the Code, nonresident alien individuals, foreign partnerships and foreign corporations may be subject to federal income tax withholding at a 30% rate on income dividends and distributions (other than exempt-interest dividends and capital gain dividends) and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption. DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL INFORMATION. TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required to include the "exempt-interest" portion of dividends paid by the Tax-Exempt Funds in their gross income for federal income tax purposes. However, shareholders will be required to report the receipt of exempt-interest dividends and other tax-exempt interest on their federal income tax returns. Moreover, exempt-interest dividends from the Tax-Exempt Funds may be subject to state income taxes, may give rise to a federal alternative minimum tax liability, may affect the amount of social security benefits subject to federal income tax, may affect the deductibility of interest on certain indebtedness of the shareholder, and may have other collateral federal income tax consequences. The Tax-Exempt Funds may invest in Municipal Securities the interest on which will constitute an item of tax preference and which therefore could give rise to a federal alternative minimum tax liability for shareholders, and may invest up to 20% of their net assets in such securities and MCF 02/96 A-17 35 other taxable securities. For additional information concerning the alternative minimum tax and certain collateral tax consequences of the receipt of exempt-interest dividends, see the Statements of Additional Information applicable to the Tax-Exempt Funds. The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but will endeavor to avoid investments which would result in taxable dividends. The percentage of dividends which constitute exempt-interest dividends, and the percentage thereof (if any) which constitute an item of tax preference, will be determined annually. This percentage may differ from the actual percentages for any particular day. To the extent that dividends are derived from taxable investments or net realized short-term capital gains, they will constitute ordinary income for federal income tax purposes, whether received in cash or additional shares. Distributions of net long-term capital gains will be taxable as long-term capital gains, whether received in cash or additional shares, and regardless of the length of time a particular shareholder may have held his shares. From time to time, proposals have been introduced before Congress that would have the effect of reducing or eliminating the federal tax exemption on Municipal Securities. If such a proposal were enacted, the ability of the Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected. AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes dividends paid by mutual funds out of interest on U.S. Treasury and certain other U.S. Government obligations, and investors should consult with their own tax advisors concerning the availability of such exemption. AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so, each of these funds may elect to pass through to shareholders credits for foreign taxes paid. If the fund makes such an election, a shareholder who receives a distribution (1) will be required to include in gross income his proportionate share of foreign taxes allocable to the distribution and (2) may claim a credit or deduction for such share for his taxable year in which the distribution is received, subject to the general limitations imposed on the allowance of foreign tax credits and deductions. Shareholders should also note that certain gains or losses attributable to fluctuations in exchange rates or foreign currency forward contracts may increase or decrease the amount of income of the fund available for distribution to shareholders, and should note that if such losses exceed other income during a taxable year, the fund would not be able to pay ordinary income dividends. - -------------------------------------------------------------------------------- GENERAL INFORMATION CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, serves as custodian for the portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND FUND and AIM LIMITED MATURITY TREASURY SHARES, for which The Bank of New York, 110 Washington Street, New York, New York 10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend payment agent. LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed upon the legality of the shares offered pursuant to this Prospectus. SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should be directed to an A I M Fund Services, Inc. Client Services Representative by calling (713) 626-1919 (extension 5224) (in Houston), or toll-free at (800) 959-4246 (elsewhere). The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. OTHER INFORMATION. This Prospectus sets forth basic information that investors should know about the fund(s) named on the cover page prior to investing. Recipients of this Prospectus will be provided with a copy of the annual report of the fund(s) to which this Prospectus relates, upon request and without charge. A Statement of Additional Information has been filed with the SEC and is available upon request and without charge, by writing or calling AIM Distributors. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from this Prospectus, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. MCF 02/96 A-18 36 APPLICATION INSTRUCTIONS SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the social security number or taxpayer identification number (TIN) which appears in Section 1 of the Application complies with the following guidelines: - -------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D. ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF: ------------ -------------------- ------------ ------------------ Individual Individual Trust, Estate, Pension Trust, Estate, Pension Plan Trust Plan Trust and not personal TIN of fiduciary Joint Individual First individual listed in the "Account Registration" portion of the Application Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership, Minors/Unif. Other Organization Other Organization Transfers to Minors Legal Guardian Ward, Minor or Incompetent Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ------------------------------------------------------------------------------- Applications without a certified TIN will not be accepted unless the applicant is a nonresident alien, foreign corporation or foreign partnership and has attached a completed IRS Form W-8. BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS regulations, withhold 31% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a TIN and a certification that he is not subject to backup withholding. An investor is subject to backup withholding if: (1) the investor fails to furnish a correct TIN to the Fund, or (2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or (3) the investor is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or (4) the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) the investor does not certify his TIN. This applies only to reportable interest, dividend, broker or barter exchange accounts opened after 1983, or broker accounts considered inactive during 1983. Except as explained in (5) above, other reportable payments are subject to backup withholding only if (1) or (2) above applies. Certain payees and payments are exempt from backup withholding and information reporting and such entities should check the box "Exempt from Backup Withholding" on the Application. A complete listing of such exempt entities appears in the Instructions accompanying Form W-9 (which can be obtained from the IRS) and includes, among others, the following: - - a corporation - - an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) - - the United States or any of its agencies or instrumentalities - - a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities - - a foreign government or any of its political subdivisions, agencies or instrumentalities - - an international organization or any of its agencies or instrumentalities - - a foreign central bank of issue - - a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. - - a futures commission merchant registered with the Commodity Futures Trading Commission - - a real estate investment trust - - an entity registered at all times during the tax year under the Investment Company Act of 1940 - - a common trust fund operated by a bank under Section 584(a) - - a financial institution - - a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List - - a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. MCF 02/96 B-1 37 NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to appropriate withholding as described in the Prospectus under "Dividends, Distributions and Tax Matters." SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. The Transfer Agent reserves the right to cease to act as agent subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone exchange privilege at any time without notice. SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as agent subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor (see the applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges by Mail"). MCF 02/96 B-2 38 [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R) Investment Advisor A I M Advisors, Inc. 11 Greenway Plaza, Suite 1919 Houston, TX 77046-1173 Transfer Agent A I M Fund Services, Inc. P.O. Box 4739 Houston TX 77210-4739 Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter A I M Distributors, Inc. P.O. Box 4739 Houston, TX 77210-4739 Independent Accountants KPMG Peat Marwick LLP 700 Louisiana NationsBank Bldg. Houston, TX 77002 For more complete information about any other Fund in The AIM Family of Funds(R), including charges and expenses, please call (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere) or write to A I M Distributors, Inc. and request a free prospectus. Please read the prospectus carefully before you invest or send money. 39 STATEMENT OF ADDITIONAL INFORMATION AIM INTERNATIONAL EQUITY FUND (A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.) 11 Greenway Plaza Suite 1919 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 FROM AUTHORIZED DEALERS OR BY WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739, OR BY CALLING (713) 626-1919 EXTENSION 5001 (IN HOUSTON) OR (800) 347-4246 (ELSEWHERE) ------------------------- Statement of Additional Information Dated: March 1, 1996 Relating to the Prospectus Dated: March 1, 1996 40 TABLE OF CONTENTS
Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 11 Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 19 Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Investment Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 20 THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
i 41 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
ii 42 INTRODUCTION AIM International Funds, Inc. (the "Company") 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, which relates to the Company's AIM International Equity Fund series (the "Fund"), is included in a Prospectus, dated March 1, 1996 (the "Prospectus"). Copies of the Prospectus and additional copies of this Statement of Additional Information may be obtained without charge by writing the distributor of the Fund's shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (713) 626-1919 (in Houston), Extension 5001 or (800) 347-4246 (elsewhere). Investors must receive a Prospectus before they invest in the Fund. 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 Fund's current Prospectus, and in order to avoid repetition, reference will be made herein to sections of the Prospectus. Additionally, the Prospectus and this Statement of Additional Information omit certain information contained in the Company's Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from the Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE COMPANY The Company and its Shares The Company was organized in 1991 as a Maryland corporation, and is registered with the SEC as a diversified, open-end, series, management investment company. The Company currently consists of four portfolios, one of which is the Fund. Other portfolios of the Company, whose shares are offered through a separate prospectus and statement of additional information are: AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund. Each portfolio of the Company offers both Class A shares and Class B shares. As used in the Prospectus, the term "majority of the outstanding shares" of the Company, the Fund, or a class of the Fund means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Company, the Fund or such class present at a meeting of shareholders, if the holders of more than 50% of the outstanding shares of the Company, the Fund or such class are present or represented by proxy or (ii) more than 50% of the outstanding shares of the Company, the Fund or such class. Each share of the Fund is entitled to one vote, to participate equally in dividends and distributions declared by the Board of Directors with respect to the Fund and, upon liquidation of the Fund, to participate proportionately in the Fund's net assets remaining after satisfaction of the Fund's outstanding liabilities. Fractional shares have proportionately the same rights, including voting rights, as are provided for full shares. PERFORMANCE Total Return Calculations Total returns quoted in advertising reflect all aspects of the Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in the Fund's net asset value per share over the period. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in the Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value 1 43 had been constant over the period. While average annual total returns are a convenient means of comparing investment alternatives, investors should realize that the Fund's performance is not constant over time, but changes from year to year, and that average annual total return does not represent the actual year-to-year performance of the Fund. In addition to average annual total return, the Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns and other performance information may be quoted numerically or in tables, graphs or similar illustrations. Total returns may be quoted with or without taking the Class A shares' 5.50% maximum sales charge, or the Class B shares' 5% maximum contingent deferred sales charge ("CDSC") into account. Excluding sales charges from a total return calculation produces a higher total return figure. HISTORICAL PORTFOLIO RESULTS Total returns for Class A shares of the Fund for the one-year period ended October 31, 1995 and the period April 7, 1992 (dated of effectiveness of the Fund's registration's statement) through October 31, 1995 (which include the maximum sales charge of 5.50% and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return ------------------ ----------------- One year ended 10/31/95 - 0.58% -0.58% Period 04/07/92 - 10/31/95 12.88% 54.11%
Total returns for Class B shares of the Fund for the one-year period ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1995 (which include the maximum contingent deferred sales charge of 5% and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return ----------------- ----------------- One year ended 10/31/95 -0.65% -0.65% Period 09/15/94 - 10/31/95 0.79% 0.90%
During the one-year period ended October 31, 1995 and for the period from April 7, 1992 through October 31, 1995, a hypothetical $1,000 investment in the Class A shares of the Fund at the beginning of each such period would have been worth $994.20 and $1,541.06, respectively. Both of such figures assume the maximum sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 1995 and the period September 15, 1994 through October 31, 1995, a hypothetical $1,000 investment in the Class B shares of the Fund at the beginning of each such period would have been worth $993.53 and $1,008.97, respective. Both of such figures assume the maximum contingent deferred sales charge was paid and all distributions were reinvested. The Fund's performance may be compared in advertising to the performance of other mutual funds in general, or of particular types of mutual funds, especially those with similar objectives. Such performance data may be prepared by Lipper Analytical Services, Inc. and other independent services which monitor the performance of mutual funds. The Fund may also advertise mutual fund performance rankings which have 2 44 been assigned to the Fund by such monitoring services. The Fund's performance may also be compared in advertising and other materials to the performance of comparative benchmarks such as the Consumer Price Index, the Standard and Poor's 500 Stock Index, The Financial Times - Actuaries World Indices (a wide range of comprehensive measures of stock price performance for the world's major stock markets and regional areas), Morgan Stanley Capital International Indices, including the EAFE Index, Pacific Basin Index and Pacific Ex Japan Index (a widely recognized series of indices in international market performance), and indices of stocks comparable to those in which the Fund invests. From time to time, the Fund's advertising may include discussions of general domestic and international economic conditions and interest rates, and may make reference to international economic sources such as The Bundesbank (the German equivalent of the U.S. Federal Reserve Board). The Fund's advertising may also include references to the use of the Fund as part of an individual's overall retirement investment program. 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. Also 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. PORTFOLIO TRANSACTIONS AND BROKERAGE GENERAL BROKERAGE POLICY Subject to policies established by the Board of Directors of the Company, A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and sell securities for the Fund, for the selection of broker-dealers, for the execution of the Fund's investment portfolio transactions, for the allocation of brokerage fees in connection with such transactions, and where applicable, for the negotiation of commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. While AIM generally seeks reasonably competitive commission rates, the Fund does not necessarily pay the lowest commission or spread available. A portion of the securities in which the Fund invests are traded in over-the-counter ("OTC") markets, and in such transactions, the Fund deals directly with the dealers who make markets in the securities involved, except in those circumstances where better prices and executions are available elsewhere. Portfolio transactions placed through dealers serving as primary market makers are effected at net prices, generally without commissions as such, but which include compensation in the form of mark up or mark down. Traditionally, commission rates have not been negotiated on stock markets outside the United States. In recent years, however, an increasing number of overseas stock markets have adopted a system of negotiated rates, although a number of markets continue to be subject to an established schedule of minimum commission rates. Foreign equity securities may be held by the Fund in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or other securities representing underlying securities of foreign issuers, or securities convertible into foreign equity securities. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the United States securities markets, and EDRs, in bearer form, are designed for use in European securities markets. ADRs and EDRs 3 45 may be listed on stock exchanges, or traded in 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. AIM may from time to time determine target levels of commission business for AIM to transact with various brokers on behalf of its clients (including the Fund) over a certain time period. The target levels will be determined 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 attitude toward and interest in mutual funds in general and in the Fund and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular. No specific formula will be used in connection with any of the foregoing considerations in determining the target levels. However, if a broker has indicated a certain level of desired commissions in return for certain research services provided by the broker, this factor will be taken into consideration by AIM. Subject to the overall objective of obtaining best net price and most favorable execution for the Fund, AIM may also consider sales of shares of the Fund and of the other AIM Funds as a factor in the selection of broker-dealers to execute portfolio transactions for the Fund. AIM will seek, whenever possible, to recapture for the benefit of the Fund any commissions, fees, brokerage or similar payments paid by the Fund on portfolio transactions. Normally, the only fees which may be recaptured are the soliciting dealer fees on the tender of an account's portfolio securities in a tender or exchange offer. The Fund is not under any obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Brokers who provide supplemental investment research to AIM may receive orders for transactions by the Fund. Information so received will be in addition to and not in lieu of the services required to be performed by AIM under its agreements with the Fund, and the expenses of AIM will not necessarily be reduced as a result of the receipt of such supplemental information. Certain research services furnished by broker-dealers may be useful to AIM in connection with its services to other advisory clients, including the other AIM Funds. Also, the Fund may pay a higher price for securities or higher commissions in recognition of research services furnished by broker-dealers. Provisions of the Investment Company Act of 1940, as amended ("1940 Act") and rules and regulations thereunder have been construed to prohibit the Fund from purchasing securities or instruments from, or selling securities or instruments to, any holder of 5% or more of the voting securities of any investment company managed or advised by AIM. The Fund has obtained an order of exemption from the SEC which permits the fund to engage in certain transactions with such 5% holders, if the Fund complies with conditions and procedures designed to ensure that such transactions are executed at fair market value and present no conflicts of interest. AIM and its affiliates manage several other investment accounts, some of which may have investment objectives similar to those of the Fund. It is possible that, at times, identical securities will be appropriate for investment by the Fund and by one or more of such investment accounts. The position of each account, however, in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund and one or more of these accounts, and is considered at or about the same time, transactions in such securities will be allocated among the Fund and such accounts in a manner deemed equitable by AIM. AIM may combine such transactions, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. Simultaneous transactions could, however, adversely affect the ability of the Fund to obtain or dispose of the full amount of a security which it seeks to purchase or sell. In some cases the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to the 4 46 Fund. In making such allocations, the main factors considered by AIM are the respective 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 Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall not be deemed to have acted unlawfully or to have breached its fiduciary duty solely because under certain circumstances it has caused an account to pay a higher commission than the lowest available. To obtain the benefit of 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," and that the services provided by a broker provide AIM with lawful and appropriate assistance in the performance of its investment decision-making responsibilities. Accordingly, the price to the Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered. Broker-dealers utilized by AIM may furnish statistical, research and other information or services which are deemed by AIM to be beneficial to the Fund's investment program. Research services received from brokers supplement AIM's own research (and the research of sub-advisors to other clients of AIM), and may include the following types of information: statistical and background information on industry groups and individual companies; forecasts and interpretations with respect to United States and foreign economies, securities, markets, specific industry groups and individual companies; information on political developments; portfolio management strategies; performance information on securities and 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. Such information may be communicated electronically, orally or in written form. Research services may also include the providing of equipment used to communicate research information, the arranging of meetings with management of companies and the providing of access to consultants who supply research information. The outside research assistance is useful to AIM since the brokers utilized by AIM as a group tend to follow a broader universe of securities and other matters than AIM's staffs can follow. In addition, this research provides AIM with a diverse perspective on financial markets. Research services which are provided to AIM by brokers are available for the benefit of all accounts managed or advised by AIM or by sub-advisors to accounts managed or advised by AIM. In some cases, the research services are available only from the broker providing such services. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM is of the opinion that because the broker research supplements rather than replaces its research, the receipt of such research does not tend to decrease its expenses, but tends to improve the quality of its investment advice. However, to the extent that AIM would have purchased any such research services had such services not been provided by brokers, the expenses of such services to AIM could be considered to have been reduced accordingly. Certain research services furnished by broker-dealers may be useful to AIM in advising clients other than the Fund. Similarly, any research services received by AIM through the placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Fund. AIM is of the opinion that this material is beneficial in supplementing AIM's research and analysis and therefore it may benefit the Fund by improving the quality of AIM's investment advice. The advisory fee paid by the Fund is not reduced because AIM receives such services. 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 Fund. 5 47 BROKERAGE COMMISSIONS PAID For the years ended October 31, 1995, 1994 and 1993 the Fund paid brokerage commissions of $3,169,134, $3,253,649 and $1,303,108 respectively. The increase in brokerage commissions from October 31, 1993 through October 31, 1995 was due to the increase in the Fund's net assets during such period. For the fiscal year ended October 31, 1995, AIM allocated certain of the Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $2,502,669 and the related brokerage commissions were $3,922. HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES The following discussion of certain investment strategies supplements the discussion set forth in the Prospectus under the heading "Hedging Strategies and Other Investment Techniques." The Fund may seek to hedge its portfolio against movements in the equity markets, interest rates and exchange rates between currencies through the use of options, futures transactions, options on futures and foreign forward exchange transactions. The Fund has authority to write (sell) covered call and put options on its portfolio securities, purchase put and call options on securities and engage in transactions in stock index options, stock index futures and financial futures, and related options on such futures. The Fund may also deal in certain forward contracts, including forward foreign exchange transactions, foreign currency options and futures, and related options on such futures. The Fund is authorized to enter into such options and futures transactions either on exchanges or in the OTC markets. Although certain risks are involved in options and futures transactions (as discussed in the Prospectus and below), AIM believes that, because the Fund will only engage in these transactions for hedging purposes, the options and futures portfolio strategies of the Fund will not subject the Fund to the risks frequently associated with the speculative use of options and futures transactions. While the Fund's use of hedging strategies is intended to reduce the volatility of the net asset value of the Fund's shares, the Fund's net asset value will nevertheless fluctuate. There can be no assurance that the Fund's hedging transactions will be effective. HEDGING FOREIGN CURRENCY RISKS Generally, the foreign exchange transactions of the Fund will be conducted on a spot (cash) basis at the spot rate then prevailing for purchasing or selling currency in the foreign exchange market. However, the Fund has authority to deal in forward foreign exchange between currencies (including the U.S. dollar) as a hedge against possible variations in the foreign exchange rate between such currencies. This is accomplished through individually negotiated contractual agreements to purchase or to sell a specified currency at a specified future date and price set at the time of the contract. The Fund's dealings in forward foreign exchange may be with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. The Fund may not position hedge with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in its portfolio denominated or quoted in that particular foreign currency. The Fund will not attempt to hedge all of its portfolio positions and will enter into such transactions only to the extent, if any, deemed appropriate by AIM. The Fund will not enter into a position hedging commitment if, as a result thereof, the Fund would have more than 10% of the value of its total assets committed to such contracts. The Fund will not enter into a forward contract with a term of more than one year. In addition to the forward exchange contracts, the Fund may also purchase or sell listed or OTC foreign currency options, foreign currency futures and related options as a short or long hedge against possible variations in foreign exchange rates. The cost to the Fund of engaging in foreign currency transactions varies with such factors as the currencies involved, the length of the contract period and the market conditions then prevailing. Since transactions in foreign currency exchange usually are conducted on a principal basis, no fees or commissions are involved. Transactions involving forward exchange contracts and futures contracts and 6 48 options thereon are subject to certain risks. A detailed discussion of such risks appears under the caption "Risk Factors in Options, Futures, Forward and Currency Transactions." WRITING COVERED CALL OPTIONS The Fund is authorized to write (sell) covered call options on the securities in which it may invest and to enter into closing purchase transactions with respect to such options. Writing a call option obligates the Fund to sell or deliver the option's underlying security, in return for the strike price, upon exercise of the option. By writing a call option, the Fund receives an option premium from the purchaser of the call option. Writing covered call options is generally a profitable strategy if prices remain the same or fall. Through receipt of the option premium, the Fund would seek to mitigate the effects of a price decline. By writing covered call options, however, the Fund gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, the Fund's ability to sell the underlying security will be limited while the option is in effect unless the Fund effects a closing purchase transaction. WRITING COVERED PUT OPTIONS The Fund is authorized to write (sell) covered put options on its portfolio securities and to enter into closing transactions with respect to such options. When the Fund writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, the Fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. The Fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option the Fund has written, however, the Fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. The Fund may write put options as an alternative to purchasing actual securities. If security prices rise, the Fund would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the Fund will also profit, because it should be able to close out the option at a lower price. If security prices fall, the Fund would expect to suffer a loss. This loss should be less than the loss the Fund would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. PURCHASING PUT OPTIONS The Fund is authorized to purchase put options to hedge against a decline in the market value of its portfolio securities. By buying a put option the Fund has the right (but not the obligation) to sell the underlying security at the exercise price, thus limiting the Fund's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid by the Fund for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. A closing sale transaction cancels out the Fund's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. The Fund will not purchase put options on securities (including stock index options discussed below) if as a result of such purchase, the aggregate cost of all outstanding options on securities held by the Fund would exceed 5% of the market value of the Fund's total assets. 7 49 PURCHASING CALL OPTIONS The Fund is also authorized to purchase call options. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). The Fund will purchase call options only in connection with "closing purchase transactions." COMBINED OPTION POSITIONS The Fund, for hedging purposes, may purchase and write options in combination with each other to adjust the risk and return characteristics of the Fund's overall position. For example, the Fund may purchase a put option and write a covered call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contact. This technique, called a "straddle," enables the Fund to offset the cost of purchasing a put option with the premium received from writing the call option. However, by selling the call option, the Fund gives up the ability for potentially unlimited profit from the put option. Another possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. STOCK INDEX OPTIONS AND FUTURES AND FINANCIAL FUTURES The Fund is authorized to engage in transactions in stock index options and futures and financial futures, and related options. The Fund may purchase or write put and call options on stock indices to hedge against the risks of market-wide stock price movements in the securities in which the Fund invests. Options on indices are similar to options on securities except that on exercise or assignment, the parties to the contract pay or receive an amount of cash equal to the difference between the closing value of the index and the exercise price of the option times a specified multiple. The Fund may invest in stock index options based on a broad market index, such as the S&P 500 Index, or on a narrow index representing an industry or market segment, such as the AMEX Oil & Gas Index. The Fund's investments in foreign stock index futures contracts and foreign interest rate futures contracts, and related options, are limited to only those contracts and related options that have been approved by the Commodities Futures Trading Commission ("CFTC") for investment by United States investors. Additionally, with respect to the Fund's investments in foreign options, unless such options are specifically authorized for investment by order of the CFTC or meet the definition of "trade option" as set forth in CFTC Regulation 32.4, the Fund will not make such investments. The Fund may also purchase and sell stock index futures contracts and other financial futures contracts ("futures contracts") as a hedge against adverse changes in the market value of its portfolio securities as described below. A futures contract is an agreement between two parties which obligates the purchaser of the futures contract to buy and the seller of a futures contract to sell a security for a set price on a future date. Unlike most other futures contracts a stock index futures contract does not require actual delivery of securities, but results in cash settlement based upon the difference in value of the index between the time the contract was entered into and the time of its settlement. The Fund may effect transactions in stock index futures contracts in connection with equity securities in which it invests and in financial futures contracts in connection with the debt securities in which it invests, if any. Transactions by the Fund in stock index futures and financial futures are subject to limitations as described below under "Restrictions on the Use of Futures Transactions." The Fund may sell futures contracts in anticipation of or during a market decline to attempt to offset the decrease in market value of the Fund's securities portfolio that might otherwise result. When the Fund is not fully invested in the securities markets and anticipates a significant market advance, the Fund may purchase futures in order to gain rapid market exposure that may in part or entirely offset increases in the cost of securities that the Fund intends to purchase. As such purchases are made, an equivalent amount of futures 8 50 contracts will be terminated by offsetting sales. The Fund does not consider purchases of futures contracts to be a speculative practice under these circumstances. It is anticipated that, in a substantial majority of these transactions, the Fund will purchase such securities upon termination of the long futures position, whether the long position results from the purchase of a futures contract or the purchase of a call option, but under unusual circumstances (e.g., the Fund experiences a significant amount of redemptions) a long futures position may be terminated without the corresponding purchase of securities. The Fund also is authorized to purchase and write call and put options on futures contracts and stock indices in connection with its hedging activities. Generally, these strategies would be utilized under the same market and market sector conditions (i.e., conditions relating to specific types of investments) in which the Fund enters into futures transactions. The Fund may purchase put options or write call options on futures contracts and stock indices rather than selling the underlying futures contract in anticipation of a decrease in the market value of securities. Similarly, the Fund can purchase call options, or write put options on futures contracts and stock indices, as a substitute for the purchase of such futures to hedge against the increased cost resulting from an increase in the market value of securities which the Fund intends to purchase. The Fund is also authorized to engage in options and futures transactions on U.S. and foreign exchanges and in options in the OTC markets ("OTC options"). In general, exchange traded contracts are third-party contracts (i.e., performance of the parties' obligations is guaranteed by an exchange or clearing corporation) with standardized strike prices and expiration dates. OTC options transactions are two-party contracts with price and terms negotiated by the buyer and seller. See "Restrictions on OTC Options" below for information as to restrictions on the use of OTC options. The Fund is authorized to purchase or sell listed or OTC foreign security or currency options, foreign security or currency futures and related options as a short or long hedge against possible variations in foreign exchange rates and market movements. Such transactions could be effected with respect to hedges on non-U.S. dollar denominated securities owned by the Fund, sold by the Fund but not yet delivered, or committed or anticipated to be purchased by the Fund. As an illustration, the Fund may use such techniques to hedge the stated value in U.S. dollars of an investment in a yen-denominated security. In such circumstances, for example, the Fund can purchase a foreign currency put option enabling it to sell a specified amount of yen for U.S. dollars at a specified price by a future date. To the extent the hedge is successful, a loss in the value of the yen relative to the U.S. dollar will tend to be offset by an increase in the value of the put option. Certain differences exist between these hedging instruments. For example, foreign currency options provide the holder thereof the rights to buy or sell a currency at a fixed price on a future date. A futures contract on a foreign currency is an agreement between two parties to buy and sell a specified amount of a currency for a set price on a future date. Futures contracts and options on futures contracts are traded on boards of trade or futures exchanges. The Fund will not speculate in foreign security or currency options, futures or related options. The Fund will not hedge a currency substantially in excess of the market value of securities which it has committed or anticipates to purchase which are denominated in such currency, and in the case of securities which have been sold by the Fund but not yet delivered, the proceeds thereof in its denominated currency. The Fund will not incur potential net liabilities of more than 25% of its total assets from foreign security or currency options, futures or related options. RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contracts more or less valuable, a process 9 51 known as "marking to market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position which will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction. Regulations of the CFTC applicable to the Fund require that all of the Fund's futures and options on futures transactions constitute bona fide hedging transactions and that the Fund not enter into such transactions if, immediately thereafter, the sum of the amount of initial margin deposits on the Fund's existing futures positions and premiums paid for related options would exceed 5% of the market value of the Fund's total assets. However, if an option is "in-the-money" (the price of the option exceeds the strike price), the in-the-money portion may be excluded in computing the 5% limit. RESTRICTIONS ON OTC OPTIONS The Fund will engage in transactions involving OTC options, including over-the-counter stock index options, over-the-counter foreign security and currency options and options on foreign security and currency futures, only with member banks of the Federal Reserve System and primary dealers in U.S. Government securities or with affiliates of such banks or dealers which have capital of at least $50 million or whose obligations are guaranteed by an entity having capital of at least $50 million. The Fund will acquire only those OTC options for which AIM believes the Fund can receive on each business day at least two independent bids or offers (one of which will be from an entity other than a party to the option). The Staff of the SEC has taken the position that purchased OTC options and the assets used as cover for written OTC options are illiquid securities. Therefore, the Fund has adopted an operating policy pursuant to which it will not purchase or sell OTC options (including OTC options on futures contracts) if, as a result of such transaction, the sum of (i) the market value of OTC options currently outstanding which are held by the Fund, (ii) the market value of the underlying securities covered by OTC call options currently outstanding which were sold by the Fund, (iii) margin deposits on the Fund's existing OTC options on futures contracts, and (iv) the market value of all other assets of the Fund which are illiquid or are not otherwise readily marketable, would exceed 15% of the net assets of the Fund, taken at market value. However, if an OTC option is sold by the Fund to a primary U.S. Government securities dealer recognized by the Federal Reserve Bank of New York, and the Fund has the unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then the Fund will treat as illiquid such amount of the underlying securities as is equal to the repurchase price less the amount by which the option is "in-the-money" (current market value of the underlying security minus the option's strike price). The repurchase price with primary dealers is typically a formula price which is generally based on a multiple of the premium received for the option, plus the amount by which the option is "in-the-money." This policy as to OTC options is not a fundamental policy of the Fund and may be amended by the Board of Directors of the Company without approval of the Fund's shareholders. However, the Fund will not change or modify this policy prior to the change or modification by the SEC staff of its position. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS The Fund will not use leverage in its options and futures strategies. Such investments will be made for hedging purposes only. The Fund will hold securities or other options or futures positions whose values are expected to offset its obligations under the hedge strategies. The Fund will not enter into an option or futures position that exposes the Fund to an obligation to another party unless it owns either (i) an offsetting position in securities or other options or futures contracts or (ii) cash, receivables and short-term debt securities with a value sufficient to cover its potential obligations. The Fund will comply with guidelines established by the SEC with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will segregate cash and high grade liquid debt securities with its custodian bank in the amount prescribed. Securities which are segregated will not be sold while the futures or option strategy is outstanding, unless they are replaced with similar securities. As a result, there is a possibility that segregation of a large 10 52 percentage of the Fund's assets could impede portfolio management or the Fund's ability to meet redemption requests or other current obligations. RISK FACTORS IN OPTIONS, FUTURES, FORWARD AND CURRENCY TRANSACTIONS The use of options and futures transactions to hedge the Fund's portfolio involves the risk of imperfect correlation in movements in the price of options and futures and movements in the price of securities or currencies which are the subject of the hedge. If the price of the options or futures moves more or less than the price of hedged securities or currencies, the Fund will experience a gain or loss which will not be completely offset by movements in the price of the subject of the hedge. The successful use of options and futures also depends on AIM's ability to correctly predict price movements in the market involved in a particular options or futures transaction. To compensate for imperfect correlations, the Fund may purchase or sell stock index options or futures contracts in a greater dollar amount than the hedged securities if the volatility of the hedged securities is historically greater than the volatility of the stock index options or futures contracts. Conversely, the Fund may purchase or sell fewer stock index options or futures contracts, if the historical price volatility of the hedged securities is less than that of the stock index options or futures contracts. The risk of imperfect correlation generally tends to diminish as the maturity date of the stock index option or futures contract approaches. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which the Fund cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid. The Fund intends to enter into options and futures transactions, on an exchange or in the OTC market, only if there appears to be a liquid secondary market for such options or futures or, in the case of OTC transactions, AIM believes the Fund can receive on each business day at least two independent bids or offers. However, there can be no assurance that a liquid secondary market will exist at any specific time. Thus, it may not be possible to close an options or futures position. The inability to close options and futures positions also could have an adverse impact on the Fund's ability to effectively hedge its portfolio. There is also the risk of loss by the Fund of margin deposits or collateral in the event of bankruptcy of a broker with whom the Fund has an open position in an option, a futures contract or related option. The exchanges on which options on portfolio securities and currency options are traded have generally established limitations governing the maximum number of call or put options on the same underlying security or currency (whether or not covered) which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written in one or more account or through one or more brokers). "Trading limits" are imposed on the maximum number of contracts which any person may trade on a particular trading day. AIM does not believe that these trading and position limits will have any adverse impact on the portfolio strategies for hedging the Fund's portfolio. Because the Fund will engage in the options and futures transactions described above solely in connection with its hedging activities, AIM does not believe such options and futures transactions necessarily will have any significant effect on the Fund's portfolio turnover rate. REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements and reverse repurchase agreements. A repurchase agreement is an instrument under which the Fund acquires ownership of a debt security and the seller (usually a broker or bank) agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of bankruptcy or other default of a seller of a repurchase agreement, the Fund may experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (b) a possible subnormal level of income and lack of access to income during this period; and (c) expenses of enforcing its rights. A repurchase agreement 11 53 is collateralized by the security acquired by the Fund and its value is marked to market daily in order to minimize the Fund's risk. Repurchase agreements usually are for short periods, such as one or two days, but may be entered into for longer periods of time. A reverse repurchase agreement involves the sale of securities held by the Fund, with an agreement that the Fund will repurchase such securities at an agreed-upon price, date, and interest payment. It is the current operating policy of the Fund to enter into reverse repurchase agreements (which are considered to be borrowings under the 1940 Act) only for temporary or emergency purposes and not as a means to increase income. The Fund will enter into a reverse repurchase agreement only when the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. During the time a reverse repurchase agreement is outstanding, the Fund will segregate U.S. Treasury obligations having a value equal to the repurchase price under such reverse repurchase agreement. Any investment gains made by the Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the investment performance resulting from the investment of borrowings obtained through reverse repurchase agreements fails to cover the cost of such borrowings to the Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. 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 33-1/3% of its total assets. Securities loans are made to banks, brokers and other financial institutions pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the value of the securities lent marked to market on a daily basis. The collateral received will consist of cash, U.S. Government securities, letters of credit or such other collateral as may be permitted under the Fund's investment program. While the securities are being lent, 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 has a right to call each loan and obtain the securities on five business days' notice or, in connection with securities trading on foreign markets, within such longer period of time which coincides with the normal settlement period for purchases and sales of such securities in such foreign markets. The Fund will not have the right to vote securities while they are being lent, but it will call a loan in anticipation of any important vote. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delay in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. Loans will only be made to persons 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. SHORT SALES The Fund may from time to time enter into short sales transactions. The Fund will not make short sales of securities or maintain a short position unless at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against the box." Such short sales will be used by the Fund for the purpose of deferring recognition of gain or loss for federal income tax purposes. In no event may more than 10% of the value of the Fund's total assets be deposited or pledged as collateral for such sales at any time. RULE 144A SECURITIES The Fund may purchase securities which, while privately placed, are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Fund, to trade in privately placed securities even though such securities are not registered under the 1933 Act. AIM, under the supervision of the Company's Board of Directors, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Fund's restriction 12 54 of investing no more than 15% of its total assets in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and of marketplace trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its total assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. INVESTMENT RESTRICTIONS The following fundamental policies and investment restrictions have been adopted by the Fund and, except as noted, such policies cannot be changed without approval by the vote of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act. The Fund may not: 1. Purchase or sell real estate or interests in real estate (except that this restriction does not preclude investments in marketable securities of companies engaged in real estate activities). 2. Purchase or sell commodities or commodity contracts, except that the Fund may purchase and sell stock index and currency options, stock index futures, financial futures and currency futures contracts and related options on such futures. 3. Purchase any security on margin, except that the Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by the Fund of initial or variation margin in connection with futures or related options transactions shall not be considered the purchase of a security on margin. 4. Make loans, although the Fund may (a) purchase money market securities and enter into repurchase agreements, (b) acquire bonds, debentures, notes and other debt securities, governmental obligations and certificates of deposit, and (c) lend portfolio securities. 5. Borrow money, except that the Fund may borrow from banks (including the Fund's custodian bank) and enter into reverse repurchase agreements as a temporary defensive measure for extraordinary or emergency purposes, and then only in amounts not exceeding 10% of its total assets, taken at market value, and may pledge amounts of up to 20% of its total assets, taken at market value, to secure such borrowings. For purposes of this restriction, collateral arrangements with respect to the writing of options, futures contracts, options on futures contracts, and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets, and neither such arrangements nor the purchase and sale of options, futures or related options shall be deemed to be the issuance of a senior security. Whenever bank borrowings and the value of the Fund's reverse repurchase agreements exceed 5% of the value of the Fund's total assets, the Fund will not make any additional purchases of securities for investment purposes. 13 55 6. Underwrite securities of other persons, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. 7. Purchase or sell interests in oil, gas or other mineral exploration or development programs. 8. Invest in securities of an issuer (including predecessors and unconditional guarantors) which has a record of less than three years of continuous operations. 9. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Fund's total assets, taken at market value, would be invested in the securities of issuers having their principal business activities in the same industry. This restriction does not apply to obligations issued or guaranteed by the U.S. Government or by any of its agencies or instrumentalities but will apply to foreign government obligations unless the Securities and Exchange Commission permits their exclusion. 10. Purchase a security if, as a result, with respect to 75% of the value of the Fund's total assets, taken at market value, more than 5% of the Fund's total assets, taken at market value, would be invested in the securities of any one issuer (including repurchase agreements with any one entity), except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. 11. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by the Fund. 12. Issue senior securities, except as provided in restriction number 5 above. The following restrictions are non-fundamental and may be changed by the Company's Board of Directors. Pursuant to such restrictions, the Fund will not: 13. Make investments for the purpose of exercising control or management. 14. Lend its portfolio securities in excess of 33-1/3% of its total assets, taken at market value; provided that loans of portfolio securities shall be made in accordance with the guidelines set forth under the heading "Lending of Portfolio Securities." 15. Invest in securities which cannot be readily resold because of legal or contractual restrictions or which are not otherwise readily marketable if, regarding all such securities, more than 15% of the Fund's total assets, taken at market value, would be invested in such securities. 16. Effect short sales of securities, except that the Fund may make short sales "against the box" to the extent that the value of the securities sold short, in the aggregate, does not represent more than 10% of the Fund's total assets, taken at market value, at any given time. Percentage restrictions apply as of the time of investment without regard to later increases or decreases in the values of securities or total assets. Subject to investment restriction number 14 above, the Fund may from time to time lend securities from its portfolio to brokers, dealers and financial institutions such as banks and trust companies and receive collateral in cash or securities issued or guaranteed by the U.S. Government which will be maintained in an 14 56 amount equal to at least 100% of the current market value of the loaned securities. Such cash will be invested in short-term securities, which will increase the current income of the Fund. Such loans will not be for more than 30 days and will be terminable at any time. The Fund will have the right to regain record ownership of loaned securities to exercise beneficial rights such as voting rights, subscription rights and rights to dividends, interest or other distributions. The Fund may pay reasonable fees to persons unaffiliated with the Fund for services in arranging such loans. With respect to the lending of portfolio securities, there is the risk of failure by the borrower to return the securities involved in such transactions. See the information under the caption "Hedging Strategies and Other Investment Techniques -- Lending of Portfolio Securities" above. The Fund may invest in warrants, valued at the lower of cost or market, to the extent that the value of such warrants, in the aggregate, does not exceed 5% of the value of the Fund's net assets. Included in that amount, but not to exceed 2% of the value of the Fund's net assets, may be warrants which are not listed on national exchanges. In order to permit the sale of the Fund's shares in certain states, the Fund may from time to time make commitments that are more restrictive than the restrictions described above. For example, as of the date of this Statement of Additional Information, the Fund has undertaken (1) that it will not invest more than 15% of its average net assets at the time of purchase in investments which are not readily marketable (Texas) and (2) that it will not purchase or retain securities of any issuer if the directors and officers of the Company and AIM who own more than 0.5% of the securities of such issuer together beneficially own more than 5% of the securities of such issuer (Ohio). Should the Fund determine that any such commitment is no longer in the best interests of the Fund and its shareholders, the Fund will revoke the commitment by terminating sales of its shares in the states involved. The Fund's ability and decisions to purchase or sell portfolio securities may be affected by laws or regulations relating to the convertibility and repatriation of assets. Because the shares of the Fund are redeemable on a daily basis in U.S. dollars, the Fund intends to manage its portfolio so as to give reasonable assurance that it will be able to obtain U.S. dollars to the extent necessary to meet anticipated redemptions. Under present conditions, it is not believed that these considerations will have any significant effect on its portfolio strategy. MANAGEMENT DIRECTORS AND OFFICERS The directors and officers of the Company and their principal occupations during the last five years are set forth below. Unless otherwise indicated, the address of each director and officer is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046. *CHARLES T. BAUER, Director and Chairman (76) Director, Chairman and Chief Executive Officer, A I M Management Group Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company; and Director, AIM Global Advisors Limited, A I M Global Management Company Limited and AIM Global Ventures Co. BRUCE L. CROCKETT, Director (51) COMSAT Corporation - ----------------------------- * A director who is an interested person of A I M Advisors, Inc. and the Company as defined in the 1940 Act. 15 57 6560 Rock Spring Drive Bethesda, MD 20817 Director, President and Chief Executive Officer, COMSAT Corporation (includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video Enterprises, COMSAT RSI and COMSAT International Ventures). Previously, President and Chief Operating Officer, COMSAT Corporation; President, World Systems Division, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT; (each of the COMSAT companies listed above is an international communication, information and entertainment-distribution services company). OWEN DALY II, Director (71) Six Blythewood Road Baltimore, MD 21210 Director, Cortland Trust Inc. (investment company). Formerly, Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. **CARL FRISCHLING, Director (59) 919 Third Avenue New York, NY 10022 Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm). Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson Gubar Brodsky & Frischling (law firm). ROBERT H. GRAHAM, Director and President (49) Director, President and Chief Operating Officer, A I M Management Group Inc.; Director and President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co., A I M Institutional Fund Services, Inc. and Fund Management Company; and Senior Vice President, AIM Global Advisors Limited. JOHN F. KROEGER, Director (71) 24875 Swan Road - Martingham Box 464 St. Michaels, MD 21663 Director, Flag Investors International Fund, Inc., Flag Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm). - ------------------------------ ** A director who is an "interested person" of the Company as defined in the 1940 Act. 16 58 LEWIS F. PENNOCK, Director (53) 8955 Katy Freeway, Suite 204 Houston, TX 77024 Attorney in private practice in Houston, Texas. IAN W. ROBINSON, Director (72) 183 River Drive Tequesta, FL 33469 Formerly, Executive Vice President and Chief Financial Officer, Bell Atlantic Management Services, Inc. (provider of centralized management services to telephone companies); Executive Vice President, Bell Atlantic Corporation (parent of seven telephone companies); and Vice President and Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone Company. LOUIS S. SKLAR, Director (56) Transco Tower, 50th Floor 2800 Post Oak Blvd. Houston, TX 77056 Executive Vice President, Development and Operations, Hines Interests Limited Partnership (real estate development). ***JOHN J. ARTHUR, Senior Vice President and Treasurer (51) Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice President and Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures Co. GARY T. CRUM, Senior Vice President (48) Director and President, A I M Capital Management, Inc.; Director and Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., AIM Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures Co.; Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global Advisors Limited. ***CAROL F. RELIHAN, Vice President and Secretary (41) Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice President, General Counsel and Secretary, A I M Management Group Inc.; Vice President and General Counsel, Fund Management Company; Vice President and Secretary, A I M Global Associates, Inc. and A I M Global Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Advisors Limited and AIM Global Ventures Co.; and Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc. - ------------------------------ *** Mr. Arthur and Ms. Relihan are married to each other. 17 59 DANA R. SUTTON, Vice President and Assistant Treasurer (37) Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. ROBERT G. ALLEY, Vice President (47) Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. Formerly, Senior Fixed Income Money Manager, Waddell and Reed, Inc. MELVILLE B. COX, Vice President (52) Vice President, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and Assistant Vice President, A I M Distributors; Inc. and Fund Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments; Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and Vice President, Integrated Resources Life Insurance Co. and Capitol Life Insurance Co. JONATHAN C. SCHOOLAR, Vice President (34) Director and Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. The standing committees of the Board of Directors are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting with the Company's auditors to review audit procedures and results and to consider any matters arising from an audit to be brought to the attention of the directors as a whole with respect to the Company's fund accounting or its internal accounting controls, and for considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. The members of the Investments Committee are Messrs. Bauer, Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible for reviewing portfolio compliance, brokerage allocation, portfolio investment pricing issues, interim dividend and distribution issues, and considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. The members of the Nominating and Compensation Committee are Messrs. Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and Compensation Committee is responsible for considering and nominating individuals to stand for election as directors who are not interested persons as long as the Company maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the compensation payable to the disinterested directors, and considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. REMUNERATION OF DIRECTORS Each director is reimbursed for expenses incurred in attending each meeting of the Board of Directors or any committee thereof. Each director who is not also an officer of the Company is compensated for his or her services according to a fee schedule which recognizes the fact that such director also serves as a director 18 60 or trustee of other AIM Funds advised or managed by AIM. Each such director receives a fee, allocated among the AIM Funds, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued for each director of the Company:
======================================================================================================= RETIREMENT BENEFITS AGGREGATE ACCRUED TOTAL COMPENSATION BY ALL AIM COMPENSATION DIRECTOR FROM COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3) -------- ------------ ---------- --------------------- Charles T. Bauer $ 0 $ 0 $ 0 - ------------------------------------------------------------------------------------------------------- Bruce L. Crockett 3,670 3,655 57,750 - ------------------------------------------------------------------------------------------------------- Owen Daly II 3,734 18,662 58,125 - ------------------------------------------------------------------------------------------------------- Carl Frischling 3,721 11,323 57,250 - ------------------------------------------------------------------------------------------------------- Robert H. Graham 0 0 0 - ------------------------------------------------------------------------------------------------------- John F. Kroeger 3,813 22,313 58,125 - ------------------------------------------------------------------------------------------------------- Lewis F. Pennock 3,622 5,067 58,125 - ------------------------------------------------------------------------------------------------------- Ian W. Robinson 3,639 15,381 56,750 - ------------------------------------------------------------------------------------------------------- Louis S. Sklar 3,708 6,632 57,250 =======================================================================================================
- -------------------- (1) The total amount of compensation deferred by all directors of the Company during the fiscal year ended October 31, 1995, including interest earned thereon, was $14,093. (2) During the fiscal year ended October 31, 1995, the total amount of expenses allocated to the Company in respect of such retirement benefits was $2,087. Data reflect compensation earned for the calendar year ended December 31, 1995. (3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as director or trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling, Robinson and Sklar each serves as director or trustee of a total of 10 AIM Funds. Data reflect total compensation earned during the calendar year ended December 31, 1995. AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each director (who is not a employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Directors. Pursuant to the Plan, the normal retirement date is the date on which the eligible director has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "AIM Funds"). Each eligible director is entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to 75% of the retainer paid or accrued by the AIM Funds for such director during the twelve-month period immediately preceding the director's retirement (including amounts deferred under a separate agreement between the AIM Funds and the director) for the number of such Director's years of service (not in excess of 10 years of service) completed with respect to any of the AIM Funds. Such benefit is payable to each eligible director in quarterly installments. If an eligible director dies after attaining the normal 19 61 retirement date but before receipt of any benefits under the Plan commences, the director's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased director, for no more than ten years beginning the first day of the calendar quarter following the date of the director's death. Payments under the Plan are not secured or funded by any AIM Fund. Set forth below is a table that shows the estimated annual benefits payable to an eligible director upon retirement assuming various compensation and years of service classifications. The estimated credited years of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 8, 9, 18, 18, 14, 8 and 6 years, respectively. ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Annual Compensation Paid By All AIM Funds ========================================= $60,000 $65,000 ----------------------------------------- Number of 10 $45,000 $48,750 Years of ----------------------------------------- Service With 9 $40,500 $43,875 the AIM ----------------------------------------- Funds 8 $36,000 $39,000 ----------------------------------------- 7 $31,500 $34,125 ----------------------------------------- 6 $27,000 $29,250 ----------------------------------------- 5 $22,500 $24,375 =========================================
DEFERRED COMPENSATION AGREEMENTS Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this paragraph only, the "deferring directors") have each executed a Deferred Compensation Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the deferring directors may elect to defer receipt of up to 100% of their compensation payable by the Company, and such amounts are placed into a deferral account. Currently, the deferring directors may select various AIM Funds in which all or part of his deferral account shall be deemed to be invested. Distributions from the deferring directors' deferral accounts will be paid in cash, in generally equal quarterly installments over a period of ten years beginning on the date the deferring director's retirement benefits commence under the Plan. The Company's Board of Directors, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring director's termination of service as a director of the Company. If a deferring director dies prior to the distribution of amounts in his deferral account, the balance of the deferral account will be distributed to his designated beneficiary in a single lump sum payment as soon as practicable after such deferring director's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the deferring directors have the status of unsecured creditors of the Company and of each other AIM Fund from which they are deferring compensation. During the year ended October 31, 1995, the Fund paid $6,527 in legal fees to Kramer, Levin, Naftalis Nessen, Kamin & Frankel, as counsel to the Company's directors. Mr. Frischling, a Director of the Company, is a partner in such firm. INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS AIM is a wholly-owned subsidiary of A I M Management Group Inc., a holding company that has been engaged in the financial services business since 1976. 20 62 AIM and the Company have adopted a Code of Ethics which requires investment personnel and certain other employees (a) to pre-clear personal securities transactions subject to the Code, (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, and (iii) transactions involving securities being considered for investment by an AIM Fund and (d) to abide by certain other provisions under the Code. The Code also prohibits investment personnel and certain other employees from purchasing securities in an initial public offering. Personal trading reports are reviewed periodically by AIM, and the Board of Directors reviews quarterly and annual reports (including information on any substantial violations of the Code). Sanctions for violations of the Code may include censure, monetary penalties, suspension or termination of employment. The Company, on behalf of the Fund, has entered into an Investment Advisory Agreement and an Administrative Services Agreement with AIM. See "Management" in the Prospectus. The Investment Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions; taxes, legal, accounting, auditing or governmental fees; the cost of preparing share certificates; custodian, transfer and shareholder service agent costs; expenses of issue, sale, redemption and repurchase of shares; expenses of registering and qualifying shares for sale; expenses relating to directors and shareholders meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Company on behalf of the Fund in connection with membership in investment company organizations; the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders; and all other charges and costs of the Fund's operations unless otherwise expressly provided. The Investment Advisory Agreement provides that if, for any fiscal year, the total of all ordinary business expenses of the Fund, including all investment advisory fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses, such as litigation costs, exceed the applicable expense limitations imposed by state securities regulations in any state in which the Fund's shares are qualified for sale, as such limitations may be raised or lowered from time to time, the aggregate of all such investment advisory fees shall be reduced by the amount of such excess. The amount of any such reduction to be borne by AIM shall be deducted from the monthly investment advisory fee otherwise payable to AIM during such fiscal year. If required pursuant to such state securities regulations, AIM will reimburse the Fund no later than the last day of the first month of the next succeeding fiscal year for any such annual operating expenses (after reduction of all investment advisory fees in excess of such limitation). The Investment Advisory Agreement for the Fund provides that such agreement will continue in effect until June 30, 1996, and from year to year thereafter only if such continuance is specifically approved at least annually by the Company's Board of Directors and by the affirmative vote of a majority of the directors who are not parties to the agreement or "interested persons" of any such party (the "Non-Interested Directors") by votes cast in person at a meeting called for such purpose. The Investment Advisory Agreement was approved by the Company's Board of Directors (including the affirmative vote of all of the Non-Interested Directors) on July 19, 1993, and was approved by the Fund's shareholders on September 27, 1993. The agreement became effective as of October 18, 1993. The agreement provides that the Fund or AIM may terminate such agreement on sixty (60) days' written notice without penalty. The Investment Advisory Agreement terminates automatically in the event of its assignment. Under the agreement, AIM is entitled to receive from the Fund a fee calculated at the annual rates of 0.95% of the first $1 billion of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $1 billion. AIM has voluntarily agreed to waive advisory fees under the Investment Advisory Agreement in order to achieve the following annual fee structure for the Fund: 0.95% of the first $500 million of the Fund's average daily net assets; 0.90% of the next $500 million of the Fund's average daily net assets; and 0.85% of the Fund's average daily net assets exceeding $1 billion. AIM may terminate such fee waiver at any time without notice to Shareholders. The Administrative Services Agreement for the Fund provides that AIM may perform, or arrange for the performance of, certain accounting, shareholder servicing and other administrative services to the Fund 21 63 which are not required to be performed by AIM under the Investment Advisory Agreement. For such services, AIM is entitled to receive from the Fund reimbursement of AIM's costs or such reasonable compensation as may be approved by the Company's Board of Directors. The Administrative Services Agreement provides that such agreement will continue in effect until June 30, 1996, and shall continue in effect from year to year thereafter only if such continuance is specifically approved at least annually by the Company's Board of Directors, including the Non-Interested Directors, by votes cast in person at a meeting called for such purpose. The Administrative Services Agreement was approved by the Company's Board of Directors (including the Non-Interested Directors) on July 19, 1993. The agreement became effective as of October 18, 1993. In addition, the Transfer Agency and Service Agreement for the Fund provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary of AIM, will perform certain shareholder services for the Fund for a fee per account serviced. The Transfer Agency and Service Agreement provides that AFS will process orders for purchases, redemptions and exchanges of shares, prepare and transmit payments for dividends and distributions declared by the Fund, maintain shareholder accounts and provide shareholders with information regarding the Fund and their accounts. The Transfer Agency and Service Agreement became effective on November 1, 1994. For the fiscal years ended October 31, 1995, 1994 and 1993, AIM received advisory fees from the Fund of $6,225,765, $5,526,858, and $1,698,154, respectively. For the fiscal years ended October 31, 1995 and 1994, AIM waived advisory fees for the Fund in the amounts of $77,672, and $43,159 respectively. Pursuant to a sub-advisory agreement which has since been terminated, AIM paid to Nationale-Nederlanden International Investment Advisors B.V. sub-advisory fees during the years ended October 31, 1994 and October 31, 1993 of $429,520 and $625,636, respectively. For the fiscal years ended October 31, 1995 and 1994, AIM received reimbursement of administrative services costs, including accounting and shareholder servicing costs (for the fiscal year ended October 31, 1994), from the Fund pursuant to the Administrative Services Agreement in the amount of $29,858 and $381,864, respectively. For the fiscal year ended October 31, 1993, AIM received reimbursement of administrative services costs from the Fund pursuant to a prior, substantially similar administrative services agreement in the amount of $102,269. . For the fiscal year ended October 31, 1995, AFS received transfer agency and shareholder services fees with respect to of the Fund in the amount of $757,067. For the fiscal year ended October 31, 1994, AIM reimbursed AFS $351,680 pursuant to a services agreement which was terminated during the fourth quarter of 1994 for providing shareholder servicing for the Fund. THE DISTRIBUTION PLANS THE CLASS A PLAN. The Company has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of the Fund (the "Class A Plan"). The Class A Plan provides that the Class A shares pay 0.30% per annum of their average daily net assets 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. Activities appropriate for financing under the Class A 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 Plan. THE CLASS B PLAN. The Company 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 22 64 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. AIM Distributors may transfer and sell its rights to payments under the Class B Plan in order to finance distribution expenditures in respect of Class B shares. 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 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 and the Company; performing sub-accounting; establishing and maintaining shareholder accounts and records; processing customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by the bank; forwarding applicable prospectuses, proxy statements, reports and notices to bank clients who hold Fund shares; and such other administrative services as the Fund reasonably may request, to the extent permitted by applicable statute, rule or regulation. Similar agreements may be permitted under the Plans for institutions which provide recordkeeping for and administrative services to 401(k) plans. 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 23 65 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 classes. 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. The Fund's Class A shares had a different Rule 12b-1 plan (the "Former Plan") for the period prior to September 27, 1993. The Former Plan provided that the Class A shares' of the Fund would pay AIM Distributors a fee of up to 0.30% of the average daily net asset value of such shares' to reimburse AIM Distributors for its distribution expenses. For the fiscal year ended October 31, 1995, the Fund paid a total of $1,903,555 under the Class A Plan, which constituted 0.30% of the Class A shares' average daily net assets. For the fiscal year ended October 31, 1995, the Fund paid $208,253 under the Class B Plan which constituted 1.00% of the Class B shares' average daily net assets. An estimate by category of actual fees paid by the Fund under the Class A Plan and Class B Plan during the year ended October 31, 1995 follows:
Class A Plan Class B Plan ------------ ------------ Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ 214,928 $ 31,435 Printing and mailing prospectuses (other than to current shareholders . . . . . . . . . . . . . . . . $ 34,988 $ 5,894 Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67,977 $ 14,735 Compensation to Underwriters . . . . . . . . . . . . . . . . $ 64,978 $ 156,189 Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 1,520,684 $ - 0 - Compensation to Sales Personnel . . . . . . . . . . . . . . . $ - 0 - $ - 0 -
The Plans require AIM Distributors to provide the Board of Directors 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 Directors 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 Directors, including a majority of the directors who are not "interested persons" (as defined in the 1940 Act) of the Company and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans ("Qualified Directors"). In approving the Plans in accordance with the requirements of Rule 12b-1, the directors considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Fund and its respective 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. 24 66 Unless terminated earlier in accordance with their terms, the Plans continue in effect until June 30, 1996 and thereafter, as long as such continuance is specifically approved at least annually by the Board of Directors, including a majority of the Qualified Directors. The Plans may be terminated by the vote of a majority of the Independent Directors, 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 directors, including a majority of the Qualified Directors, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Qualified Directors is committed to the discretion of the Qualified Directors. In the event the Class A Plan is amended in a manner which the Board of Directors 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 Fund unless the Class B shares, voting separately, approve such amendment. If the Class B shareholders do not approve such amendment, the Board of Directors 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 Plan, on the one hand, and the Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.30% of average daily net assets of the Fund's Class A shares 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 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 the Fund's shares is set forth in the Prospectus under the headings "How to Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master Distribution Agreement with AIM Distributors relating to the Class A shares of the Fund was approved by the Board of Directors on September 10, 1994. A Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Fund was also approved by the Board of Directors on September 10, 1994. Both 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 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. 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 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM 25 67 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 Company (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; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of the Fund and its Class B shareholders to pay Contingent Deferred Sales Charges. For the fiscal years ended October 31, 1995, 1994 and 1993, the total sales charges paid in connection with the sale of Class A shares of the Fund were $3,662,531, $8,535,232 and $3,026,960, respectively, of which AIM Distributors retained $565,101, $1,177,691, and $474,270, respectively. For the fiscal year ended October 31, 1995 and the period September 15, 1994 (date sales commenced) through October 31, 1994, AIM Distributors received commissions of $106,168 and $336, respectively, in contingent deferred sales charges imposed on redemptions of Fund shares. HOW TO PURCHASE AND REDEEM SHARES A complete description of the manner by which shares of the Fund may be purchased appears in the Prospectus under the headings "How to Purchase Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special Plans." The sales charge normally deducted on purchases of Class A shares is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Fund's Class A shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons who, because of their relationship with the Fund or with AIM and its affiliates, are familiar with the Fund, 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 Fund's best interest that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase Class A shares through AIM Distributors without payment of a sales charge. The persons who may purchase Class A shares without a sales charge are set forth in the Prospectus. Complete information concerning the method of exchanging shares of the Fund for shares of the other AIM Funds is set forth in the Prospectus under the heading "Exchange Privilege." Information concerning redemption of the Fund's shares is set forth in the Prospectus under the heading "How to Redeem Shares." In addition to the Fund's 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: (713) 626-1919, Extension 5001 (Houston) or (800) 959-4246 (elsewhere)) and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of the Fund next determined after the repurchase order is received. Such arrangement is subject to timely receipt by A I M Fund Services, Inc. (a wholly-owned subsidiary of A I M Advisors, Inc.), 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. While there is no charge imposed by the Fund 26 68 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. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange is restricted, as determined by applicable rules and regulations of the SEC, (b) the New York Stock Exchange 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. NET ASSET VALUE DETERMINATION In accordance with current SEC rules and regulations, the net asset value of a share of the Fund is determined once daily as of 4:00 p.m. Eastern time on each business day of the Fund. In the event the New York Stock Exchange 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 New York Stock Exchange on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available fifteen (15) minutes after the close of trading of the New York Stock Exchange will generally be used. Each Class' net asset value per share is determined by subtracting the Class' liabilities (e.g., the expenses) from the Class' assets, and dividing the result by the total number of Class shares outstanding. Determination of the net asset value per share is made in accordance with generally accepted accounting principles. Securities listed or traded on U.S. or foreign securities exchanges or included in a national market system are valued at the last quoted sales price. Exchange listed convertible debt securities are valued at the mean between the last bid and asked prices obtained from broker-dealers. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost, which approximates fair market value. Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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 Board of Directors. DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS Income dividends and capital gains 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 in the Prospectus under the caption "Special Plans -- Automatic Dividend Investment Plan." If a shareholder's account does not have any shares in it on a dividend or capital gains 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. 27 69 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 Fund's 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 Fund's Prospectus is not intended as a substitute for careful tax planning. Investors are urged to consult their tax advisors with specific reference to their own tax situation. QUALIFICATION AS A REGULATED INVESTMENT COMPANY. As stated in the Fund's Prospectus, the Fund intends to qualify each year as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order to qualify for tax treatment as a regulated investment company under the Code, the Fund is required, among other things, to derive at least 90% of its gross income in each taxable year from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies and other income (including but not limited to gains from options, futures or forward contracts derived with respect to the Fund's business of investing in such stock, securities or currencies) (the "Income Requirement"); and derive less than 30% of its gross income (exclusive of certain gains from designated hedging transactions that are offset by realized or unrealized losses on offsetting positions) in each taxable year from the sale or other disposition of any of the following investments, if such investments are held for less than three months (the "Short-Short Gain Test"): (a) stock or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options, futures or forward contracts (other than options, futures or forward contracts on foreign currencies); and (c) foreign currencies (or options, futures or forward contracts on foreign currencies), but only if such currencies (or options, futures or forward contracts) are not directly related to the Fund's principal business of investing in stock or securities (or options and futures with respect to stock or securities). Foreign currency gains (including gains from options, futures or forward contracts on foreign currencies) that are not "directly related" to the Fund's principal business may, under regulations not yet issued, not be qualifying income for purposes of the Income Requirement. At the close of each quarter of its taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Test"). For purposes of the Asset Diversification Test, it is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or foreign government backing the particular currency. Consequently, the Fund may find it necessary to seek a ruling from the Internal Revenue Service on this issue or to curtail its trading in forward foreign currency exchange contracts in order to stay within the limits of the Asset Diversification Test. If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. FUND DISTRIBUTIONS. Under the Code, the Fund is exempt from U.S. federal income tax on its net investment income and realized capital gains which it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (net investment income and the excess of net short-term capital gain over net long-term capital loss) and its net exempt interest income for the year. Distributions of investment company taxable income will be taxable to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in shares. 28 70 The Fund also intends to distribute to shareholders substantially all of the excess of its net long-term capital gain over net short-term capital loss as a capital gain dividend. Capital gain dividends are taxable to shareholders as a long-term capital gain, regardless of the length of time a shareholder has held his shares. Treasury regulations permit a regulated investment company in determining its investment company taxable income and undistributed net capital gain for any taxable year to elect to treat all or part of any net capital loss, any net long-term capital loss, or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year. A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute in each calendar year an amount equal to 98% of their ordinary taxable income for the calendar year plus 98% of their "capital gain net income" (excess of capital gains over capital losses) for the one-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. For purposes of the excise tax, a regulated investment company shall (1) offset a net ordinary loss for any calendar year in determining its capital gain net income for the one-year period ending on October 31 of such calendar year and (2) exclude foreign currency gains and losses incurred after October 31 of any year in determining the amount of ordinary taxable income for the current calendar year (and, instead, to include such gains and losses in determining ordinary taxable income for the succeeding calendar year). The Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that the Fund may in certain circumstances be required to liquidate portfolio investments in order to make sufficient distributions to avoid excise tax liability and that such liquidation may affect the ability of the Fund to satisfy the Short-Short Gain Test. INVESTMENT IN FOREIGN FINANCIAL INSTRUMENTS. Under Code Section 988, gains or losses from certain foreign currency forward contracts or fluctuations in exchange rates will generally be treated as ordinary income or loss. Such Code Section 988 gains or losses will increase or decrease the amount of the Fund's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Fund's net capital gains. Additionally, if Code Section 988 losses exceed other investment company taxable income during a taxable year, the Fund would not be able to pay any ordinary income dividends, and any such dividends paid before the losses were realized, but in the same taxable year, would be recharacterized as a return of capital to shareholders, thereby reducing the tax basis of Fund shares. Some of the forward foreign currency exchange contracts, options and futures contracts that the Fund may enter into will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts are treated as if they are sold for their fair market value on the last business day of the taxable year, regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end deemed disposition of Section 1256 contracts is combined with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year (including gain or loss arising as a consequence of the year-end deemed sale of such contracts) is deemed to be 60% long-term and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) generally treated as ordinary income or loss. Generally, the hedging transactions in which the Fund may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Fund. In addition, losses realized by the Fund on positions that are part of the straddle may be deferred under the straddle rules, 29 71 rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Fund of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Fund (and if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders. The Fund may make one or more of the elections available under the Code which are applicable to straddles. If the Fund makes any of the elections, the amount, character, and timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the election(s) made. The rules applicable under certain of the elections may operate to accelerate the recognition of gains or losses from the affected straddle positions. Because application of the straddle and conversion transaction rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may be increased or decreased as compared to a fund that did not engage in such hedging transactions. Requirements relating to the Fund's tax status as a regulated investment company, including (in particular) the Short-Short Gain Test, may limit the extent to which the Fund will be able to engage in transactions in options and futures contracts. PFIC INVESTMENTS. The Fund may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. Under the PFIC rules, an "excess distribution" received with respect to PFIC stock is treated as having been realized ratably over the period during which the Fund held the PFIC stock. The Fund itself will be subject to tax on the portion, if any, of the excess distribution that is allocated to the Fund's holding period in prior taxable years (and an interest factor will be added to the tax, as if the tax had actually been payable in such prior taxable years) even though the Fund distributes the corresponding income to shareholders. Excess distributions include any gain from the sale of PFIC stock as well as certain distributions from a PFIC. All excess distributions are taxable as ordinary income. The Fund may be able to elect alternative tax treatment with respect to PFIC stock. Under one such election, the Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether any distributions are received from the PFIC. If this election is made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. In addition, other elections may become available that would affect the tax treatment of PFIC stock held by the Fund. The Fund's intention to qualify annually as a regulated investment company may limit its elections with respect to PFIC stock. Because the application of the PFIC rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Fund itself to tax on certain income from PFIC stock, the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gains, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock. REDEMPTION OR EXCHANGE OF SHARES. Upon a redemption or exchange of shares, a shareholder will recognize a taxable gain or loss depending upon his or her basis in the shares. Unless the shares are disposed of as part of a conversion transaction, such gain or loss will be treated as capital gain or loss if the shares are capital assets in the shareholder's hands and will be long-term or short-term, depending upon the shareholder's holding period for the shares. Any loss recognized by a shareholder on the sale of Fund shares 30 72 held six months or less will be treated as a long-term capital loss to the extent of any distributions of net capital gains received by the shareholder with respect to such shares. If a shareholder exercises the exchange privilege within 90 days of acquiring Class A shares, then the loss such shareholder recognizes on the exchange will be reduced (or the gain increased) to the extent the sales charge paid upon the purchase of Class A shares reduces any charge such shareholder would have owed upon purchase of the new Class A shares in the absence of the exchange privilege. Instead, such sales charge will be treated as an amount paid for the new Class A shares. In addition, any loss recognized on a sale or exchange will be disallowed to the extent Class A shares or Class B shares disposed of are replaced within the 61-day period beginning 30 days before and ending 30 days after the shares are disposed of. In such a case, the basis of the shares acquired will be increased to reflect the disallowed loss. Shareholders should particularly note that this loss disallowance rule applies even where shares are automatically replaced under the dividend reinvestment plan. FOREIGN INCOME TAXES. Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Fund to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of the Fund's assets to be invested in various countries is not known. If more than 50% of the value of the Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income taxes paid by the Fund that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign taxes in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign taxes may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax. Generally, a credit for foreign taxes is subject to the limitation that it may not exceed the shareholder's U.S. tax (determined without regard to the availability of the credit) attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from the Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. The Fund's gains from the sale of stock and securities and certain currency fluctuation gains and losses will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income taxes paid by the Fund. BACKUP WITHHOLDING. Under certain provisions of the Code, the Fund may be required to withhold 31% of reportable dividends, capital gains distributions and redemption payments ("backup withholding"). Generally, shareholders subject to backup withholding will be those for whom a certified taxpayer identification number is not on file with the Company or who, to the Company's knowledge, have furnished an incorrect number, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. When establishing an account, an investor must provide his or her taxpayer identification number and certify under penalty of perjury that such number is correct and that he or she is not otherwise subject to backup withholding. Corporate shareholders and other shareholders specified in the Code are exempt from backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder's U.S. federal income tax liability. FOREIGN SHAREHOLDERS. Dividends from the Fund's investment company taxable income and distributions constituting returns of capital paid to a nonresident alien individual, a foreign trust or estate, foreign corporation, or foreign partnership (a "foreign shareholder") generally will be subject to U.S. withholding tax 31 73 at a rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from the Fund's election to treat any foreign income taxes paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign taxes treated as having been paid by them. A foreign shareholder generally will not be subject to U.S. taxation on gain realized upon the redemption or exchange of shares of the Fund or on capital gain dividends. In the case of a foreign shareholder who is a nonresident alien individual, however, gain realized upon the sale of shares of the Fund and capital gain dividends ordinarily will be subject to U.S. income tax at a rate of 30% (or lower applicable treaty rate) if such individual is physically present in the U.S. for 183 days or more during the taxable year and certain other conditions are met. In the case of a foreign shareholder who is a nonresident alien individual, the Fund may be required to withhold U.S. federal income tax at a rate of 31% unless proper notification of such shareholder's foreign status is provided. Notwithstanding the foregoing, if distributions by the Fund are effectively connected with a U.S. trade or business of a foreign shareholder, then dividends from the Fund's investment company taxable income, capital gains, and any gains realized upon the sale or redemption of shares of the Fund will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens or domestic corporations. Transfers by gift of shares of the Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in the Fund. Miscellaneous Considerations; Effect of Future Legislation. The foregoing general discussion of federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on February 20, 1996. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Rules of state and local taxation of dividend and capital gain distributions from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other U.S. state and local tax rules affecting investments in the Fund. MISCELLANEOUS INFORMATION AUDIT REPORTS The Board of Directors will issue to shareholders at least semi-annually the Fund's financial statements. Financial statements, audited by independent auditors, will be issued annually. The firm of KPMG Peat Marwick LLP serves as the auditors of the Fund. LEGAL MATTERS Legal matters for the Company are passed upon by Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania. 32 74 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. Under its contract with the Company relating to the Fund, the Custodian is authorized to establish separate accounts in foreign currencies and to cause foreign securities owned by the Fund to be held in its offices outside the United States and with certain foreign banks and securities depositories. 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. A I M Fund Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of A I M Advisors, Inc., P.O. Box 4739, Houston, Texas 77210-4739, is transfer and dividend disbursing agent for the Class A and Class B shares of the Fund. The Fund pays the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time. Texas Commerce Bank National Association, P. O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. SHAREHOLDER INQUIRIES The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. PRINCIPAL HOLDERS OF SECURITIES To the best knowledge of the Company, the names and addresses of the holders of 5% or more of the outstanding shares of each class of each of the Company's portfolios as of February 1, 1996, and the amount of outstanding shares held by such holders are set forth below:
Percent Name and Address Owned of Fund of Record Owner Record Only* - ---- --------------- ----------- AIM International Equity Fund - Merrill Lynch, Pierce, 31.40%** Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286
- ------------------------------ * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. ** A shareholder who holds 25% or more of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 33 75
Percent Name and Address Owned of Fund of Record Owner Record Only* - ---- --------------- ----------- AIM Global Aggressive Growth Fund - Merrill Lynch, Pierce 20.09% Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Growth Fund - Merrill, Lynch, Pierce, 14.13% Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Income Fund - Citibank, N.A. Collateral Agent Under 16.92% Class A shares Pledge and Security Agreement dated 8/20/93 among Citibank, N.A. and AIM Management Group Inc. et al. 11 Greenway Plaza, Suite 1919 Houston, TX 77046 AIM International Equity Fund - Merrill, Lynch, Pierce, 32.63%** Class B shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Aggressive Growth Fund - Merrill, Lynch, Pierce 26.85%** Class B shares Fenner & Smith Mutual Fund Operations P. O.Box 45286 Jacksonville, FL 32232-5288
- ------------------------------ * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially ** A shareholder who holds 25% or more of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 34 76
Percent Name and Address Owned of Fund of Record Owner Record Only* - ---- --------------- ------------ AIM Global Growth Fund - Merrill, Lynch, Pierce 24.10% Class B shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286
As of February 1, 1996, the directors and officers of the Company as a group owned less than 1% of the outstanding shares of the Fund and the other portfolios of the Company. OTHER INFORMATION The Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the portfolios of the Company have filed with the SEC under the 1933 Act and the 1940 Act, and reference is hereby made to the Registration Statement for further information with respect to each portfolio of the Company and the securities offered hereby. The Registration Statement is available for inspection by the public at the Securities and Exchange Commission in Washington, D.C. - ------------------------------ * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 35 77 FINANCIAL STATEMENTS FS 78 Financials INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of AIM International Equity Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1995, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the three-year period then ended and the period November 5, 1991 (date operations commenced) through October 31, 1992. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM International Equity Fund as of October 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended and the period November 5, 1991 (date operations commenced) through October 31, 1992, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas December 8, 1995 FS-1 79 Financials SCHEDULE OF INVESTMENTS October 31, 1995
SHARES MARKET VALUE STOCKS & OTHER EQUITY INTERESTS-88.85% ARGENTINA-0.65% 202,200 Buenos Aires Embotellado S.A.-Class B-ADR (Beverages-Soft Drinks) $ 4,625,325 - ------------------------------------------------------------------------------------------ AUSTRALIA-3.67% 1,407,294 Australia & New Zealand Banking Group Ltd. (Banking) 5,895,884 - ------------------------------------------------------------------------------------------ 214,282 Broken Hill Proprietary Co. Ltd. (Conglomerates) 2,902,143 - ------------------------------------------------------------------------------------------ 267,100 News Corporation Ltd.-ADR (Publishing) 4,874,575 - ------------------------------------------------------------------------------------------ 780,890 QBE Insurance Group Ltd. (Insurance-Broker) 3,450,002 - ------------------------------------------------------------------------------------------ 2,139,900 QNI Ltd. (Metals-Miscellaneous) 4,107,669 - ------------------------------------------------------------------------------------------ 741,200 Western Mining Corp. Holding Ltd. (Metals-Miscellaneous) 4,753,888 - ------------------------------------------------------------------------------------------ 25,984,161 - ------------------------------------------------------------------------------------------ AUSTRIA-1.24% 47,800 Oesterreichische Elektrizitaetswirtschafts AG (Verbundgesellschaft)-Class A (Electric Services) 2,920,668 - ------------------------------------------------------------------------------------------ 52,000 OMV AG (Oil & Gas-Exploration & Production) 4,490,229 - ------------------------------------------------------------------------------------------ 6,800 Wienerberger Baustoffindustrie AG (Building Materials) 1,366,662 - ------------------------------------------------------------------------------------------ 8,777,559 - ------------------------------------------------------------------------------------------ CANADA-2.70% 536,000 Bombardier, Inc.-Class B (Transportation-Miscellaneous) 6,600,985 - ------------------------------------------------------------------------------------------ 128,000 GEAC Computer Corp. Ltd.(a) (Computer Software/Services) 1,767,428 - ------------------------------------------------------------------------------------------ 291,600 Imasco, Ltd. (Tobacco) 5,223,466 - ------------------------------------------------------------------------------------------ 83,400 Loewen Group, Inc. (Funeral Services) 3,339,909 - ------------------------------------------------------------------------------------------ 60,300 Northern Telecom Ltd. (Telecommunications) 2,170,800 - ------------------------------------------------------------------------------------------ 19,102,588 - ------------------------------------------------------------------------------------------ CHILE-0.66% 64,600 Compania de Telefonos de Chile S.A.-ADR (Telecommunications) 4,651,200 - ------------------------------------------------------------------------------------------ DENMARK-1.73% 79,300 Danisco A/S (Food Processing) 3,613,781 - ------------------------------------------------------------------------------------------ 24,500 Danske Traelastkompagni (Building Materials) 1,748,719 - ------------------------------------------------------------------------------------------ 30,000 Novo Nordisk A/S-Class B (Medical-Drugs) 3,815,886 - ------------------------------------------------------------------------------------------ 66,800 Unidanmark A/S (Banking-Money Center) 3,068,594 - ------------------------------------------------------------------------------------------ 12,246,980 - ------------------------------------------------------------------------------------------ FINLAND-0.47% 7,250 Nokia Corp. (Telecommunications) 414,764 - ------------------------------------------------------------------------------------------ 150,000 Repola OY (Paper & Forest Products) 2,902,816 - ------------------------------------------------------------------------------------------ 3,317,580 - ------------------------------------------------------------------------------------------
FS-2 80 Financials
SHARES MARKET VALUE FRANCE-9.78% 24,700 Accor S.A. (Hotels/Motels) $2,934,643 - ------------------------------------------------------------------------------------------ 9,500 Carrefour Supermarche (Retail-Stores) 5,579,436 - ------------------------------------------------------------------------------------------ 21,000 Castorama Dubois (Retail-Stores) 3,405,452 - ------------------------------------------------------------------------------------------ 19,000 Christian Dior S.A. (Consumer Non-Durables) 1,864,993 - ------------------------------------------------------------------------------------------ 25,880 Docks de France, S.A. (Retail-Food & Drug) 3,937,490 - ------------------------------------------------------------------------------------------ 26,400 ECCO Travail Temporaire (Business Services) 4,092,186 - ------------------------------------------------------------------------------------------ 24,940 Essilor International-Compagnie Generale d'Optique (Medical Instruments/Products) 4,615,591 - ------------------------------------------------------------------------------------------ 1,100,000 Euro Disneyland SCA(a) (Leisure & Recreation) 3,700,333 - ------------------------------------------------------------------------------------------ 28,000 Legrand (Electronic Components/Miscellaneous) 4,683,749 - ------------------------------------------------------------------------------------------ 18,700 LVMH Moet Hennessy Louis Vuitton (Beverages-Alcoholic) 3,720,803 - ------------------------------------------------------------------------------------------ 34,800 Pinault-Printemps, S.A. (Retail-Food & Drug) 7,543,404 - ------------------------------------------------------------------------------------------ 20,800 Promodes S.A. (Retail-Food & Drug) 5,065,909 - ------------------------------------------------------------------------------------------ 10,000 Rexel S.A. (Transportation-Miscellaneous) 1,615,509 - ------------------------------------------------------------------------------------------ 37,600 Roussel-Uclaf (Medical-Drugs) 6,166,581 - ------------------------------------------------------------------------------------------ 80,000 SGS-Thomson Microelectronics N.V.(a) (Electronic Components/Miscellaneous) 3,620,000 - ------------------------------------------------------------------------------------------ 18,920 Sidel S.A. (Machinery-Miscellaneous) 6,569,633 - ------------------------------------------------------------------------------------------ 69,115,712 - ------------------------------------------------------------------------------------------ GERMANY-2.34% 6,000 Altana A.G. (Medical-Drugs) 3,488,917 - ------------------------------------------------------------------------------------------ 6,300 Gehe A.G. (Medical-Drugs) 3,092,711 - ------------------------------------------------------------------------------------------ 10,900 Mannesmann A.G. (Machinery-Miscellaneous) 3,587,646 - ------------------------------------------------------------------------------------------ 155,000 VEBA A.G. (Electric Services) 6,363,633 - ------------------------------------------------------------------------------------------ 16,532,907 - ------------------------------------------------------------------------------------------ HONG KONG-5.55% 860,000 Cheung Kong Holdings Ltd. (Real Estate) 4,849,645 - ------------------------------------------------------------------------------------------ 1,106,000 Consolidated Electric Power of Asia (Electric Services) 2,238,693 - ------------------------------------------------------------------------------------------ 5,669,908 First Pacific Co. (Conglomerates) 6,526,661 - ------------------------------------------------------------------------------------------ 498,000 HSBC Holdings PLC (Banking) 7,246,143 - ------------------------------------------------------------------------------------------ 1,398,000 Hutchison Whampoa Ltd. (Conglomerates) 7,702,679 - ------------------------------------------------------------------------------------------ 1,024,000 New World Infrastructure(a) (Conglomerates) 1,801,208 - ------------------------------------------------------------------------------------------ 6,000,000 Shanghai Petrochemical Co., Ltd. (Chemicals) 1,726,658 - ------------------------------------------------------------------------------------------ 651,100 Sun Hung Kai Properties Ltd. (Real Estate) 5,200,076 - ------------------------------------------------------------------------------------------ 1,000,000 Vatronix International (Electronic Components/Miscellaneous) 1,907,730 - ------------------------------------------------------------------------------------------ 39,199,493 - ------------------------------------------------------------------------------------------ INDIA-0.21% 95,000 Reliance Industries GDS(a) (Conglomerates) 1,482,000 - ------------------------------------------------------------------------------------------ INDONESIA-2.36% 1,741,000 PT Astra International (Automobile/Trucks Parts & Tires) 3,488,133 - ------------------------------------------------------------------------------------------ 1,246,000 PT Bank International Indonesia (Banking) 4,361,823 - ------------------------------------------------------------------------------------------ 957,500 PT Hanjaya Mandala Sampoerna (Tobacco) 8,854,029 - ------------------------------------------------------------------------------------------ 16,703,985 - ------------------------------------------------------------------------------------------
FS-3 81 Financials
SHARES MARKET VALUE IRELAND-0.45% 79,400 Elan Corp. PLC-ADR(a) (Medical-Drugs) $3,185,925 - ------------------------------------------------------------------------------------------ ISRAEL-0.51% 91,000 Teva Pharmaceutical Industries Ltd.-ADR (Medical-Drugs) 3,571,750 - ------------------------------------------------------------------------------------------ ITALY-0.93% 2,283,000 Telecom Italia Mobile S.p.A.(a) (Telecommunications) 3,831,258 - ------------------------------------------------------------------------------------------ 1,827,000 Telecom Italia S.p.A. (Telecommunications) 2,773,739 - ------------------------------------------------------------------------------------------ 6,604,997 - ------------------------------------------------------------------------------------------ JAPAN-19.17% 100,000 Advantest Corp. (Electronic Components/Miscellaneous) 5,669,876 - ------------------------------------------------------------------------------------------ 168,299 Alpine Electronics (Electronic Components/Miscellaneous) 2,336,232 - ------------------------------------------------------------------------------------------ 32,700 Autobacs Seven (Retail-Stores) 3,084,755 - ------------------------------------------------------------------------------------------ 270,000 Bridgestone Corp. (Automobile/Trucks Parts & Tires) 3,747,984 - ------------------------------------------------------------------------------------------ 276,000 Canon, Inc. (Office Products) 4,721,638 - ------------------------------------------------------------------------------------------ 235,000 Exedy Corp. (Automobile/Trucks Parts & Tires) 3,652,671 - ------------------------------------------------------------------------------------------ 100,800 Fanuc Ltd. (Machine Tools) 4,365,257 - ------------------------------------------------------------------------------------------ 445,000 Fujitsu Ltd. (Computer Mainframes) 5,307,200 - ------------------------------------------------------------------------------------------ 547,000 Hitachi Ltd. (Electronic Components/Miscellaneous) 5,614,644 - ------------------------------------------------------------------------------------------ 195,000 Hoya Corp. (Medical Instruments/Products) 5,718,755 - ------------------------------------------------------------------------------------------ 225,000 Kajima Corp. (Engineering & Construction) 2,076,348 - ------------------------------------------------------------------------------------------ 200,000 Koa Corp. (Electronic Components/Miscellaneous) 3,245,515 - ------------------------------------------------------------------------------------------ 77,000 Kyocera Corp. (Electronic Components/Miscellaneous) 6,307,835 - ------------------------------------------------------------------------------------------ 152,000 Mitsumi Electric Co. Ltd. (Electronic 3,670,170 Components/Miscellaneous) - ------------------------------------------------------------------------------------------ 492,000 NEC Corp. (Semiconductors) 6,492,986 - ------------------------------------------------------------------------------------------ 26,400 Nemic-Lambda K.K. (Electronic Components/Miscellaneous) 1,269,739 - ------------------------------------------------------------------------------------------ 46,000 Nichiei Co., Ltd. (Business Services) 2,855,467 - ------------------------------------------------------------------------------------------ 465,000 Nikon Corp. (Conglomerate) 6,636,688 - ------------------------------------------------------------------------------------------ 17,100 Nippon Television Network (Advertising/Broadcasting) 4,078,792 - ------------------------------------------------------------------------------------------ 64,000 Nissen (Retail Stores) 1,845,643 - ------------------------------------------------------------------------------------------ 150 NTT Data Communications Systems Co. 3,753,849 - ------------------------------------------------------------------------------------------ 224,000 Omron Corp. (Electronic Components/Miscellaneous) 5,233,491 - ------------------------------------------------------------------------------------------ 58,000 Plenus Co., Ltd. (Restaurants) 2,738,550 - ------------------------------------------------------------------------------------------ 582,000 Ricoh Co., Ltd. (Office Products) 6,258,370 - ------------------------------------------------------------------------------------------ 133,000 Rohm Co., Ltd. (Electronic Components/Miscellaneous) 8,074,002 - ------------------------------------------------------------------------------------------ 80,100 SMC (Machinery-Miscellaneous) 5,629,982 - ------------------------------------------------------------------------------------------ 176,000 Tokyo Electron Ltd. (Electronic Components/Miscellaneous) 7,639,083 - ------------------------------------------------------------------------------------------ 915,000 Toshiba Corp. (Electronic Components/Miscellaneous) 6,628,037 - ------------------------------------------------------------------------------------------ 427,000 Yamaha Corp. (Leisure & Recreation) 6,803,949 - ------------------------------------------------------------------------------------------ 135,457,508 - ------------------------------------------------------------------------------------------
FS-4 82 Financials
SHARES MARKET VALUE MALAYSIA-2.62% 1,300,000 Bandar Raya Developments Berhad (Real Estate) $1,944,116 - ------------------------------------------------------------------------------------------ 247,000 Edaran Otomobil Nasional Berhad (Retail-Stores) 1,944,116 - ------------------------------------------------------------------------------------------ 1,508,000 Land & General Berhad (Paper & Forest Products) 3,501,456 - ------------------------------------------------------------------------------------------ 679,000 Malayan Banking Berhad (Banking) 5,477,961 - ------------------------------------------------------------------------------------------ 906,000 United Engineers (Building Materials) 5,633,530 - ------------------------------------------------------------------------------------------ 18,501,179 - ------------------------------------------------------------------------------------------ MEXICO-0.80% 431,000 Kimberly-Clark de Mexico S.A. (Retail-Stores) 5,625,684 - ------------------------------------------------------------------------------------------ NETHERLANDS-4.76% 540,000 Elsevier N.V. (Publishing) 6,981,873 - ------------------------------------------------------------------------------------------ 32,050 Heineken N.V. (Beverages-Alcoholic) 5,687,666 - ------------------------------------------------------------------------------------------ 142,000 Koninklijke Ahold N.V. (Retail-Food & Drug) 5,381,924 - ------------------------------------------------------------------------------------------ 48,100 Uitgevuer Bezit N.V. (Publishing) 6,743,390 - ------------------------------------------------------------------------------------------ 124,000 Vendex International N.V. (Retail-Stores) 3,575,865 - ------------------------------------------------------------------------------------------ 58,000 Wolters Kluwer N.V. (Publishing) 5,278,743 - ------------------------------------------------------------------------------------------ 33,649,461 - ------------------------------------------------------------------------------------------ NEW ZEALAND-0.74% 1,251,400 Telecom Corp. of New Zealand Ltd. (Telephone) 5,195,924 - ------------------------------------------------------------------------------------------ NORWAY-1.13% 86,000 Norsk Hydro A.S. (Chemicals) 3,425,084 - ------------------------------------------------------------------------------------------ 14,500 Orkla A.S. (Conglomerates) 749,799 - ------------------------------------------------------------------------------------------ 750,000 UNI Storebrand A.S.(a) (Insurance-Life & Health) 3,781,917 - ------------------------------------------------------------------------------------------ 7,956,800 - ------------------------------------------------------------------------------------------ PHILIPPINES-0.23% 11,303,000 Metro Pacific Corp. (Conglomerates) 1,629,614 - ------------------------------------------------------------------------------------------ PORTUGAL-0.49% 182,000 Portugal Telecom S.A.(a) (Telecommunications) 3,446,459 - ------------------------------------------------------------------------------------------ SINGAPORE-1.55% 528,000 Cerebos Pacific Ltd. (Food/Processing) 3,288,323 - ------------------------------------------------------------------------------------------ 845,000 City Developments Ltd. (Real Estate) 5,232,661 - ------------------------------------------------------------------------------------------ 279,200 United OverSeas Bank Ltd. (Banking) 2,450,163 - ------------------------------------------------------------------------------------------ 10,971,147 - ------------------------------------------------------------------------------------------ SPAIN-3.09% 16,200 Acerinox S.A. (Metals-Miscellaneous) 1,706,870 - ------------------------------------------------------------------------------------------ 66,000 Corporacion Mapfre Compania Internacional De Reaseguros S.A. (Insurance-Broker) 3,379,624 - ------------------------------------------------------------------------------------------ 105,500 Empresa Nacional de Electricidad, S.A. (Telephone) 5,246,692 - ------------------------------------------------------------------------------------------ 57,200 Gas Natural SDG-E.S.A. (Natural Gas Pipeline) 7,845,053 - ------------------------------------------------------------------------------------------ 109,800 Tabacalera S.A. (Tobacco) 3,674,843 - ------------------------------------------------------------------------------------------ 21,853,082 - ------------------------------------------------------------------------------------------
FS-5 83 Financials
SHARES MARKET VALUE SWEDEN-3.52% 207,000 Astra AB (Medical-Drugs) $7,481,252 - ------------------------------------------------------------------------------------------ 61,000 Autoliv AB (Automobile/Trucks Parts & Tires) 3,499,834 - ------------------------------------------------------------------------------------------ 218,000 Sandvik AB (Metals-Miscellaneous) 4,103,545 - ------------------------------------------------------------------------------------------ 160,000 Skandia Forsakrings AB (Insurance--Multi-Line Property) 4,059,874 - ------------------------------------------------------------------------------------------ 269,280 Telefonaktiebolaget L.M. Ericsson-ADR (Telecommunications) 5,751,653 - ------------------------------------------------------------------------------------------ 24,896,158 - ------------------------------------------------------------------------------------------ SWITZERLAND-3.33% 6,200 BBC Brown Boveri Ltd. (Engineering & Construction) 7,192,284 - ------------------------------------------------------------------------------------------ 5,640 Ciba-Geigy Ltd. (Medical-Drugs) 4,883,396 - ------------------------------------------------------------------------------------------ 1,040 Roche Holdings A.G. (Medical-Drugs) 7,557,474 - ------------------------------------------------------------------------------------------ 4,700 Sandoz AG (Chemicals) 3,879,063 - ------------------------------------------------------------------------------------------ 23,512,217 - ------------------------------------------------------------------------------------------ THAILAND-2.18% 41,800 Bank of Ayudhya Ltd. (Banking) 240,850 - ------------------------------------------------------------------------------------------ 1,502,920 Krung Thai Bank PLC (Banking) 5,972,263 - ------------------------------------------------------------------------------------------ 246,300 Land & House Co. Ltd. (Home Building) 3,973,686 - ------------------------------------------------------------------------------------------ 118,600 Thai Farmers Bank (Banking) 980,282 - ------------------------------------------------------------------------------------------ 338,200 United Communication Industry (Telecommunications) 4,273,698 - ------------------------------------------------------------------------------------------ 15,440,779 - ------------------------------------------------------------------------------------------ UNITED KINGDOM-11.99% 700,000 Argos PLC (Retail-Stores) 5,655,336 - ------------------------------------------------------------------------------------------ 1,100,000 Asda Group PLC (Retail-Food & Drug) 1,782,609 - ------------------------------------------------------------------------------------------ 330,000 BOC Group PLC (Chemicals) 4,533,913 - ------------------------------------------------------------------------------------------ 517,000 British Petroleum PLC (Oil & Gas-Exploration & Production) 3,800,870 - ------------------------------------------------------------------------------------------ 3,140,000 Burton Group PLC (Retail-Stores) 5,001,660 - ------------------------------------------------------------------------------------------ 510,000 Compass Group PLC (Food/Processing) 3,467,194 - ------------------------------------------------------------------------------------------ 750,000 Cookson Group PLC (Conglomerates) 3,474,308 - ------------------------------------------------------------------------------------------ 726,000 Dixons Group PLC (Retail-Stores) 4,396,174 - ------------------------------------------------------------------------------------------ 360,000 Farnell Electronics PLC (Electronic Components/Miscellaneous) 3,807,747 - ------------------------------------------------------------------------------------------ 680,000 Granada Group PLC (Leisure & Recreation) 7,278,419 - ------------------------------------------------------------------------------------------ 1,490,000 Medeva PLC (Medical-Drugs) 6,419,368 - ------------------------------------------------------------------------------------------ 402,181 Provident Financial PLC (Finance-Consumer Credit) 4,889,758 - ------------------------------------------------------------------------------------------ 649,000 Rentokil Group PLC (Business Services) 3,232,174 - ------------------------------------------------------------------------------------------ 385,000 Smith (David S.) Holdings PLC (Paper & Forest Products) 3,506,087 - ------------------------------------------------------------------------------------------ 645,000 Standard Chartered PLC (Banking) 5,292,569 - ------------------------------------------------------------------------------------------ 745,000 Storehouse PLC (Retail-Stores) 3,533,597 - ------------------------------------------------------------------------------------------ 315,000 Thorn EMI PLC (Leisure & Recreation) 7,335,889 - ------------------------------------------------------------------------------------------ 925,000 Vickers PLC (Automobile Manufacturers) 3,670,751 - ------------------------------------------------------------------------------------------ 1,500,000 WPP Group (Advertising/Broadcasting) 3,628,459 - ------------------------------------------------------------------------------------------ 84,706,882 - ------------------------------------------------------------------------------------------ Total Stocks & Other Equity Interests 627,945,056 - ------------------------------------------------------------------------------------------
FS-6 84 Financials
SHARES MARKET VALUE RIGHTS & WARRANTS-0.15% MALAYSIA-0.15% 270,000 YTL Corp. Berhad, expiring 1997 (Engineering & Construction) $1,051,948 - ------------------------------------------------------------------------------------------ PRINCIPAL AMOUNT CONVERTIBLE BONDS-0.71% $ 4,780,000 MBL International Finance Bermuda, Convertible Bonds, 3.00%, 11/30/02 4,983,150 - ------------------------------------------------------------------------------------------ REPURCHASE AGREEMENT-2.01%(b) 14,250,684 Daiwa Securities America, Inc., 5.90%, 11/01/95(c) 14,250,684 - ------------------------------------------------------------------------------------------ TOTAL INVESTMENTS -- 91.72% 648,230,838 - ------------------------------------------------------------------------------------------ OTHER ASSETS LESS LIABILITIES -- 8.28% 58,496,631 - ------------------------------------------------------------------------------------------ NET ASSETS -- 100.00% $706,727,469 ==========================================================================================
Notes to Schedule of Investments: (a) Non-income producing security. (b) Collateral on repurchase agreements, including the Fund's pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102 percent of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds managed by the investment advisor. (c) Joint repurchase agreement entered into 10/31/95 with a maturing value of $401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations, 8.375% due 08/15/08. See Notes to Financial Statements. FS-7 85 Financials STATEMENT OF ASSETS AND LIABILITIES October 31, 1995 ASSETS: Investments, at market value (cost $552,096,213) $648,230,838 - ---------------------------------------------------------------------------------------- Foreign currencies, at market value (cost $45,512,454) 45,335,748 - ---------------------------------------------------------------------------------------- Receivables for: Investments sold 18,923,357 - ---------------------------------------------------------------------------------------- Capital stock sold 3,800,742 - ---------------------------------------------------------------------------------------- Dividends and interest 1,664,631 - ---------------------------------------------------------------------------------------- Foreign currency 1,705,929 - ---------------------------------------------------------------------------------------- Investment for deferred compensation plan 11,193 - ---------------------------------------------------------------------------------------- Other assets 65,581 - ---------------------------------------------------------------------------------------- Total assets 719,738,019 - ---------------------------------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 8,959,475 - ---------------------------------------------------------------------------------------- Capital stock reacquired 919,749 - ---------------------------------------------------------------------------------------- Foreign currency 1,703,525 - ---------------------------------------------------------------------------------------- Deferred compensation 11,193 - ---------------------------------------------------------------------------------------- Accrued advisory fees 557,489 - ---------------------------------------------------------------------------------------- Accrued administrative services fees 2,500 - ---------------------------------------------------------------------------------------- Accrued directors' fees 812 - ---------------------------------------------------------------------------------------- Accrued distribution fees 329,656 - ---------------------------------------------------------------------------------------- Accrued transfer agent fees 137,000 - ---------------------------------------------------------------------------------------- Accrued operating expenses 389,151 - ---------------------------------------------------------------------------------------- Total liabilities 13,010,550 - ---------------------------------------------------------------------------------------- Net assets applicable to shares outstanding $706,727,469 ======================================================================================== NET ASSETS: Class A $654,763,825 ======================================================================================== Class B $ 51,963,644 ======================================================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 47,952,875 ======================================================================================== Class B: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 3,836,621 ======================================================================================== Class A: Net asset value and redemption price per share $13.65 ======================================================================================== Offering price per share: (Net asset value of $13.65 divided by 94.50%) $14.44 ======================================================================================== Class B: Net asset value and offering price per share $13.54 ========================================================================================
See Notes to Financial Statements. FS-8 86 Financials STATEMENT OF OPERATIONS For the year ended October 31, 1995 INVESTMENT INCOME: Dividends (net of $1,433,521 foreign withholding tax) $10,074,533 - ---------------------------------------------------------------------------------------- Interest 1,527,686 - ---------------------------------------------------------------------------------------- Total investment income 11,602,219 - ---------------------------------------------------------------------------------------- EXPENSES: Advisory fees 6,225,765 - ---------------------------------------------------------------------------------------- Administrative services fees 29,858 - ---------------------------------------------------------------------------------------- Directors' fees 11,163 - ---------------------------------------------------------------------------------------- Distribution fees-Class A 1,903,555 - ---------------------------------------------------------------------------------------- Distribution fees-Class B 208,253 - ---------------------------------------------------------------------------------------- Custodian fees 711,930 - ---------------------------------------------------------------------------------------- Transfer agent fees-Class A 1,205,385 - ---------------------------------------------------------------------------------------- Transfer agent fees-Class B 80,189 - ---------------------------------------------------------------------------------------- Other 834,857 - ---------------------------------------------------------------------------------------- Total expenses 11,210,955 - ---------------------------------------------------------------------------------------- Less advisory fees waived (77,672) - ---------------------------------------------------------------------------------------- Net expenses 11,133,283 - ---------------------------------------------------------------------------------------- Net investment income 468,936 - ---------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on sales of: Investment securities 19,512,242 - ---------------------------------------------------------------------------------------- Foreign currencies (210,424) - ---------------------------------------------------------------------------------------- 19,301,818 - ---------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of: Investment securities 9,349,878 - ---------------------------------------------------------------------------------------- Foreign currencies (537,122) - ---------------------------------------------------------------------------------------- 8,812,756 - ---------------------------------------------------------------------------------------- Net gain on investment securities and foreign currencies 28,114,574 - ---------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $28,583,510 ========================================================================================
See Notes to Financial Statements. FS-9 87 Financials STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1995 and 1994
1995 1994 OPERATIONS: Net investment income $ 468,936 $ 1,270,473 - -------------------------------------------------------------------------------------------- Net realized gain on sales of investment securities and foreign currencies 19,301,818 27,935,713 - -------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 8,812,756 23,766,336 - -------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 28,583,510 52,972,522 - -------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income: Class A (2,166,421) (381,603) - -------------------------------------------------------------------------------------------- Class B (19,050) -- - -------------------------------------------------------------------------------------------- Distributions to shareholders from net realized capital gains: Class A (23,092,160) -- - -------------------------------------------------------------------------------------------- Class B (287,957) -- - -------------------------------------------------------------------------------------------- Share transactions-net: Class A (54,671,896) 283,363,359 - -------------------------------------------------------------------------------------------- Class B 45,389,211 4,755,554 - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets (6,264,763) 340,709,832 - -------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 712,992,232 372,282,400 - -------------------------------------------------------------------------------------------- End of period $706,727,469 $712,992,232 ============================================================================================ NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $590,886,286 $599,529,243 - -------------------------------------------------------------------------------------------- Undistributed net investment income 237,171 1,368,300 - -------------------------------------------------------------------------------------------- Undistributed net realized gain on sales of investment securities and foreign currencies 19,504,994 24,808,427 - -------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 96,099,018 87,286,262 - -------------------------------------------------------------------------------------------- $706,727,469 $712,992,232 ============================================================================================
See Notes to Financial Statements. FS-10 88 Financials NOTES TO FINANCIAL STATEMENTS October 31, 1995 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM International Equity Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company consisting of four separate series portfolios: AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund. The Fund currently offers two different classes of shares: the Class A shares and the Class B shares. Class A shares are sold with a front-end sales charge. Class B shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- Investment securities are valued at the last sales price on the exchange on which the securities are traded or, lacking any sales, at the mean between the closing bid and asked prices on the day of valuation. Securities traded in the over-the-counter market are valued at the mean between the closing bid and asked prices on valuation date or absent a last sales price, at the mean of the closing bid and asked prices. If a mean is not available, as is the case in some foreign markets, the closing bid will be used absent a last sales price. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors. Short-term obligations having 60 days or less to maturity are valued on the basis of amortized cost which approximates market value. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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 Board of Directors. B. 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. C. Foreign Currency Contracts -- A forward 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 forward 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 forward 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. D. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on an accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. On October 31, 1995, undistributed net investment income was increased by $585,406, paid-in capital increased by $639,728 and undistributed net realized gains reduced by $1,225,134 in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassifications discussed above. E. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. FS-11 89 Financials F. Organizational Costs -- Organizational costs of $23,098 were borne by the Fund. Such costs are amortized to operations over sixty months. Prior to full amortization of the organizational costs, the proceeds of any redemption of the shares related to the Fund's initial formation (10,000 Class A shares) will be reduced by a pro rata share of such unamortized organizational expenses. The pro rata share of organizational expenses will be calculated by dividing the number of initial shares redeemed by the remaining number of initial shares outstanding at the time of the redemption and multiplying the result by the unamortized organizational expenses. G. Expenses -- Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to both classes, e.g. advisory fees, are allocated between them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $1 billion of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $1 billion. AIM is currently voluntarily waiving a portion of its advisory fees paid by the Fund to AIM to the extent necessary to reduce the fees paid by the Fund at net asset levels higher than those currently incorporated in the present advisory fee schedule. AIM will receive a fee calculated at the annual rate of 0.95% of the first $500 million of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $500 million to and including $1 billion, plus 0.85% of the Fund's average daily net assets in excess of $1 billion. The waiver of fees is entirely voluntary and the Board of Directors of the Company would be advised of any decision by AIM to discontinue the waiver. During the year ended October 31, 1995, AIM waived fees of $77,672. Under the terms of the advisory agreement, AIM will, if necessary, reduce its fee or make payments to the Fund to the extent necessary to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Fund's shares are qualified for sale. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1995, AIM was reimbursed $29,858 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing transfer agency services to the Fund. During the year ended October 31, 1995, the Fund paid AFS $757,067 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A shares and the Class B shares of the Fund. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and with respect to the Fund's Class B shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to the Class A Plan, pays AIM Distributors at an annual rate of 0.30% of the average daily net assets attributable to the Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs and to implement a program which provides periodic payments to selected dealers and financial institutions, in amounts of up to 0.25% of the average daily net assets of the Class A shares attributable to the customers of such dealers or financial institutions, who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. Any amounts not paid as a service fee under such 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. AIM Distributors may, from time to time, assign, transfer or pledge to one or more designees, its rights to all or a designated portion of (a) compensation received by AIM Distributors from the Fund pursuant to the Class B Plan (but not AIM Distributors duties and obligations pursuant to the Class B Plan) and (b) any contingent deferred sales charges received by AIM Distributors related to the Class B shares. During the year ended October 31, 1995, the Class A shares and the Class B shares paid AIM Distributors $1,903,555 and $208,253, respectively, as compensation under the Plans. FS-12 90 Financials AIM Distributors received commissions of $565,101 from sales of the Class A shares of the Fund during the year ended October 31, 1995. 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, 1995, AIM Distributors received commissions of $106,168 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1995, the Fund incurred legal fees of $6,527 for services rendered by the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-BANK BORROWINGS The Fund has a $10,800,000 committed line of credit with a financial institution syndicate with Chemical Bank of New York as the administrative agent. Interest on borrowings under the line of credit is payable on maturity or prepayment date. During the period July 20, 1995 (effective date of Credit Agreement) through October 31, 1995, the Fund did not borrow under the line of credit agreement. The Fund is charged a commitment fee, payable quarterly, at the rate of 1/10 of 1% per annum on the unused balance of the Fund's commitment. NOTE 5-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, 1995 was $409,967,333 and $474,743,130, respectively. The amount of unrealized appreciation (depreciation) of investment securities, on a tax basis, as of October 31, 1995 is as follows: Aggregate unrealized appreciation of investment securities $110,270,738 - ------------------------------------------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (14,992,393) - ------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities $ 95,278,345 =================================================================================================================== Cost of investments for tax purposes is $522,952,493.
NOTE 6-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the years ended October 31, 1995 and 1994 were as follows:
1995 1994 ------------------------------ ------------------------------ Shares Amount Shares Amount ----------- ------------- ----------- ------------- Sold: Class A 19,941,452 $ 256,345,253 32,646,831 $ 422,295,820 - ----------------------------------------------------------- ----------- ------------- ----------- ------------- Class B* 3,764,258 49,112,660 359,146 4,768,687 - ----------------------------------------------------------- ----------- ------------- ----------- ------------- Issued as reinvestment of dividends: Class A 1,330,022 15,787,364 17,420 217,930 - ----------------------------------------------------------- ----------- ------------- ----------- ------------- Class B* 24,816 294,807 -- -- - ----------------------------------------------------------- ----------- ------------- ----------- ------------- Reacquired: Class A (25,762,596) (326,804,513) (10,785,235) (139,150,391) - ----------------------------------------------------------- ----------- ------------- ----------- ------------- Class B* (310,613) (4,018,256) (986) (13,133) - ----------------------------------------------------------- ----------- ------------- ----------- ------------- (1,012,661) $ (9,282,685) 22,237,176 $ 288,118,913 =========================================================== =========== ============= =========== =============
* Sales of Class B shares commenced on September 15, 1994. FS-13 91 Financials NOTE 7-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a Class A share outstanding during each of the years in the three-year period ended October 31, 1995 and the period November 5, 1991 (date operations commenced) through October 31, 1992 and for a Class B share outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date sales commenced) through October 31, 1994.
1995 1994 1993 1992 ------- ------- ------- ------- CLASS A: Net asset value, beginning of period $ 13.50 $ 12.18 $ 8.88 $ 8.61(a) - ------------------------------------------------------------ ------- ------- ------- ------- Income from investment operations: Net investment income 0.01 0.02 0.02 0.03 - ------------------------------------------------------------ ------- ------- ------- ------- Net gains on securities (both realized and unrealized) 0.62 1.31 3.29 0.26 - ------------------------------------------------------------ ------- ------- ------- ------- Total from investment operations 0.63 1.33 3.31 0.29 - ------------------------------------------------------------ ------- ------- ------- ------- Less distributions: Dividends from net investment income (0.04) (0.01) (0.01) (0.02) - ------------------------------------------------------------ ------- ------- ------- ------- Distributions from capital gains (0.44) -- -- -- - ------------------------------------------------------------ ------- ------- ------- ------- Total distributions (0.48) (0.01) (0.01) (0.02) - ------------------------------------------------------------ ------- ------- ------- ------- Net asset value, end of period $ 13.65 $ 13.50 $ 12.18 $ 8.88 ============================================================ ======= ======= ======= ======= Total return(b) 5.24% 10.94% 37.36% 3.36% ============================================================ ======= ======= ======= ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $654,764 $708,159 $372,282 $122,663 ============================================================ ======= ======= ======= ======= Ratio of expenses to average net assets 1.67%(c)(d) 1.64% 1.78% 1.80%(e) ============================================================ ======= ======= ======= ======= Ratio of net investment income to average net assets 0.10%(c)(d) 0.22% 0.28% 0.30%(e) ============================================================ ======= ======= ======= ======= Portfolio turnover rate 68% 67% 62% 41% ============================================================ ======= ======= ======= =======
(a) Net asset value at the beginning of the period has been restated to reflect a 1.1619 for 1 stock split, effected in the form of a dividend, on May 21, 1992. (b) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (c) Ratios are based on average net assets of $634,518,409. (d) After waiver of advisory fees. Ratios of expenses and net investment income prior to waiver of advisory fees are 1.68% and 0.09%, respectively. (e) Annualized. After waiver of advisory fees.
1995 1994 -------- -------- CLASS B: Net asset value, beginning of period $ 13.49 $ 13.42 - ------------------------------------------------------------------------------------- -------- -------- Income from investment operations: Net investment income (loss) (0.09) (0.01) - ------------------------------------------------------------------------------------- -------- -------- Net gains on securities (both realized and unrealized) 0.61 0.08 - ------------------------------------------------------------------------------------- -------- -------- Total from investment operations 0.52 0.07 - ------------------------------------------------------------------------------------- -------- -------- Less distributions: Dividends from net investment income (0.03) -- - ------------------------------------------------------------------------------------- -------- -------- Distributions from capital gains (0.44) -- - ------------------------------------------------------------------------------------- -------- -------- Total distributions (0.47) -- - ------------------------------------------------------------------------------------- -------- -------- Net asset value, end of period $ 13.54 $ 13.49 ===================================================================================== ======== ======== Total return(a) 4.35% 0.52% ===================================================================================== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 51,964 $ 4,833 ===================================================================================== ======== ======== Ratio of expenses to average net assets 2.55%(b)(c) 2.53%(d) ===================================================================================== ======== ======== Ratio of net investment income (loss) to average net assets (0.78)%(b)(c) (0.67)%(d) ===================================================================================== ======== ======== Portfolio turnover rate 68% 67% ===================================================================================== ======== ========
(a) Does not deduct contingent deferred sales charges and for periods less than one year, total returns are not annualized. (b) Ratios are based on average net assets of $20,825,255. (c) After waiver of advisory fees. Ratios of expenses and net investment income (loss) prior to waiver of advisory fees are 2.56% and (0.79)%, respectively. (d) Annualized. FS-14 92 APPLICATION INSIDE [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R) AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND (SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.) PROSPECTUS MARCH 1, 1996 AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND and AIM GLOBAL INCOME FUND (collectively, the "Funds") are series investment portfolios of AIM International Funds, Inc. (the "Company"), an open-end, series, management investment company. The Company also offers shares of another series portfolio, AIM International Equity Fund, pursuant to a separate prospectus. AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"). The investment objective of the AGGRESSIVE GROWTH FUND is to provide above-average long-term growth of capital appreciation. The Fund seeks to achieve its objective by investing in a portfolio of global (i.e., U.S. and foreign) equity securities including securities of selected companies with relatively small market capitalization. AIM GLOBAL GROWTH FUND ("GROWTH FUND"). The investment objective of the GROWTH FUND is to provide long-term growth of capital. The Fund seeks to achieve its objective by investing in a portfolio of global (i.e., U.S. and foreign) equity securities of selected companies that are considered by the Fund's investment advisor to have strong earnings momentum. AIM GLOBAL INCOME FUND ("INCOME FUND"). The investment objective of the INCOME FUND is to provide high current income. The Fund seeks to achieve its objective by investing in a portfolio of U.S. and foreign government and corporate debt securities. As a secondary objective, the Fund seeks preservation of principal and capital appreciation. This Prospectus sets forth basic information about the Funds that prospective investors should know before investing. It should be read and retained for future reference. A Statement of Additional Information, dated March 1, 1996, has been filed with the United States Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. The Statement of Additional Information is available without charge upon written request to the Company at P.O. Box 4739, Houston, Texas 77210-4739. THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 93 TABLE OF CONTENTS
PAGE ---- SUMMARY.................................. 2 THE FUNDS................................ 4 Table of Fees and Expenses............. 4 Financial Highlights................... 5 Performance............................ 7 Investment Objectives and Policies..... 8 Hedging Strategies..................... 10 Other Investment Techniques............ 12 Risk Factors........................... 14 Investment Restrictions................ 15 Portfolio Turnover..................... 16 Management............................. 16 Organization of the Company............ 19 PAGE ---- INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS(R)............................... A-1 Introduction to The AIM Family of Funds............................... A-1 How to Purchase Shares................. A-1 Terms and Conditions of Purchase of the AIM Funds........................... A-2 Special Plans.......................... A-8 Exchange Privilege..................... A-10 How to Redeem Shares................... A-12 Determination of Net Asset Value....... A-15 Dividends, Distributions and Tax Matters............................. A-16 General Information.................... A-18 APPENDIX A............................... A-19 APPENDIX B............................... A-21 APPLICATION INSTRUCTIONS................. B-1
SUMMARY - -------------------------------------------------------------------------------- THE FUNDS. AIM International Funds, Inc. (the "Company") is a Maryland corporation organized as an open-end, series, management investment company. Currently, the Company offers four series comprising four separate investment portfolios. Three of these series are offered pursuant to this Prospectus: AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND ("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND")(individually, a "Fund" and collectively, the "Funds"), each of which pursues unique investment objectives. The AGGRESSIVE GROWTH FUND and the GROWTH FUND are diversified investment portfolios; the INCOME FUND is a non-diversified investment portfolio. For more complete information on each Fund's investment objective and policies, see "Investment Objectives and Policies." RISK FACTORS. EACH FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING GLOBAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH INVESTMENTS IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND ECONOMIC RISK, REGULATORY RISK AND MARKET RISK. THE INCOME FUND IS A NON-DIVERSIFIED PORTFOLIO, AND MAY ALSO INVEST IN HIGH YIELD SECURITIES (I.E., "JUNK BONDS") THAT ENTAIL CERTAIN RISKS. NONE OF THE FUNDS IS DESIGNED AS A COMPLETE INVESTMENT PROGRAM. FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS." THE INCOME FUND MAY ENGAGE IN LEVERAGING WHICH MAY INVOLVE AN INCREASE IN RISK. SEE "OTHER INVESTMENT TECHNIQUES -- BORROWING." MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment advisor pursuant to an investment advisory agreement (the "Advisory Agreement"). AIM, together with its affiliates, manages or advises 39 investment company portfolios. As of February 1, 1996, the total assets advised or managed by AIM or its affiliates were approximately $47.2 billion. Under the terms of the Advisory Agreement, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. As compensation for these services, AIM receives a fee based on each Fund's average daily net assets. Under an Administrative Services Agreement, AIM may be reimbursed by each Fund for its costs of performing, or arranging for the performance of, certain accounting, shareholder servicing and other administrative services for each Fund. Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc. ("AFS"), AIM's wholly-owned subsidiary and a registered transfer agent, receives a fee for its provision of transfer agency, dividend distribution and disbursement, and shareholder services for each Fund. MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A or Class B shares of the Funds which are offered by this Prospectus at an offering price that reflects differing sales charges and expense levels. See "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Class A Shares -- Shares are offered at net asset value plus any applicable initial sales charge. Class B Shares -- Shares are offered at net asset value, without an initial sales charge, and are subject to a maximum contingent deferred sales charge of 5% on certain redemptions made within six years of the date on which a purchase was made. Class B shares automatically convert to Class A shares of the same Fund eight years following the end of the calendar month in which a purchase was made. Class B shares are subject to higher expenses than Class A shares. SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an investor to choose the method of purchasing shares that is most beneficial given the amount of the purchase, the length of time the shares are expected to be held, whether dividends will be paid in cash or reinvested in additional shares of a Fund and other circumstances. Investors should consider whether, during the antic- 2 94 ipated life of their investment in a Fund, the accumulated distribution fees and any applicable contingent deferred sales charges on Class B shares prior to conversion would be less than the initial sales charge and accumulated distribution fees on Class A shares purchased at the same time, and to what extent such differential would be offset by the higher return on Class A shares. To assist investors in making this determination, the table under the caption "Table of Fees and Expenses" sets forth examples of the charges applicable to each class of shares. Class A shares will normally be more beneficial than Class B shares to the investor who qualifies for reduced initial sales charges, as described below. Therefore, A I M Distributors, Inc. will reject any order for purchase of more than $250,000 for Class B shares. PURCHASING SHARES. Initial investments in either class of shares must be at least $500 and additional investments must be at least $50. The minimum initial investment is modified for investments through tax-qualified retirement plans and accounts initially established with an Automatic Investment Plan. The distributor of the Funds' shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans." EXCHANGE PRIVILEGE. The Funds are several of the mutual funds distributed by AIM Distributors (collectively, "The AIM Family of Funds"). Class A and Class B shares of each Fund may be exchanged for shares of other funds in The AIM Family of Funds in the manner and subject to the policies and charges set forth herein. See "Exchange Privilege." REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of their shares at net asset value on any business day, generally without charge. A contingent deferred sales charge of 1% may apply to certain redemptions of Class A shares, where purchases of shares in an amount of $1 million or more are made at net asset value. See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." Holders of Class B shares may redeem all or a portion of their shares at net asset value on any business day, less a contingent deferred sales charge for redemptions made within six years following the date on which a purchase was made. Class B shares redeemed after six years following the date of purchase will not be subject to any contingent deferred sales charge. See "How to Redeem Shares -- Multiple Distribution System." DISTRIBUTIONS. The AGGRESSIVE GROWTH FUND and the GROWTH FUND declare and pay dividends from net investment income, if any, and make distributions of realized capital gains, if any, on an annual basis. The INCOME FUND declares dividends from net investment income on a daily basis and pays such dividends monthly. The INCOME FUND declares and makes distributions of realized short-term capital gains, if any, annually, and of realized long-term capital gains, if any, annually. Dividends and distributions paid with respect to Class A shares of a Fund may be paid by check, may be reinvested in additional Class A shares of the Fund or, subject to certain conditions, in Class A shares (or shares which normally involve payment of initial sales charges) of other funds in The AIM Family of Funds at current net asset value (without payment of a sales charge). Dividends and distributions paid with respect to Class B shares of a Fund may be paid by check or reinvested in additional Class B shares of the Fund or Class B Shares of other funds in The AIM Family of Funds, subject to certain conditions. See "Dividends, Distributions and Tax Matters" and "Special Plans." THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM LOGO), AIM AND DESIGN, AIM, AIM LINK AND AIM INSTITUTIONAL FUNDS ARE REGISTERED SERVICE MARKS OF A I M MANAGEMENT GROUP INC. 3 95 THE FUNDS - -------------------------------------------------------------------------------- TABLE OF FEES AND EXPENSES The following table is designed to help an investor in the Funds understand the various costs that an investor will bear, both directly and indirectly. The fees and expenses set forth in the table are based on the average net assets of the respective classes of the Funds for the year ended October 31, 1995. Expenses have been restated for GROWTH FUND to reflect current fee waivers. The rules of the SEC require that the maximum sales charge be reflected in the table, even though certain investors may qualify for reduced sales charges. See "How to Purchase Shares."
AGGRESSIVE GROWTH FUND GROWTH FUND INCOME FUND ----------------- ----------------- ------------------ CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B ------- ------- ------- ------- ------- ------- Shareholder Transaction Expenses Maximum sales load imposed on purchase of shares (as a % of offering price)........... 4.75% None 4.75% None 4.75% None Maximum sales load on reinvested dividends and distributions.......... None None None None None None Deferred sales load (as a % of original purchase price or redemption proceeds, whichever is lower)........ None* 5.0% None* 5.0% None* 5.0% Redemption fee.......................... None None None None None None Exchange fee**.......................... None None None None None None Annual Fund Operating Expenses (as a % of average net assets) Management fees*** (after fee waivers)............................. .90% .90% .85% .85% .00%*** .00%*** Rule 12b-1 distribution plan payments... .50% 1.00% .50% 1.00% .50% 1.00% Other expenses (after reimbursement).... .71% .72% .85% .87% .75%*** .74%*** ----- ----- ----- ----- ----- ----- Total fund operating expenses... 2.11% 2.62% 2.20% 2.72% 1.25% 1.74% ===== ===== ===== ===== ===== =====
- --------------- * Purchases of shares in an amount of $1 million or more are not subject to an initial sales charge. However, a contingent deferred sales charge of 1% applies to certain redemptions made within 18 months from the date such shares were purchased. See the Investor's Guide, under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." ** No fee will be charged for exchanges among The AIM Family of Funds; however, a $5 service fee may be charged for exchanges by accounts of market timers. *** If no fee waivers were projected on the INCOME FUND, management fees would be 0.70% and other expenses would have been 1.78% and 1.87% for the Class A shares and Class B shares, respectively. EXAMPLES. An investor in each of the Funds would pay the following expenses on a $1,000 investment in Class A shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of each time period:
AGGRESSIVE GROWTH GROWTH INCOME FUND FUND FUND ---- ---- ---- 1 year........................................ $ 68 $ 69 $ 60 3 years....................................... $110 $113 $ 85 5 years....................................... $156 $160 $113 10 years...................................... $280 $289 $191
The examples above assume payment of a sales charge at the time of purchase; actual expenses may vary for purchases of $1 million or more which are made at net asset value and subject to a contingent deferred sales charge for 18 months following the date such shares were purchased. 4 96 An investor in each of the Funds would pay the following expenses on a $1,000 investment in Class B shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of each time period:
AGGRESSIVE GROWTH GROWTH INCOME FUND FUND FUND ---- ---- ---- 1 year........................................ $ 77 $ 78 $ 68 3 years....................................... $111 $114 $ 85 5 years....................................... $159 $164 $114 10 years...................................... $283* $293* $192*
An investor in each of the Funds would pay the following expenses on the same $1,000 investment in Class B shares, assuming no redemption at the end of each time period:
AGGRESSIVE GROWTH GROWTH INCOME FUND FUND FUND ---- ---- ---- 1 year...................................... $ 27 $ 28 $ 18 3 years..................................... $ 81 $ 84 $ 55 5 years..................................... $139 $144 $ 94 10 years.................................... $283* $293* $192*
- --------------- * Reflects the conversion to Class A shares eight years after purchase; therefore years nine and ten reflect Class A expenses. As a result of 12b-1 fees, a long-term shareholder may pay more than the economic equivalent of the maximum front-end sales charges permitted by rules of the National Association of Securities Dealers, Inc. Given the maximum front-end sales charge applicable to Class A shares and the Rule 12b-1 fees applicable to Class A shares and Class B shares, it is estimated that it would require a substantial number of years to exceed the maximum permissible front-end sales charges. THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF A PARTICULAR FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In addition, while the examples assume a 5% annual return, a Fund's actual performance will vary and may result in an actual return that is greater or less than 5%. The examples assume reinvestment of all dividends and distributions and that the percentage amounts for total fund operating expenses remain the same for each year. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Shown below are per share income and capital changes for a Class A share and Class B share of each of the Funds for the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994. The information has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified reports on the Funds' financial statements and the related notes appear in the Statement of Additional Information. AIM GLOBAL AGGRESSIVE GROWTH FUND
CLASS A CLASS B ------------------------------ ---------------------------- PERIOD PERIOD SEPTEMBER 15, SEPTEMBER 15, YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1995 1994 1995 1994 ----------- ------------- ----------- ------------- Net asset value, beginning of period....... $ 10.22 $ 10.00 $ 10.21 $ 10.00 Income from investment operations: Net investment income................. (0.09)(a) -- (0.14)(a) -- Net gains or losses on securities (both realized and unrealized)...... 2.96 0.22 2.95 0.21 --------- ------- --------- ------- Total from investment operations...... 2.87 0.22 2.81 0.21 --------- ------- --------- ------- Less distributions: Dividends from net investment income.............................. -- -- -- -- Distributions from capital gains...... -- -- -- -- --------- ------- --------- ------- Total distributions................... -- -- -- -- --------- ------- --------- ------- Net asset value, end of period............. $ 13.09 $ 10.22 $ 13.02 $ 10.21 ========= ======= ========= ======= Total return(b)............................ 28.08% 2.20% 27.52% 2.10% ========= ======= ========= ======= Ratio/supplemental data: Net assets, end of period (000s omitted).............................. $ 186,029 $18,410 $ 118,199 $ 6,201 ========= ======= ========= ======= Ratio of expenses to average net assets................................ 2.11%(c) 2.02%(d) 2.62%(e) 2.54%(d) ========= ======= ========= ======= Ratio of net investment income (loss) to average net assets.................... (0.68)%(c) 0.27%(d) (1.19)%(e) (0.25)%(d) ========= ======= ========= ======= Portfolio turnover rate.................. 64% 2% 64% 2% ========= ======= ========= =======
(See notes on following page) 5 97 - --------------- (a) Calculated using average share outstanding. (b) Does not deduct sales charges and for periods less than one year; total returns are not annualized. (c) Ratios are based on average net assets of $80,557,274. (d) Annualized. After fee waivers and expense reimbursements. (e) Ratios are based on average net assets of $42,353,541. AIM GLOBAL GROWTH FUND
CLASS A CLASS B ---------------------------- ---------------------------- PERIOD PERIOD SEPTEMBER 15, SEPTEMBER 15, YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1995 1994 1995 1994 ----------- ------------- ----------- ------------- Net asset value, beginning of period............ $ 10.23 $ 10.00 $ 10.22 $ 10.00 Income from investment operations: Net investment income (loss)............... (0.02) -- (0.04) -- Net gains or losses on securities (both realized and unrealized)................. 2.11 0.23 2.08 0.22 --------- ------- --------- ------- Total from investment operations........... 2.09 0.23 2.04 0.22 --------- ------- --------- ------- Less distributions: Dividends from net investment income....... (0.004) -- -- -- Distributions from capital gains........... -- -- -- -- --------- ------- --------- ------- Total distributions........................ (0.004) -- -- -- --------- ------- --------- ------- Net asset value, end of period.................. $ 12.32 $ 10.23 $ 12.26 $ 10.22 ========= ======= ========= ======= Total return(a)................................. 20.48% 2.30% 19.96% 2.20% ========= ======= ========= ======= Ratio/supplemental data: Net assets, end of period (000s omitted)...... $ 23,754 $ 3,093 $ 17,157 $ 1,277 ========= ======= ========= ======= Ratio of expenses to average net assets....... 2.12%(b) 1.95%(c) 2.64%(d) 2.51%(c) ========= ======= ========= ======= Ratio of net investment income (loss) to average net assets......................... (0.28)%(b) 0.10%(c) (0.79)%(d) (0.47)%(c) ========= ======= ========= ======= Portfolio turnover rate....................... 79% 6% 79% 6% ========= ======= ========= =======
- --------------- (a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) Ratios are based on average net assets of $10,051,749. Ratios of expenses and net investment income (loss) to average net assets before fee waivers and expense reimbursements are 2.98% and (1.14)%, respectively. (c) Annualized. (d) Ratios are based on average net assets of $6,993,129. Ratios of expenses and net investment income (loss) to average net assets before fee waivers and expense reimbursements are 3.38% and (1.54)%, respectively. 6 98 AIM GLOBAL INCOME FUND
CLASS A CLASS B ------------------------------ ------------------------------ PERIOD PERIOD SEPTEMBER 15, SEPTEMBER 15, YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1995 1994 1995 1994 ----------- ------------- ----------- ------------- Net asset value, beginning of period..... $ 10.02 $ 10.00 $ 10.01 $ 10.00 Income from investment operations: Net investment income............... 0.79 0.08 0.74 0.07 Net gains or losses on securities (both realized and unrealized).... 0.75 0.01 0.75 0.01 ------- ------- ------- ------- Total from investment operations.... 1.54 0.09 1.49 0.08 ------- ------- ------- ------- Less distributions: Dividends from net investment income............................ (0.82) (0.07) (0.77) (0.07) ------- ------- ------- ------- Total distributions................. (0.82) (0.07) (0.77) (0.07) ------- ------- ------- ------- Net asset value, end of period........... $ 10.74 $ 10.02 $ 10.73 $ 10.01 ======= ======= ======= ======= Total return(a).......................... 16.07% 0.93% 15.56% 0.79% ======= ======= ======= ======= Ratio/supplemental data: Net assets, end of period (000s omitted)............................ $10,004 $ 2,661 $ 4,207 $ 362 ======= ======= ======= ======= Ratio of expenses to average net assets.............................. 1.25%(b) 1.25%(d) 1.74%(c) 1.73%(d) ======= ======= ======= ======= Ratio of net investment income to average net assets.................. 7.38%(b) 6.01%(d) 6.88%(c) 3.59%(d) ======= ======= ======= ======= Portfolio turnover rate................ 128% 6% 128% 6% ======= ======= ======= =======
- --------------- (a) Does not deduct sales charges and for periods less than one year; total returns are not annualized. (b) Ratios are based on average net assets of $5,923,634. Ratios of expenses and net investment income to average net assets before fee waivers and expense reimbursements are 3.03% and 5.59%, respectively. (c) Ratios are based on average net assets of $1,945,925. Ratios of expenses and net investment income to average net assets before fee waivers and expense reimbursements are 3.57% and 5.05%, respectively. (d) Annualized - -------------------------------------------------------------------------------- PERFORMANCE The performance of each Fund may be quoted in advertising in terms of total return, and the performance of the INCOME FUND may also be quoted in terms of yield. All advertisements of a Fund will disclose the maximum sales charge (including deferred sales charge) to which investments in shares of the Funds may be subject. Each Fund will also include performance data on Class A and Class B shares in any advertisement or promotional material which includes Fund performance data. 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 Funds. Standardized total return for Class A shares reflects the deduction of the Fund's maximum initial 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. Each Fund's total return shows its overall change in value, including changes in share price assuming that all the Fund's dividends and capital gain distributions are reinvested and that all charges and expenses are deducted. A cumulative total return reflects a 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 A 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, a Fund may separate its cumulative and average annual returns into income results and capital gains or losses. Yield is computed in accordance with a standardized formula described in the Statement of Additional Information and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, the yield information may not 7 99 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 share of the Fund, expressed as an annualized percentage of the maximum offering price per share of the Fund. It is a function of the type and quality of a Fund's investments, its maturity and its operating expense ratio. From time to time and in its discretion, AIM may waive all or a portion of its advisory fees and/or assume certain expenses of any Fund. Such a practice will have the effect of increasing the Fund's yield and total return. The performance of each Fund will vary from time to time, and past results are not necessarily representative of future results. Each 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 as well as by general market conditions. A shareholder's investment in any of the Funds is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in a Fund. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVES AND POLICIES Each of the Funds has its own investment objective and investment program as discussed herein. The Funds' investment objective(s) are fundamental policies that cannot be changed without shareholder approval. There can, of course, be no assurance that any Fund will in fact achieve its objective(s). The Board of Directors of the Company reserves the right to change any of the investment policies, strategies or practices of any of the Funds, as described in this Prospectus and in the Statement of Additional Information, without shareholder approval, except in those instances where shareholder approval is expressly required. AIM GLOBAL AGGRESSIVE GROWTH FUND. The investment objective of the AGGRESSIVE GROWTH FUND is to provide above-average long-term growth of capital appreciation. The Fund seeks to achieve its objective by investing in a portfolio of global equity securities including securities of selected companies with relatively small market capitalization. The AGGRESSIVE GROWTH FUND will invest in companies throughout the world which AIM believes possess exceptional growth potential that should enhance such companies' prospects for future growth in earnings. As a result of this policy, the market prices of many of the securities purchased and held by the AGGRESSIVE GROWTH FUND may fluctuate widely. Any income received from securities held by the Fund will be incidental, and an investor should not consider a purchase of shares of the AGGRESSIVE GROWTH FUND as equivalent to a complete investment program. The AGGRESSIVE GROWTH FUND will emphasize investment in small to medium-sized companies, but its strategy does not preclude investment in large, seasoned companies which in AIM's judgment possess superior potential returns similar to companies with formative growth profiles. The Fund will also invest in established smaller companies (under $1 billion in market capitalization) which in AIM's judgment offer exceptional value based upon substantially above average earnings growth potential relative to market value. Investors should realize that equity securities of small to medium-sized companies may involve greater risk than is associated with investing in more established companies. Small to medium-sized companies often have limited product and market diversification, fewer financial and managerial resources or may be dependent on a few key managers. Also, because smaller companies normally have fewer shares outstanding than larger companies and trade less frequently, it may be more difficult for the Fund to buy and sell shares without an unfavorable impact on prevailing market prices. Some of the companies in which the Fund may invest may distribute, sell or produce products which have recently been brought to market. Any of the foregoing may change suddenly and have an immediate impact on the value of the Fund's investments. Furthermore, whenever the securities markets have experienced rapid price changes due to national economic trends, secondary growth securities have historically been subject to exaggerated price changes. AIM GLOBAL GROWTH FUND. The investment objective of the GROWTH FUND is to provide long-term growth of capital. The Fund seeks to achieve its objective by investing in a portfolio of global equity securities of selected companies that are considered by AIM to have strong earnings momentum. Current income will not be an important criterion of investment selection, and any such income should be considered incidental. In managing both the AGGRESSIVE GROWTH FUND and the GROWTH FUND, AIM seeks to apply to each of the diversified portfolios of equity securities the same investment strategy which it applies to several of its other managed portfolios which have similar investment objectives but which invest primarily in United States equities markets. Each of the AGGRESSIVE GROWTH FUND and the GROWTH FUND will utilize to the extent practicable a fully managed investment policy providing for the selection of securities which meet certain quantitative standards determined by AIM. AIM reviews carefully the earnings history and prospects for growth of each company considered for investment by each of the two Funds. It is anticipated that common stocks will be the principal form of investment of the AGGRESSIVE GROWTH FUND and the GROWTH FUND. The portfolio of each of the two Funds is primarily comprised of securities of two basic categories of companies: (a) "core" companies, which AIM considers to have experienced above-average and consistent long-term growth in earnings and to have excellent prospects for outstanding future growth, and (b) "earnings acceleration" companies which AIM believes are currently enjoying a dramatic increase in earnings. Under normal market conditions, the AGGRESSIVE GROWTH FUND and the GROWTH FUND will invest primarily in marketable equity securities (including common and preferred stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company)) of companies which, with their predecessors, have been in continuous operation for three years or more and which are listed on a recognized securities exchange or traded in an over-the-counter market. The Fund may satisfy the foregoing 8 100 requirement in part through the ownership of securities which are convertible into, or exchangeable for, common stocks, or by investment in the securities of issuers which are in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. If a particular foreign company meets the quantitative standards determined by AIM, its securities may be acquired by a Fund regardless of the location of the company or the percentage of the Fund's investments in the company's country or region. However, AIM will also consider other factors in making investment decisions for these Funds, including such factors as the prospects for relative economic growth among countries or regions, economic and political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. Under normal market conditions, the AGGRESSIVE GROWTH FUND and the GROWTH FUND will maintain at least 20% of their respective total assets in U.S. dollar denominated securities. AIM recognizes that often there is less public information about foreign companies than is available in reports supplied by domestic companies, that foreign companies are not subject to uniform accounting and financial reporting standards, and that there may be greater delays experienced by a Fund in receiving financial information supplied by foreign companies than comparable information supplied by domestic companies. In addition, the value of a Fund's investments that are denominated in a foreign currency may be affected by changes in currency exchange rates. For these and other reasons, AIM from time to time may encounter greater difficulty applying its disciplined stock selection strategy to an international equity investment portfolio than to a portfolio of domestic equity securities. See "Risk Factors -- Foreign Securities." The AGGRESSIVE GROWTH FUND and the GROWTH FUND each will normally invest at least 65% of their respective total assets in marketable equity securities of foreign and domestic issuers, including common and preferred stock. As a temporary defensive measure, and without regard to each Fund's investment objective, AIM may invest all or substantially all of the assets of the AGGRESSIVE GROWTH FUND or the GROWTH FUND in cash or high-grade short-term securities, including repurchase agreements, denominated either in U.S. dollars or foreign currencies. To the extent a Fund assumes a temporary defensive posture and holds cash or invests in high-grade short-term securities, it will not be pursuing its investment objective. Under normal circumstances, neither the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will invest more than 35% of the value of its total assets in high-grade short-term securities, including repurchase agreements. The AGGRESSIVE GROWTH FUND and the GROWTH FUND will each emphasize investment in companies in developed countries such as the United States, the countries of Western Europe and certain countries in the Pacific Basin (such as Japan, Hong Kong and Australia). The Funds may also invest in the securities of companies located in developing countries (such as Turkey, Poland and Mexico) in various regions of the world. A "developing country" is a country in the initial stages of its industrial cycle. Under normal market conditions, the assets of each Fund will be invested in the securities of companies located in at least four different countries, including the United States. Investment in the equity markets of developing countries involves exposure to securities exchanges that may have substantially less trading volume and greater price volatility, economic structures that are less diverse and mature, and political systems that may be less stable than the equity markets of developed countries. See "Risk Factors -- Emerging Markets and Developing Countries." AIM GLOBAL INCOME FUND. The INCOME FUND'S primary investment objective is to provide a high level of current income. As a secondary objective the Fund seeks preservation of principal and capital appreciation. The Fund seeks to achieve its objectives by investing in a portfolio of U.S. and foreign government and corporate debt securities. The INCOME FUND intends to invest in (i) foreign government securities, (ii) securities issued by supranational organizations (such as the World Bank), (iii) foreign and domestic corporate debt securities, including lower-rated or unrated U.S. dollar-denominated high yield corporate debt securities, commonly known as "junk bonds" and (iv) U.S. Government securities, including U.S. Government Agency mortgage-backed securities. The INCOME FUND is a non-diversified portfolio, which means that 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. The INCOME FUND will, however, invest no more than 5% of its total assets in the securities of any one corporate issuer, and will invest no more than 25% of its total assets in securities of any one foreign government or supranational issuer. The INCOME FUND will generally invest in the securities of issuers located in at least four countries, including the United States, although for defensive purposes, it may from time to time invest 100% of its total assets in securities of U.S. issuers, which may include U.S. Government securities, or money market securities with maturities of 397 days or less. Under normal market conditions, the INCOME FUND will maintain at least 20% of total assets in securities of U.S. issuers. The INCOME FUND may invest in securities issued by governments and companies throughout the world, but expects that it will invest primarily in securities of issuers in industrialized countries with established securities markets, such as Western European countries, Canada, Japan, Australia, New Zealand and the United States. The INCOME FUND may, however, invest up to 20% of its total assets in securities of issuers in developing countries such as Turkey, Poland and Mexico. Although the INCOME FUND will invest at least 65% of its total assets in debt securities of foreign and domestic issuers, it may invest up to 10% of its total assets in common stocks, preferred stocks, convertible securities and similar equity securities of foreign and domestic issuers. 9 101 The INCOME FUND may invest less than 35% of its total assets in high yield debt securities (i.e., "junk bonds"). Such securities, at the time of purchase, are rated below investment grade or are determined by AIM to be of non-investment grade quality. (For a description of the various rating categories of corporate debt securities in which the INCOME FUND may invest, see Appendix A to this Prospectus.) During the fiscal year ended October 31, 1995, the percentage of the INCOME FUND'S average annual assets, calculated on a dollar weighted basis, which was invested in securities within each rating category of Moody's (as described in Appendix A), and in unrated securities determined by AIM to be of comparable quality, was as follows:
INCOME FUND -------- Aaa............................................................................... 58.05% Aa................................................................................ 5.80% A................................................................................. 8.24% Baa............................................................................... 3.87% Ba................................................................................ 5.19% B................................................................................. 17.21% Caa............................................................................... 1.34% Ca................................................................................ 0.00% C................................................................................. 0.00% D................................................................................. 0.00% Unrated........................................................................... 0.30% -------- Total Average Annual Assets............................................. 100.0%
Securities issued by the U.S. Treasury (notes, bonds and bills) are supported by the full faith and credit of the United States government, while certain securities issued or guaranteed by agencies or instrumentalities of the U.S. Government may not be supported by the full faith and credit of the United States. These agency securities include both obligations supported by the right of the issuer to borrow from the U.S. Treasury (such as obligations of the Federal Home Loan Bank) and obligations supported by the credit of the agency or instrumentality (such as Federal National Mortgage Association bonds.) Similarly, obligations of foreign governments include obligations issued by national, provincial, state or other governments that have taxing authority over their local populations, or by agencies of such governments that may be supported by the full faith and credit of the governmental entity, or solely by the credit of such agency. Supranational organizations include organizations formed and supported by governmental entities to promote economic growth and development, or international banking institutions, such as the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the Inter-American Development Bank. Supranational organizations are generally formed and supported by the capital contributions of governmental entities and, in their lending and other activities, carry out the particular purposes designated by their member governmental entities. The value of the debt securities in which the INCOME FUND invests will change in response to interest rate changes and other factors. During periods of rising interest rates, the values of outstanding long-term debt securities will generally decline, and during periods of falling interest rates, the values of such securities will generally rise. Such changes will affect the net asset value per share of the INCOME FUND. The INCOME FUND generally expects the average portfolio maturity of the Fund will be in the range of 4 to 10 1/2 years. Longer-term fixed income securities tend to be subject to greater fluctuations in price than shorter-term securities. For a discussion of certain risks associated with investments in high yield securities (i.e., "junk bonds"), foreign securities and non-diversified funds, see "Risk Factors" in this Prospectus. For a further discussion of the intended investment strategies of the AGGRESSIVE GROWTH FUND, the GROWTH FUND and the INCOME FUND, see "Hedging Strategies" and "Other Investment Techniques" in this Prospectus. - -------------------------------------------------------------------------------- HEDGING STRATEGIES Each of the Funds may, at such times as AIM deems appropriate and consistent with the investment objective of the Fund, write (sell) covered put or call options on its portfolio securities. Each of the Funds may also purchase and sell (i) options on domestic and foreign securities and currencies, (ii) stock index options, (iii) stock, currency and interest rate futures, (iv) options on stock, currency, stock index and interest rate futures and (v) foreign forward currency exchange contracts. The purpose of such transactions is to hedge against changes in the market value of a Fund's portfolio securities caused by fluctuating interest rates, fluctuating currency exchange rates and changing market conditions, and to close out or offset existing positions in such options or futures contracts as described below. None of the Funds will engage in such transactions for speculative purposes. OPTIONS. Each Fund may purchase options issued by the Options Clearing Corporation. Such options give a Fund the right for a fixed period of time to sell (in the case of purchase of a put option) or to buy (in the case of purchase of a call option) the number of units of the underlying security or obligation covered by the option at a fixed or determinable exercise price. Buying a put option hedges against the risk of a market decline. Buying a call option hedges against a market advance. Prior to its expiration, a put or call 10 102 option may be sold in a closing sale transaction. Gain or loss from such a sale will depend on whether the amount received is more or less than the premium paid for the option plus the related transaction costs. Each Fund also may write (sell) put or call options, but only if such options are covered and remain covered as long as the Fund is obligated as a writer of the option (seller). A call option is "covered" if a Fund owns the underlying security covered by the call. A put option is "covered" if a Fund segregates with its custodian cash, U.S. Treasury bills or other high-grade short-term debt obligations with a value equal to the exercise price of the put option. If a "covered" call or put option expires unexercised, the writer realizes a gain in the amount of the premium received. If the covered call option is exercised, the writer realizes either a gain or loss from the sale or purchase of the underlying security with the proceeds to the writer being increased by the amount of the premium. If the covered put option is exercised, the writer's cost of purchasing the underlying security is reduced by the amount of the premium received from the initial sale of the put option. Prior to its expiration, a put or call option may be closed out by means of a purchase of an identical option. Any gain or loss from such transaction will depend on whether the amount paid is more or less than the premium received for the option plus related transaction costs. Each Fund may also purchase and write options in combination with each other to adjust the risk and return characteristics of certain portfolio security positions. This technique is commonly referred to as a "straddle." Options are subject to certain risks, including the risk of imperfect correlation between the option and a Fund's other investments and the risk that there might not be a liquid secondary market for the option when the Fund seeks to hedge against adverse market movements. In general, options whose strike prices are close to their underlying securities' current values will have the highest trading value, while options whose strike prices are further away may be less liquid. The liquidity of options may also be affected if options exchanges impose trading halts, particularly when markets are volatile. None of the Funds will write options if, immediately after such sale, the aggregate value of the securities or obligations underlying the outstanding options exceeds 25% of the Fund's total assets. None of the Funds will purchase put options (including options on securities indices and futures contracts) if, at the time of investment, the aggregate premiums paid for such options will exceed 5% of the Fund's total assets. FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held by each Fund may be denominated in foreign currencies, the value of their respective portfolios will be affected by changes in exchange rates between currencies (including the U.S. dollar), as well as by changes in the market value of the securities themselves. Each Fund may enter into interest rate, exchange rate and currency futures contracts and related options, or it may purchase or sell stock index futures contracts and related options in order to mitigate the effects of such changes. Futures contracts obligate the seller to deliver a specific type of security called for in the contract, at a specified future time and for a specified price. Futures contracts are traded on U.S. and foreign exchanges and generally contain standardized strike prices and expiration dates. Certain futures contracts may be satisfied by actual delivery of the securities or, more typically, by entering into an offsetting transaction. An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a position in a futures contract. In addition to purchasing or selling futures contracts on currencies and specific securities, interest rates and exchange rates, each Fund may purchase or sell stock index futures contracts. A stock index futures contract is an agreement to take or make delivery of an amount of cash based on the difference between the value of a stock index at the beginning and at the end of the contract period. No more than 5% of each Fund's total assets will be committed to initial margin deposits required pursuant to futures contracts. Percentage investment limitations on each Fund's investment in options on futures contracts are set forth above under "Options." Although each Fund is authorized to invest in futures contracts and related options with respect to foreign securities, stock indices, interest rates and currencies, it will limit such investments to those which have been approved by the Commodity Futures Trading Commission for investment by United States investors. In attempting to manage its currency exposure, each Fund may buy and sell currencies, either in the spot (cash) market or in the forward market (through forward contracts generally expiring within one year). Each Fund may also enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, a Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." In addition to hedging specific securities transactions, the Funds may also generally hedge their respective holdings denominated in a particular currency. This practice is sometimes referred to as "position hedging." The Funds may not position hedge with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in any such Fund's portfolio denominated or quoted in that particular foreign currency. Unlike futures contracts, forward contracts are generally individually negotiated and privately traded. A forward contract obligates the seller to sell a specific security or currency at a specified price on a future date, which may be any fixed number of days from the date of the contract. Each Fund may enter into transaction hedging forward contracts with respect to all or a substantial portion of its trades. There are risks associated with the use of futures and forward contracts and options thereon for hedging purposes. During certain market conditions, sales of futures contracts may not completely offset a decline or rise in the value of a Fund's portfolio securities or 11 103 currency against which the futures or forward contract or options thereon are being sold. In the futures and options on futures markets, it may not always be possible to execute a buy or sell order at the desired price, or to close out an open position due to market conditions, limits on open positions and/or daily price fluctuations. Risks in the use of futures contracts and options thereon also result from the possibility that changes in the market value of securities or currency may differ substantially from the changes anticipated by a Fund when hedged positions were established. Successful use of futures and forward contracts and options thereon is dependent upon AIM's ability to predict correctly movements in the direction of the applicable markets. No assurance can be given that AIM's judgment in this respect will be correct. Accordingly, the Funds may lose the expected benefit of futures and forward transactions and options thereon if markets move in a manner unanticipated by AIM. - -------------------------------------------------------------------------------- OTHER INVESTMENT TECHNIQUES Each of the Funds has the flexibility to invest, to the extent described below, in a variety of instruments designed to enhance its investment capabilities. Each of the Funds may invest in money market obligations, foreign securities, repurchase agreements, reverse repurchase agreements, illiquid securities, Rule 144A securities, ADRs and EDRs; the INCOME FUND may invest in U.S. Government Agency Mortgage-Backed Securities; and each of the Funds may purchase or sell securities on a delayed delivery or when-issued basis, may borrow money, may lend portfolio securities and make short sales "against the box." A short sale is "against the box" to the extent that the Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment of any further consideration. MONEY MARKET OBLIGATIONS. When deemed appropriate for temporary or defensive purposes, each of the Funds may hold cash or cash equivalent Money Market Obligations. The term "Money Market Obligations" includes a broad range of U.S. Government and foreign government obligations, and bank and commercial instruments that may be available in the money markets. Such obligations include U.S. Treasury obligations and repurchase agreements secured by such obligations. The term also includes investments in bankers' acceptances, certificates of deposit, repurchase agreements, time deposits and commercial paper, and U.S. Government direct obligations and U.S. Government agencies' securities. Bankers' acceptances, certificates of deposit and time deposits may be purchased from U.S. or foreign banks. See the Statement of Additional Information for more information on Money Market Obligations. In addition to the Money Market Obligations described above, as a temporary or defensive measure, and without regard to their respective investment objectives, each Fund may also purchase foreign currencies in the form of bank deposits as well as other foreign money market instruments, including, but not limited to, bankers' acceptances, certificates of deposit, commercial paper, short-term government and corporate obligations and repurchase agreements. U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. The INCOME FUND may invest in U.S. Government Agency Mortgage-Backed Securities. These securities are obligations issued or guaranteed by the United States Government or by one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC"). U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through to investors of their pro-rata share of monthly payments (including any principal prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and the servicers of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC Gold Participation Certificates now guarantee timely payment of monthly principal reductions. Although their close relationship with the U.S. Government is believed to make them high-quality securities with minimal credit risks, the U.S. Government is not obligated by law to support either FNMA or FHLMC. However, historically there have not been any defaults of FNMA or FHLMC issues. See Appendix B for a more complete description of these securities. Mortgage-backed securities consist of interests in underlying mortgages generally with maturities of up to thirty years. However, due to early unscheduled payments of principal on the underlying mortgages, the securities have a shorter average life and, therefore, less volatility than a comparable thirty-year bond. The value of U. S. Government Agency Mortgage-Backed Securities, like other traditional debt instruments, will tend to decline as interest rates rise and increase as interest rates decline. REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements with institutions believed by the Company's Board of Directors to present minimal credit risk. A repurchase agreement is an instrument under which the Fund acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the sellers' failure to repurchase the obligation in accordance with the terms of the agreement), a Fund could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Fund seeks to enforce its rights thereto; (b) possible reduced levels of income and lack of access to income during this period; and (d) expenses of enforcing its rights. Repurchase agreements are considered to be loans by the Fund under the Investment Company Act of 1940, as amended (the "1940 Act"). Repurchase agreements will be secured by U.S. Treasury securities, U.S. Government agency securities (including, but not limited to, those which have been stripped of their 12 104 interest payments and mortgage-backed securities) and commercial paper. For additional information on the use of repurchase agreements, see the Statement of Additional Information. REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase agreements. A reverse repurchase agreement is the same as a repurchase agreement, except that a Fund acts as the seller and repurchaser of the subject security. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. A Fund will enter into a reverse repurchase agreement only when the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Any investment gains made by a Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the investment performance resulting from the investment of borrowings obtained through reverse repurchase agreements fails to cover the cost of such borrowings to a Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. The AGGRESSIVE GROWTH FUND and the GROWTH FUND currently intend to enter into reverse repurchase agreements only for temporary or emergency purposes and not as a means of increasing income. The INCOME FUND may enter into reverse repurchase agreements to enhance portfolio returns. See "Borrowing." LENDING OF PORTFOLIO SECURITIES. Each Fund may from time to time lend securities from their respective portfolios, with a value not exceeding 33-1/3% of its total assets, to banks, brokers and other financial institutions, and receive in return collateral in the form of cash or securities issued or guaranteed by the U.S. Government which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. During the period of the loan, a Fund receives the income on both the loaned securities and the collateral and thereby increases its yield. In the event that the borrower defaults on its obligation to return loaned securities because of insolvency or otherwise, a Fund could experience delays and costs in gaining access to the collateral and could suffer a loss to the extent that the value of the collateral falls below the market value of the loaned securities. DELAYED DELIVERY AGREEMENTS AND WHEN-ISSUED SECURITIES. Each Fund may enter into delayed delivery agreements and may purchase securities on a "when issued" basis. Delayed delivery agreements are commitments by a Fund to dealers or issuers to acquire securities beyond the customary settlement date for such securities. These commitments fix the payment price and interest rate to be received on the investment. Delayed delivery agreements will not be used as a speculative or leverage technique. Rather, from time to time, AIM can anticipate that cash for investment purposes will result from scheduled maturities of existing portfolio instruments or from net sales of shares of the Fund and may enter into delayed delivery agreements to assure that the Fund will be as fully invested as possible in instruments meeting its investment objective. Debt securities are sometimes offered on a "when-issued" basis; that is, the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued (normally within forty-five days after the date of the transaction). The payment obligation and the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. The Funds will only make commitments to purchase such debt securities with the intention of actually acquiring the securities, but a Fund may sell these securities before the settlement date if it is deemed advisable. If a Fund enters into a delayed delivery agreement or purchases a when-issued security, the Fund will direct its custodian bank to segregate cash or other high grade securities (including Money Market Obligations) in an amount equal to its delayed delivery agreements or when-issued commitments. If the market value of such securities declines, additional cash or securities will be segregated on a daily basis so that the market value of the account will equal the amount of such Fund's delayed delivery agreements and when-issued commitments. To the extent that funds are segregated, they will not be available for new investment or to meet redemptions. Investment in securities on a when-issued basis and use of delayed delivery agreements may increase a Fund's exposure to market fluctuation, or may increase the possibility that the Fund will incur a short-term loss, if the Fund must engage in portfolio transactions in order to honor a when-issued commitment or accept delivery of a security under a delayed delivery agreement. The Funds will employ techniques designed to minimize these risks. No additional delayed delivery agreements or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's net assets would become so committed. DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage prepayment risks, the INCOME FUND may engage in dollar roll transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, a Fund sells a mortgage security held in the portfolio to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the sold security. Dollar roll transactions involve the risk that the market value of the securities retained by a Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities under 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 13 105 restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. See "Borrowing," below for the applicable limitation on dollar roll transactions. BORROWING. Each of the Funds may borrow money to a limited extent from banks (including the Funds' custodian bank) for temporary or emergency purposes subject to the limitations under the 1940 Act. The Funds will restrict borrowings, reverse repurchase agreements and dollar roll transactions to an aggregate of 33-1/3% of each Fund's respective total assets at the time of the transaction. Neither the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will purchase additional securities when any borrowings from banks exceed 5% of each Fund's respective total assets. The INCOME FUND may engage in reverse repurchase agreement transactions and dollar roll transactions to enhance portfolio returns. Such transactions are considered borrowings under the 1940 Act. Any investment gains made by the INCOME FUND with the borrowed monies in excess of interest paid by the Fund will cause the net asset value of the Fund's shares to rise faster than would otherwise be the case. On the other hand, if the investment performance of the additional securities purchased with the proceeds of such borrowings fails to cover the interest paid by the money borrowed by the Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. This speculative factor is known as "leveraging." SHORT SALES. Each Fund may make short sales "against the box." A short sale is a transaction in which a party sells a security it does not own in anticipation of a decline in the market value of that security. A short sale is "against the box" to the extent that a Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment of any further consideration. The Funds will enter into such transactions only to the extent the aggregate value of all securities sold short does not represent more than 10% of each Fund's respective assets at any given time. ILLIQUID SECURITIES AND RULE 144A SECURITIES. Each Fund will not invest more than 15% of its assets in illiquid securities, including restricted securities which are illiquid. Although securities which may be resold only to "qualified institutional buyers" in accordance with the provisions of Rule 144A under the Securities Act of 1933 are unregistered securities, the Funds may purchase Rule 144A securities without regard to the 15% limitation described above provided that a determination is made that such securities have a readily available trading market. AIM will determine the liquidity of Rule 144A securities under the supervision of the Company's Board of Directors. The liquidity of Rule 144A securities will be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, each Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its assets in illiquid securities. See the Statement of Additional Information. - -------------------------------------------------------------------------------- RISK FACTORS There can be no assurance that each Fund's investment objective will be attained. Each Fund is designed for investors seeking international diversification, and is not intended as a complete investment program. In addition, investing in securities of foreign companies generally involves greater risks than investing in securities of domestic companies. The INCOME FUND may also invest in high yield securities (i.e., "junk bonds"), which entail certain risks. Investors should consider carefully the following special factors before investing in a Fund. FOREIGN SECURITIES. The following considerations are risk factors associated with the Funds' investments in foreign securities: CURRENCY RISK. The value of a Fund's foreign investments may be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security generally decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and tends to increase when the value of the U.S. dollar falls against such currency. POLITICAL AND ECONOMIC RISK. The economies of many of the countries in which a Fund may invest are not as developed as the United States economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of a Fund's investments. REGULATORY RISK. Foreign companies are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less public information available about foreign securities than is available about domestic securities. Foreign companies are not subject to accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by a Fund may be reduced by withholding tax at the source which would reduce dividend income payable to the Fund's shareholders. MARKET RISK. The securities markets in many of the countries in which a Fund invests will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. Transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States. Further, the settlement period of securities transactions in foreign markets may be longer than in domestic markets. These considerations generally are more of a concern in developing countries. For example, the possibility of 14 106 revolution and the dependence on foreign economic assistance may be greater in these countries than in developed countries. The management of the Funds seeks to mitigate the risks associated with these considerations through diversification and active professional management. NON-INVESTMENT GRADE DEBT SECURITIES (INCOME FUND ONLY). The INCOME FUND may invest in non-investment grade debt securities, commonly known as "junk bonds." While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than higher-rated securities. Economic downturns tend to disrupt the market for junk bonds and adversely affect their values. Such economic downturns may be expected to result in increased price volatility for junk bonds and of the value of shares of the Fund, and increased issuer defaults on junk bonds. In addition, many issuers of junk bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, junk bonds are subordinated to the prior payment of senior indebtedness, which potentially limits a Fund's ability to fully recover principal or to receive payments when senior securities are subject to a default. The credit rating of a debt security does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. Junk bonds have speculative characteristics which are likely to increase in number and significance with each successive lower rating category. Credit ratings evaluate the safety of principal and interest payments, not market value risk of high yield bonds. Also, since credit rating agencies may fail to timely change the credit ratings to reflect subsequent events, AIM continuously monitors the issuers of high yield bonds in the INCOME FUND'S portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to attempt to assure the bonds' liquidity so that the INCOME FUND can meet redemption requests. The achievement of the INCOME FUND'S investment objective may be more dependent on AIM's own credit analysis than might be the case for a fund which invests in higher quality bonds. The INCOME FUND may retain a portfolio security whose rating has been changed. See Appendix A to this Prospectus -- "Description of Corporate Bond Ratings." When the secondary market for junk bonds becomes more illiquid, or in the absence of readily available market quotations for such securities, the relative lack of reliable objective data makes it more difficult for the directors to value a Fund's securities, and judgment plays a more important role in determining such valuations. Increased illiquidity in the junk bond market also may affect a Fund's ability to dispose of such securities at desirable prices. In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds without regard to their investment merits, thereby decreasing the asset base upon which the Fund's expenses can be spread and possibly reducing the Fund's rate of return. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments, than those of higher-rated debt securities. NON-DIVERSIFIED PORTFOLIO (INCOME FUND ONLY). The INCOME FUND is a non-diversified portfolio, which means that, with respect to 50% of its total assets, it may invest more than 5% of its assets in obligations of one issuer. (A diversified portfolio may not invest more than 5% of its assets in obligations of one issuer, with respect to 75% of its total assets.) Since the INCOME FUND may invest a greater percentage of its assets in securities of fewer issuers than a diversified portfolio, it may be subject to greater investment and credit risks than a diversified portfolio. EMERGING MARKETS AND DEVELOPING COUNTRIES. Investors should also be aware that the Funds may invest in companies located within emerging or developing countries. Investments in emerging markets or developing countries involve exposure to economic structures that are generally less diverse and mature and to political systems which can be expected to have less stability than those of more developed countries. Such countries may have relatively unstable governments, economies based on only a few industries, and securities markets which trade only a small number of securities. Historical experience indicates that emerging markets have been more volatile than the markets of more mature economies; such markets have also from time to time provided higher rates of return and greater risks to investors. AIM believes that these characteristics of emerging markets can be expected to continue in the future. In addition, throughout the countries commonly referred to as the Eastern Bloc, the lack of a capital market structure or market-oriented economy and the possible reversal of recent favorable economic, political and social events in some of those countries present greater risks than those associated with more developed, market-oriented Western European countries and markets. - -------------------------------------------------------------------------------- INVESTMENT RESTRICTIONS The following restrictions are matters of fundamental policy and may not be changed without approval of a Fund's shareholders. No Fund may: 1. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by the Fund. 2. Purchase a security if, as a result, 25% or more of the value of the Fund's total assets, taken at market value, would be invested in the securities of issuers having their principal business activities in the same industry. This restriction does not apply to obligations issued or guaranteed by the U.S. Government or by any of its agencies or instrumentalities but will apply to foreign government obligations unless the SEC permits their exclusion. 15 107 3. Borrow money, except that the Fund may borrow from banks (including the Fund's custodian bank) and enter into reverse repurchase agreements and dollar roll transactions (INCOME FUND only). With respect to the AGGRESSIVE GROWTH FUND and the GROWTH FUND, such permitted borrowings shall be used as a temporary defensive measure for extraordinary or emergency purposes. Permitted borrowings shall be in amounts not exceeding 33 1/3% of a Fund's total assets, taken at market value, and the Fund may pledge amounts of up to 20% of its total assets, taken at market value, to secure such borrowings. Whenever bank borrowings exceed 5% of the value of the total assets of the AGGRESSIVE GROWTH FUND or the GROWTH FUND, such Fund will not make any additional purchases of securities for investment purposes. Neither the AGGRESSIVE GROWTH FUND nor the GROWTH FUND will purchase a security if, as a result, with respect to 75% of the value of the Fund's respective total assets, taken at market value, more than 5% of the value of the Fund's total assets, taken at market value, would be invested in securities of any one issuer, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. The INCOME FUND will not purchase a security if, as a result, with respect to 50% of the value of the Fund's total assets taken at market value, more than 5% of the value of the Fund's total assets, taken at market value, would be invested in securities of any one issuer, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. A complete listing of investment restrictions applicable to the Funds, some of which may be changed by the Board of Directors without shareholder approval, is contained in the Statement of Additional Information. - -------------------------------------------------------------------------------- PORTFOLIO TURNOVER Any particular security will be sold, and the proceeds reinvested, whenever such action is deemed prudent from the viewpoint of a Fund's investment objectives, regardless of the holding period of that security. It is anticipated that the annual portfolio turnover rates of each of the AGGRESSIVE GROWTH FUND and the GROWTH FUND will not exceed 150% during each Fund's next fiscal year. It is anticipated that the annual portfolio turnover rate of the INCOME FUND will not exceed 125% during the Fund's next fiscal year. A higher rate of portfolio turnover may result in higher transaction costs, including brokerage commissions. Also, to the extent that higher portfolio turnover results in a higher rate of net realized capital gains to a Fund, the portion of the Fund's distributions constituting taxable capital gains may increase. - -------------------------------------------------------------------------------- MANAGEMENT The overall management of the business and affairs of the Funds are vested with the Company's Board of Directors. The Board of Directors approves all significant agreements between the Funds and persons or companies furnishing services to the Funds, including the investment advisory agreement with AIM, the administrative services agreement with AIM, the agreement with AIM Distributors regarding distribution of the Funds' shares, the agreements with State Street Bank and Trust Company as custodian and accounting agent, and the agreement with A I M Fund Services, Inc., as transfer agent. The day-to-day operations of the Funds are delegated to the officers of the Company and to AIM, subject always to the objective and policies of each Fund and to the general supervision of the Board of Directors. Certain directors and officers of the Company are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM Management is a holding company engaged in the financial services business. Information concerning the Board of Directors may be found in the Statement of Additional Information. INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046, serves as the investment advisor to each Fund pursuant to an investment advisory agreement, dated as of July 1, 1994 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 39 investment company portfolios. As of February 1, 1996, the total assets advised or managed by AIM or its affiliates were approximately $47.2 billion. AIM is a wholly-owned subsidiary of AIM Management. Under the terms of the Advisory Agreement, AIM supervises all aspects of each Fund's operations and provides investment advisory services to the Fund. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds. The Advisory Agreement also provides that, upon the request of the Company's Board of Directors, AIM may perform or arrange for certain accounting, shareholder servicing and other administrative services for each Fund which are not required to be performed by AIM under the Advisory Agreement. The Board of Directors has made such a request. As a result, AIM and the Company have entered into an Administrative Services Agreement dated as of July 1, 1994 (the "Administrative Services Agreement"), pursuant to which AIM is entitled to receive from each Fund reimbursement of its costs or such reasonable compensation as may be approved by the Company's Board of Directors for providing specified administrative services. Currently, AIM is reimbursed for the services of the Company's principal financial officer and his staff, and any expenses related to such services. In addition, pursuant to the terms of a Transfer Agency and Service Agreement, A I M Fund Services, Inc. ("AFS"), a wholly-owned subsidiary of AIM and a registered transfer agent, receives a fee for its provision of transfer agency, dividend distribution and disbursement and shareholder services to the Funds. 16 108 For a discussion of AIM's brokerage allocation policies and practices, see "Portfolio Transactions and Brokerage" in the Statement of Additional Information. In accordance with policies established by the directors, AIM may take into account sales of shares of the Funds and other funds advised by AIM in selecting broker-dealers to effect portfolio transactions on behalf of the Funds. PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment strategy in providing investment advisory services to all its accounts, including the Funds. AIM's investment staff consists of 92 individuals. While individual members of AIM's investment staff are assigned primary responsibility for the day-to-day management of each of AIM's accounts, all accounts are reviewed on a regular basis by AIM's Investment Policy Committee to ensure that they are being invested in accordance with the accounts' and AIM's investment policies. The individuals on the investment team who are primarily responsible for the day-to-day management of each of the Funds and their titles, if any, with AIM or its affiliates and the Company, the length of time they have been responsible for the management of the Funds, their years of experience and prior experience are shown below: A. Dale Griffin, III, Robert M. Kippes, Paul A. Rogge, Barrett K. Sides and Dominic H.R. Moross are responsible for the day-to-day management of the AGGRESSIVE GROWTH FUND. Mr. Griffin is Vice President of A I M Capital Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM, and has been responsible for the Fund since its inception in 1994. Mr. Griffin has been associated with AIM since 1989 and has a total of nine years of experience as an investment professional. Mr. Kippes is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. Mr. Kippes has been associated with AIM since 1989 and has a total of six years of experience as an investment professional. Mr. Rogge is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. Mr. Rogge has been associated with AIM since 1991 and has a total of five years of experience as an investment professional. Mr. Sides is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. Mr. Sides has been associated with AIM since 1990 and has a total of six years of experience as an investment professional. Mr. Moross is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. Mr. Moross has been associated with AIM since 1993 and has a total of two years of experience as an investment professional. Prior to joining AIM, he was a management graduate trainee with Maxwell Communications PLC. A. Dale Griffin, III, Paul A. Rogge, Jonathan C. Schoolar, Barrett K. Sides and Dominic H.R. Moross are responsible for the day-to-day management of the GROWTH FUND. Background information for Mr. Griffin, Mr. Rogge, Mr. Sides and Mr. Moross is discussed above with respect to the management of Aggressive Growth Fund. Mr. Griffin and Mr. Rogge have been responsible for the Fund since its inception in 1994. Mr. Sides and Mr. Moross have been responsible for the Fund since 1995. Mr. Schoolar is Senior Vice President and Director of AIM Capital, Vice President of AIM, Vice President of the Company and has been responsible for the Fund since its inception in 1994. Mr. Schoolar has been associated with AIM since 1986 and has a total of 12 years of experience as an investment professional. Robert G. Alley, John L. Pessarra and Carolyn L. Gibbs are responsible for the day-to-day management of the INCOME FUND. Mr. Alley is Senior Vice President of AIM Capital, Vice President of AIM, Vice President of the Company and has been responsible for the Fund since its inception in 1994. Mr. Alley has been associated with AIM since 1992 and has a total of 23 years of experience as an investment professional. Prior to joining AIM, he was Senior Fixed Income Money Manager for Waddell & Reed, Inc. Mr. Pessarra is Vice President of AIM Capital and also has been responsible for the Fund since its inception in 1994. Mr. Pessarra has been associated with AIM since 1990 and has a total of 11 years of experience as an investment professional. Ms. Gibbs is Assistant Vice President of AIM Capital and has been responsible for the Fund since 1995. Ms. Gibbs has been associated with AIM since 1992 and has over 10 years of experience as an investment professional. Prior to joining AIM, she was a financial analyst for Northwest Airlines. EXPENSES. The Investment Advisory Agreement provides that each Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions; taxes, legal, accounting, auditing or governmental fees; the cost of preparing share certificates; custodian, transfer and shareholder service agent costs; expenses of issue, sale, redemption and repurchase of shares; expenses of registering and qualifying shares for sale; expenses relating to directors and shareholders meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Company on behalf of the Funds in connection with membership in investment company organizations; the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders; and all other charges and costs of the Fund's operations unless otherwise explicitly provided. ADVISORY FEES. Subject to reduction in accordance with expense limitations imposed by states in which each Fund's shares are qualified for sale, AIM is entitled to be paid by each Fund an advisory fee at the annual rates of: AIM GLOBAL AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion................................................ 0.90% Over $1 billion................................................. 0.85%
17 109 AIM GLOBAL GROWTH FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion................................................ 0.85% Over $1 billion................................................. 0.80%
AIM GLOBAL INCOME FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion................................................ 0.70% Over $1 billion................................................. 0.65%
Although these fees are higher than those paid by most mutual funds which invest in domestic securities, they are competitive with such fees paid by mutual funds which invest primarily in foreign securities. The Company believes such fees are justified due to the higher costs and additional expenses associated with managing and operating funds holding primarily foreign securities. For the year ended October 31, 1995, each Fund paid the following compensation to AIM for its advisory services, and the total expenses of each such Class were, stated as a percentage of the Class' average daily net assets, as follows:
CLASS A CLASS B COMPENSATION EXPENSE EXPENSE TO AIM RATIO RATIO ------------ ------- ------- Aggressive Growth Fund.................................... 0.90% 2.11% 2.62% Growth Fund............................................... 0.74% 2.12% 2.64% Income Fund............................................... 0.00% 1.25% 1.74%
For the year ended October 31, 1995, each Fund reimbursed AIM for administrative services in the following amounts, stated as a percentage of the Funds' average daily net assets:
REIMBURSEMENT PAYMENTS ------------- Aggressive Growth Fund...................................................... 0.02% Growth Fund................................................................. 0.13% Income Fund................................................................. 0.38%
For the fiscal year ended October 31, 1995, AIM waived advisory fees for GROWTH FUND and INCOME FUND which represented 0.11% and 0.70%, respectively, of each such Fund's average daily net assets. In addition, the Company and AFS, P.O. Box 4739, Houston, TX 77210-4739, a wholly-owned subsidiary of AIM and registered transfer agent, have entered into a Transfer Agency and Service Agreement, pursuant to which AFS provides transfer agency, dividend distribution and disbursement, and shareholder services to the Funds. FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees, while retaining its ability to be reimbursed prior to the end of each fiscal year. Fee waivers or reductions, other than those contained in the Advisory Agreement, may be modified or terminated at any time and without notice to investors. AIM has agreed to waive advisory fees under the Advisory Agreement for the Funds until such time as in AIM's judgment, the Funds have achieved a size in assets under management to bear such costs. DISTRIBUTOR. The Company has entered into Master Distribution Agreements on behalf of the Funds (the "Distribution Agreements") with A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the distributor of Class A and Class B shares of the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain directors and officers of the Company are affiliated with AIM Distributors. The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. Under the Distribution Agreement for the Class B shares, AIM Distributors sells Class B shares at net asset value subject to a contingent deferred sales charge established by AIM Distributors. AIM Distributors is authorized to advance to institutions through whom Class B shares are sold a sales commission under schedules established by AIM Distributors. The Distribution Agreement for the Class B shares provides that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the total 1.00% payable under the distribution plan applicable to Class B shares) of each Fund's average daily net assets attributable to Class B shares attributable to the sales efforts of AIM Distributors. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset based sales charges in respect of the outstanding Class B shares attributable to AIM Distributors; provided, however, that a complete termination of the Class B shares master distribution plan (as defined in the plan) would terminate all payments to AIM Distributors. Termination of the Class B shares distribution plan or Distribution Agreement does not affect the obligation of Class B shareholders to pay Contingent Deferred Sales Charges. 18 110 DISTRIBUTION PLANS. The Company has adopted a master distribution plan applicable to Class A shares of each Fund (the "Class A Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Class A Plan, each Fund pays compensation of 0.50% per annum of the average daily net assets attributable to its Class A shares to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs. Of the total compensation payable, each Fund pays a service fee of 0.25% to implement a program which provides periodic payments to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of such Fund. Any amounts not paid as a service fee would constitute an asset based sales charge. The Company has also adopted a master distribution plan applicable to Class B shares of each Fund (the "Class B Plan"). Under the Class B Plan, each Fund pays distribution expenses at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to its Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of such Fund. 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. Activities that may be financed under the Class A Plan and the Class B Plan (collectively, the "Plans") include, but are 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, supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements and the cost of administering the Plans. These amounts payable by a Fund under the Plans need not be directly related to the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Company will not be obligated to pay more than that fee, and, if AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Payments pursuant to the Plans are subject to any applicable limitations imposed by the rules of the National Association of Securities Dealers, Inc. Each of the Plans may be terminated at any time by a vote of the majority of those directors who are not "interested persons" of the Company or by a vote of the holders of the majority of the outstanding shares of the applicable class. Under the Plans, AIM Distributors may in its discretion from time to time agree to waive voluntarily all or any portion of its fee that has not been assigned or transferred, while retaining its ability to be reimbursed for such fee prior to the end of each fiscal year. Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of a Fund on an agency basis, may receive payments from the Fund pursuant to the Fund's Plans. AIM Distributors does not act as principal, but rather as agent, for the Funds in making such payments. The Funds will obtain a representation from such financial institutions that they will either be licensed as dealers as required under applicable state law, or that they will not engage in activities which would constitute acting as a "dealer" as defined under applicable state law. 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. For additional information concerning the operation of the Plans see the Statement of Additional Information. - -------------------------------------------------------------------------------- ORGANIZATION OF THE COMPANY The Company was organized in 1991 as a Maryland corporation, and is registered with the SEC as a diversified open-end series management investment company. The Company currently consists of four investment portfolios: the Funds and AIM International Equity Fund. The Board of Directors may authorize additional portfolios in the future. Shares of the Funds are offered to investors pursuant to this Prospectus, while shares of the AIM International Equity Fund are offered to investors pursuant to a separate prospectus. The authorized capital stock of the Company consists of 2,000,000,000 shares of common stock with a par value of $0.001 per share, of which 200,000,000 shares are designated Class A shares and 200,000,000 shares are designated Class B shares of each investment portfolio of the Company, and the balance of which are unclassified. Class A shares and Class B 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. Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the Class A shares and Class B shares of a Fund. However, on matters affecting one portfolio of the Company or one class of shares, a separate vote of shareholders of that portfolio or class is required. Shareholders of a portfolio or class are not entitled to vote on any matter which does not affect that portfolio or class but which requires a separate vote of another portfolio or class. An example of a matter which would be voted on separately by shareholders of a portfolio is the approval of an advisory agreement, and an example of a matter which would be voted on separately by shareholders of a class of shares is approval of a distribution plan. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Other than the automatic conversion of Class B shares to Class A shares, there 19 111 are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect directors, holders of more than 50% of the shares voting for the election of directors can elect all of the directors of the Company, and the holders of less than 50% of the shares voting for the election of directors will not be able to elect any directors. Under Maryland law and the Company's By-Laws, the Company need not hold an annual meeting of shareholders unless a meeting is otherwise required under the 1940 Act to elect directors. Shareholders may remove directors from office, and a meeting of shareholders may be called at the request of the holders of 10% or more of the Company's outstanding shares. 20 112 THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER ASSISTANCE IS (800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME). INVESTOR'S GUIDE TO THE AIM FAMILY OF FUNDS(R) - -------------------------------------------------------------------------------- INTRODUCTION TO THE AIM FAMILY OF FUNDS THE AIM FAMILY OF FUNDS consists of the following mutual funds: AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND AIM BALANCED FUND AIM INTERNATIONAL EQUITY FUND AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES AIM CONSTELLATION FUND AIM MONEY MARKET FUND* AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND* AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES AIM GROWTH FUND AIM VALUE FUND AIM HIGH YIELD FUND AIM WEINGARTEN FUND AIM INCOME FUND
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET FUND, are offered to investors at net asset value, without payment of a sales charge, as described below. Other funds, including the Class A and Class B shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or subject to a contingent deferred sales charge upon redemption, as described below. IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS. - -------------------------------------------------------------------------------- HOW TO PURCHASE SHARES HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family of Funds ("AIM Funds"), an investor must submit a fully completed new Account Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM Distributors") to sell shares of the AIM Funds. Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will be subject to backup withholding. See the Account Application for applicable Internal Revenue Service penalties. The minimum initial investment is $500, except for accounts initially established through an Automatic Investment Plan, which requires a special authorization form (see "Special Plans") and for certain retirement accounts. The minimum initial investment for accounts established with an Automatic Investment Plan is $50. The minimum initial investment for an Individual Retirement Account ("IRA") is $250. There are no minimum initial investment requirements applicable to money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation) plans (except that the minimum initial investment for salary deferrals for such plans is $25), or for investment of dividends and distributions of any of the AIM Funds into any existing AIM Funds account. AFS' mailing address is: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 For additional information or assistance, investors should call the Client Services Department of AFS at one of the following telephone numbers: (713) 626-1919 Extension 5224 (in Houston) (800) 959-4246 (elsewhere) Shares of any AIM Funds not named on the cover of this Prospectus are offered pursuant to separate prospectuses. Copies of other prospectuses may be obtained by calling (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). MCF 02/96 A-1 113 HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent purchases is $50. The minimum employee salary deferral investment for participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is $25. There are no such minimum investment requirements for investment of dividends and distributions of any of the AIM Funds into any other existing AIM Funds account. Additional shares may be purchased directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. Direct investments may be made by mail or by wiring payment to AFS as follows: SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and the name of the Fund being purchased. The remittance slip from a confirmation statement should be used for this purpose, and sent to AFS. PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his dealer should call AFS' Client Services Department at (800) 959-4246 prior to sending a wire to receive a reference number for the wire. The following wire instructions should be used: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: AIM Fund Services, Inc. RFB: Fund name, Reference Number (16 charter limit) OBI: Shareholder Name, Shareholder Account Number (70 character limit)
If wires are received after 4:00 p.m. Eastern Time or during a bank holiday, purchases will be confirmed at the price determined on the next business day of the applicable AIM Fund. - -------------------------------------------------------------------------------- TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS Shares of the AIM Funds, including Class A shares (the "Class A shares") of AIM AGGRESSIVE GROWTH FUND, AIM BALANCED FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM VALUE FUND and AIM WEINGARTEN FUND (other than AIM AGGRESSIVE GROWTH FUND and AIM CONSTELLATION FUND, collectively, the "Multiple Class Funds") may be purchased at their respective net asset value plus a sales charge as indicated below, except that shares of AIM TAX-EXEMPT CASH FUND and Class C shares (the "Class C shares") of AIM MONEY MARKET FUND are sold without a sales charge and Class B shares (the "Class B shares") of the Multiple Class Funds are sold at net asset value subject to a contingent deferred sales charge payable upon certain redemptions. These contingent deferred sales charges are described under the caption "How to Redeem Shares -- Multiple Distribution System." Securities dealers and other persons entitled to receive compensation for selling or servicing shares of a Multiple Class Fund may receive different compensation for selling or servicing one particular class of shares over another class in the same Multiple Class Fund. Factors an investor should consider prior to purchasing Class A or Class B shares (or, if applicable, Class C shares) of a Multiple Class Fund are described below under "Special Information Relating to Multiple Class Funds." For information on purchasing any of the AIM Funds and to receive a prospectus, please call (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). As described below, the sales charge otherwise applicable to a purchase of shares of a fund may be reduced if certain conditions are met. In order to take advantage of a reduced sales charge, the prospective investor or his dealer must advise AIM Distributors that the conditions for obtaining a reduced sales charge have been met. Net asset value is determined in the manner described under the caption "Determination of Net Asset Value." The following tables show the sales charge and dealer concession at various investment levels for the AIM Funds. MCF 02/96 A-2 114 SALES CHARGES AND DEALER CONCESSIONS GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM WEINGARTEN FUND.
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 $ 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
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are at net asset value, subject to a contingent deferred sales charge of 1% if shares are redeemed prior to 18 months from the date such shares were purchased, as described under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds are: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
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
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. See "All Groups of AIM Funds." Purchases of $1,000,000 or more are at net asset value, subject to a contingent deferred sales charge of 1% if shares are redeemed prior to 18 months from the date such shares were purchased, as described under the caption "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large Purchases." GROUP III. Certain AIM Funds are currently sold with a sales charge ranging from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000. These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES.
DEALER CONCESSION INVESTOR'S SALES CHARGE ---------- ----------------------- AS A AS A AS A PERCENTAGE PERCENTAGE PERCENTAGE OF THE OF THE PUBLIC OF THE NET PUBLIC AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING SINGLE TRANSACTION PRICE INVESTED PRICE - ---------------------------------- ------------ ---------- -------- Less than $ 100,000 1.00% 1.01% 0.75% $100,000 but less than $ 250,000 0.75 0.76 0.50 $250,000 but less than $1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more; however, AIM Distributors may pay a dealer concession and/ or advance a service fee on such transactions. MCF 02/96 A-3 115 ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933. In addition to amounts paid to dealers as a dealer concession out of the initial sales charge paid by investors, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers who sell a minimum dollar amount of the shares of the AIM Funds during a specified period of time. In some instances, these incentives may be offered only to certain dealers who have sold or may sell significant amounts of shares. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See "Contingent Deferred Sales Charge Programs for Large Purchases." AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1,000,000 or more of shares which normally involve payment of initial sales charges, and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE INTERMEDIATE SHARES. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund (other than the Money Market Funds, as described below) received by dealers prior to 4:00 p.m. Eastern Time on any business day of an AIM Fund and either received by AIM Distributors in its Houston, Texas office prior to 5:00 p.m. Central Time on that day or transmitted by dealers to the Transfer Agent through the facilities of the National Securities Clearing Corporation ("NSCC") by 7:00 p.m. Eastern Time on that day, will be confirmed at the price determined as of the close of that day. Orders received by dealers after 4:00 p.m. Eastern Time will be confirmed at the price determined on the next business day of the AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to AIM Distributors or to the Transfer Agent through the facilities of NSCC. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. Please see "How to Purchase Shares -- Purchases by Wire" for information on obtaining a reference number for wire orders, which will facilitate the handling of such orders and ensure prompt credit to an investor's account. A "business day" of an AIM Fund is any day on which the New York Stock Exchange ("NYSE") is open for business. It is expected that the NYSE will be closed during the next twelve months on Saturdays and Sundays and on the days on which New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE. An investor who uses a check to purchase shares will be credited with the full number of shares purchased at the time of receipt of the purchase order, as previously described. However, in the event of a redemption or exchange of such shares, the investor may be required to wait up to ten business days before the redemption proceeds are sent. This delay is necessary in order to ensure that the check has cleared. If the check does not clear, or if any investment order must be cancelled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors. SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds, other than AIM MONEY MARKET FUND, currently offer two classes of shares, and AIM MONEY MARKET FUND currently offers three classes of shares, through separate distribution systems (the "Multiple Distribution System"). Although the Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C shares) of a particular Multiple Class Fund represent an interest in the same portfolio of investments, each class is subject to a different distribution structure and, as a result, differing expenses. This Multiple Distribution System allows investors to select the class that is best suited to the investor's needs and objectives. In considering the options afforded by the Multiple Distribution System, investors should consider both the applicable initial sales charge or contingent deferred sales charge, as well as the ongo- MCF 02/96 A-4 116 ing expenses borne by Class A or Class B shares and, if applicable, Class C shares, and other relevant factors, such as whether his or her investment goals are long-term or short-term. CLASS A SHARES are sold subject to the initial sales charges described above and are subject to the other fees and expenses described herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of an investor who wishes to establish a dollar cost averaging program, pursuant to which Class A shares an investor owns may be exchanged at net asset value for Class A shares of another Multiple Class Fund or shares of another AIM Fund which is not a Multiple Class Fund, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." CLASS B SHARES are sold without an initial sales charge. Thus, the entire purchase price of Class B shares is immediately invested in Class B shares. Class B shares are subject, however, to Class B Plan payments of 1.00% per annum on the average daily net assets of a Multiple Class Fund attributable to Class B shares. See the discussion under the caption "Management -- Distribution Plans." In addition, Class B shares redeemed within six years from the date such shares were purchased are subject to a contingent deferred sales charge ranging from 5% for redemptions made within the first year to 1% for redemptions made within the sixth year. No contingent deferred sales charge will be imposed if Class B shares are redeemed after six years from the date such shares were purchased. Redemptions of Class B shares and associated charges are further described under the caption "How to Redeem Shares -- Multiple Distribution System." Class B shares will automatically convert into Class A shares of the same Multiple Class Fund (together with a pro rata portion of all Class B shares acquired through the reinvestment of dividends and distributions) eight years from the end of the calendar month in which the purchase of Class B shares was made. Following such conversion of their Class B shares, investors will be relieved of the higher Class B Plan payments associated with Class B shares. See "Management -- Distribution Plans." CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales charge and are not subject to a contingent deferred sales charge. Such shares are, however, subject to the other fees and expenses described in the prospectus for AIM MONEY MARKET FUND. SPECIAL INFORMATION RELATING TO MONEY MARKET FUNDS. Shares of AIM MONEY MARKET FUND or AIM TAX-EXEMPT CASH FUND (the "Money Market Funds") are purchased or exchanged at the net asset value next determined after acceptance of an order for purchase or exchange in proper form, except for Class A shares of AIM MONEY MARKET FUND, which are sold with a sales charge. Net asset value is normally determined at 12:00 noon and 4:00 p.m. Eastern Time on each business day of AIM MONEY MARKET FUND and at 4:00 p.m. Eastern Time on each business day of AIM TAX-EXEMPT CASH FUND. Because each Money Market Fund uses the amortized cost method of valuing the securities it holds and rounds its per share net asset value to the nearest whole cent, it is anticipated that the net asset value of the shares of such funds will remain constant at $1.00 per share. However, there is no assurance that either Money Market Fund can maintain a $1.00 net asset value per share. In order to earn dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase is made, purchase payments in the form of federal funds must be received by the Transfer Agent before 12:00 noon Eastern Time on that day. See "How to Purchase Shares -- Purchases by Wire." Purchases made by payments in any other form, or payments in the form of federal funds received after such time, will begin to earn dividends on the next business day following the date of purchase. The Money Market Funds generally will not issue share certificates but will record investor holdings in noncertificate form and regularly advise the shareholder of his ownership position. Class B shares of AIM MONEY MARKET FUND are designed for temporary investment as part of an investment program in the Class B shares and, unlike shares of most money market funds, are subject to a contingent deferred sales charge as well as Rule 12b-1 distribution fees and service fees. SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon written request by a shareholder to AIM Distributors or the Transfer Agent. Otherwise, such shares will be held on the shareholder's behalf by the applicable AIM Fund(s) and be recorded on the books of such fund(s). See "Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares -- Redemptions by Telephone" for restrictions applicable to shares issued in certificate form. Please note that certificates will not be issued for shares held in prototype retirement plans. MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect for at least one year and the shareholder has not made an additional purchase in that account within the preceding six calendar months and (2) the value of such account drops below $500 for three consecutive months as a result of redemptions or exchanges, the fund has the right to redeem the account, after giving the shareholder 60 days' prior written notice, unless the shareholder makes additional investments within the notice period to bring the account value up to $500. 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 shares of AIM TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares of the Multiple Class Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. MCF 02/96 A-5 117 The term "purchaser" means: - an individual and his or her spouse and minor children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) Plan (unless such 403(b) plan qualifies as the purchaser as defined below); - a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), provided that: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; - a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code, SEP, Salary Reduction and other Elective Simplified Employee Pension accounts ("SARSEP")) and 457 plans, although more than one beneficiary or participant is involved; - any other organized group of persons, whether incorporated or not, provided the organization has been in existence for at least six months and has some purpose other than the purchase at a discount of redeemable securities of a registered investment company; or - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M Capital Management, Inc. ("AIM Capital"). Investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled, by virtue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. (1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. MCF 02/96 A-6 118 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) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple Class Funds) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish AFS with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made. PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at net asset value (without payment of an initial sales charge) may be made in connection with: (a) the reinvestment of dividends and distributions from a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a fund. Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A shares of the particular AIM Fund(s) whose shares they owned on such date, at net asset value (without payment of a sales charge) for as long as they continuously own Class A shares of such AIM Fund(s) having a market value of at least $500. In addition, discretionary advised clients of any investment advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM CHARTER FUND on November 17, 1986, and have held such Class A shares at all times subsequent to such date, may purchase Class A shares of the applicable AIM Fund(s) at the net asset value of such shares. The following persons may purchase shares of the AIM Funds through AIM Distributors without payment of an initial sales charge: (a) A I M Management Group Inc. ("AIM Management") and its affiliated companies; (b) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, of AIM Management or its affiliates or of certain mutual funds which are advised or managed by AIM, or any trust established exclusively for the benefit of such persons; (c) any employee benefit plan established for employees of AIM Management or its affiliates; (d) any current or retired officer, director, trustee or employee, or any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, or of CIGNA Corporation or of any of its affiliated companies, or of First Data Investor Services Group (formerly The Shareholders Services Group, Inc.); (e) any investment company sponsored by CIGNA Investments, Inc. or any of its affiliated companies for the benefit of its directors' deferred compensation plans; (f) discretionary advised clients of AIM or AIM Capital; (g) registered representatives and employees of dealers who have entered into agreements with AIM Distributors (or financial institutions that have arrangements with such dealers with respect to the sale of shares of the AIM Funds) and any member of the immediate family (including spouse, minor children, parents and parents of spouse) of any such person, provided that purchases at net asset value are permitted by the policies of such person's employer; and (h) certain broker-dealers, investment advisers or bank trust departments that provide asset allocation, similar specialized investment services or investment company transaction services for their customers, that charge a minimum annual fee for such services, and that have entered into an agreement with AIM Distributors with respect to their use of the AIM Funds in connection with such services. In addition, shares of any AIM Fund may be purchased at net asset value, without payment of a sales charge, by pension, profit-sharing or other employee benefit plans created pursuant to a plan qualified under Section 401 of the Code or plans under Section 457 of the Code, or employee benefit plans created pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of the Code. Such plans will qualify for purchases at net asset value provided that (1) the initial amount invested in the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an employer-sponsored plan with at least 100 eligible employees, or (4) all of the plan's transactions are executed through a single omnibus account per fund. Section 403(b) plans sponsored by public educational institutions will not be eligible for net asset value purchases based on the aggregate investment made by the plan or the number of eligible employees. Participants in such plans will be eligible for reduced sales charges based solely on the aggregate value of their individual investments in the applicable AIM Fund. MCF 02/96 A-7 119 PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay investment dealers or other financial service firms up to 1.00% of the net asset value of any shares of the Load Funds (as defined on page A-10 herein) up to 0.10% of the net asset value of any shares of AIM LIMITED MATURITY TREASURY SHARES, and up to 0.25% of the net asset value of any shares of all other AIM Funds sold at net asset value to an employee benefit plan in accordance with this paragraph. Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be deposited at net asset value, without payment of a sales charge, in G/SET series unit investment trusts, whose portfolios consist exclusively of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States Treasury issued notes or bonds bearing no current interest ("Treasury Obligations"). Class A shares of such funds may also be purchased at net asset value by other unit investment trusts approved by the Board of Directors of AIM Equity Funds, Inc. Unit holders of such trusts may elect to invest cash distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net asset value, including: (a) distributions of any dividend income or other income received by such trusts; (b) distributions of any net capital gains received in respect of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts; and (c) proceeds from the maturity of the Treasury Obligations at the termination dates of such trusts. Prior to the termination dates of such trusts, a unit holder may invest the proceeds from the redemption or repurchase of his units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net asset value, provided: (a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such redemption or repurchase; and (b) that the unit holder or his dealer provides AIM Distributors with a letter which: (i) identifies the name, address and telephone number of the dealer who sold to the unit holder the units to be redeemed or repurchased; and (ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by the proceeds from the redemption or repurchase of units of such trusts. FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund named on the cover page, AIM Distributors and its agents will use their best efforts to provide notice of any such actions through correspondence with broker-dealers and existing shareholders, supplements to the AIM Funds' prospectuses, or other appropriate means, and will provide sixty (60) days' notice in the case of termination or material modification to the exchange privilege discussed under the caption "Exchange Privilege." - -------------------------------------------------------------------------------- SPECIAL PLANS Except as noted below, each AIM Fund provides the special plans described below for the convenience of its shareholders. Once established, there is no obligation to continue to invest through a plan, and a shareholder may terminate a plan at any time. Special plan applications and further information, including details of any fees which are charged to a shareholder investing through a plan, may be obtained by written request, directed to AFS at the address provided under "How to Purchase Shares," or by calling the Client Services Department of AFS at the phone numbers provided under "How to Purchase Shares." IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN SUCH A PLAN. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder who owns Class A shares of a Multiple Class Fund, Class C shares of AIM Money Market Fund, or shares of another AIM Fund can arrange for monthly, quarterly or annual checks in any amount (but not less than $50) to be drawn against the balance of his account in the designated AIM Fund. Shareholders who own Class B shares of a Multiple Class Fund can only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal Plan. Payment of this amount is normally made on or about the tenth or the twenty-fifth day of each month in which a payment is to be made. A minimum account balance of $5,000 is required to establish a Systematic Withdrawal Plan, but there is no requirement thereafter to maintain any minimum investment. No contingent deferred sales charge with respect to Class B shares of a Multiple Class Fund will be imposed on withdrawals made under a Systematic Withdrawal Plan, provided that the amounts withdrawn under such a plan do not exceed on an annual basis 12% of the account value at the time the shareholder elects to participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to Class B shares that exceed on an annual basis 12% of such account will be subject to a contingent deferred sales charge on the amounts exceeding 12% of the initial account value. 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 MCF 02/96 A-8 120 imposed on additional purchases of shares (other than Class B Shares and Class C Shares of the Multiple Class Funds), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. The Systematic Withdrawal Plan may be terminated at any time upon 10 days' prior notice to AFS. Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee for each withdrawal (not to exceed its cost), but there is no present intent to do so. AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly investments may establish an Automatic Investment Plan. Under this plan, on or about the tenth and/or twenty-fifth day of the applicable month, a draft is drawn on the shareholder's bank account in the amount specified by the shareholder (minimum $50 per investment, per account). The proceeds of the draft are invested in shares of the designated AIM Fund at the applicable offering price determined on the date of the draft. An Automatic Investment Plan may be discontinued upon 10 days' prior notice to the Transfer Agent or AIM Distributors. AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all dividends and distributions declared by an AIM Fund paid in cash or invested at net asset value, without payment of an initial sales charge, either in shares of the same AIM Fund or invested in shares of another AIM Fund. For each of the Multiple Class Funds, dividends and distributions attributable to Class A shares may be reinvested in Class A shares of the same fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund; dividends and distributions attributable to Class B shares may be reinvested in Class B shares of the same fund or in Class B shares of another Multiple Class Fund; and dividends and distributions attributable to Class C shares of AIM MONEY MARKET FUND may be reinvested in additional shares of such fund, in Class A shares of another Multiple Class Fund or in shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a description of payment dates for these options. In order to qualify to have dividends and distributions of one AIM Fund invested in shares of another AIM Fund, the following conditions must be satisfied: (a) the shareholder must have an account balance in the dividend paying fund of at least $5,000; (b) the account must be held in the name of the shareholder (i.e., the account may not be held in nominee name); and (c) the shareholder must have requested and completed an authorization relating to the reinvestment of dividends into another AIM Fund. An authorization may be given on the account application or on an authorization form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum account value requirement if the shareholder has an account in the fund selected to receive the dividends and distributions with a value of at least $500. DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount automatically exchanged, either monthly or quarterly (on or about the 10th or 25th day of the applicable month), from one of their accounts into one or more AIM Funds, subject to the terms and conditions described under the caption "Exchange Privilege -- Terms and Conditions of Exchanges." The account from which exchanges are to be made must have a value of at least $5,000 when a shareholder elects to begin this program, and the exchange minimum is $50 per transaction. All of the accounts that are part of this program must have identical registrations. The net asset value of shares purchased under this program may vary, and may be more or less advantageous than if shares were not exchanged automatically. There is no charge for entering the Dollar Cost Averaging program. Sales charges may apply, as described under the caption "Exchange Privilege." PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype retirement plans available to corporations, individuals and employees of non-profit organizations and public schools: combination money- purchase/profit-sharing plans; 403(b) plans; IRA plans; and SEP plans (collectively, "retirement accounts"). Information concerning these plans, including the custodian's fees and the forms necessary to adopt such plans, can be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also available for investment through existing 401(k) plans (for both individuals and employers) adopted under the Code. The plan custodian currently imposes an annual $10 maintenance fee with respect to each retirement account for which it serves as the custodian. This fee is generally charged in December. Each AIM Fund and/or the custodian reserve the right to change this maintenance fee and to initiate an establishment fee (not to exceed its cost). MCF 02/96 A-9 121 - -------------------------------------------------------------------------------- EXCHANGE PRIVILEGE TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may participate in an exchange privilege as described below. The exchange privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds, which represent a range of different investment objectives and policies. As set forth under the caption "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM Funds, including the Class A shares of the Multiple Class Funds, referred to herein as the "Load Funds," are sold at a public offering price that includes a maximum sales charge of 5.50% or 4.75% of the public offering price of such shares; shares of certain of the AIM Funds, referred to herein as the "Lower Load Funds," are sold at a public offering price that includes a maximum sales charge of 1.00% of the public offering price of such shares; and shares of certain other funds, including the Class C shares of AIM MONEY MARKET FUND, referred to herein as the "No Load Funds," are sold at net asset value, without payment of a sales charge. LOAD FUNDS: LOWER LOAD FUNDS: ----------- ----------------- AIM AGGRESSIVE GROWTH AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES AIM BALANCED FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM CHARTER FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS: AIM CONSTELLATION AIM INTERNATIONAL EQUITY -------------- FUND -- CLASS A FUND -- CLASS A AIM MONEY MARKET FUND AIM GLOBAL AGGRESSIVE GROWTH AIM MONEY MARKET -- CLASS C FUND -- CLASS A FUND -- CLASS A AIM TAX-EXEMPT CASH FUND AIM GLOBAL GROWTH AIM MUNICIPAL BOND FUND -- CLASS A FUND -- CLASS A AIM GLOBAL INCOME AIM TAX-EXEMPT BOND FUND FUND -- CLASS A OF CONNECTICUT AIM GLOBAL UTILITIES AIM VALUE FUND -- CLASS A FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A AIM GROWTH FUND -- CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund, except that (i) Load Fund share purchases of $1,000,000 or more which are subject to a contingent deferred sales charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND; (ii) Lower Load Fund share purchases of $1,000,000 or more and No Load Fund purchases may be exchanged for Load Fund shares in amounts of $1,000,000 or more which will then be subject to a contingent deferred sales charge; however, for purposes of calculating the contingent deferred sales charge on the Load Fund shares acquired, the 18-month period shall be computed from the date of such exchange; (iii) Class A shares and shares of all other AIM Funds may not be exchanged for Class B shares; (iv) Class B shares may be exchanged only for Class B shares; and (v) Class C shares of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or for Class B shares. For shares initially purchased prior to November 20, 1995, the exchange conditions in (i) and (ii) above will apply effective January 16, 1996. DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
MULTIPLE CLASS LOWER LOAD NO LOAD FUNDS: FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B - ---------------- ------------------------------------- --------------------- ---------------- ------------- Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable Lower Load Net Asset Value if shares were held Net Asset Value Net Asset Value Not Funds......... for at least 30 days; or if shares Applicable were acquired upon exchange of any Load Fund; or if shares were acquired upon exchange from any Lower Load Fund and such shares were held for at least 30 days. (No exchange privilege is available for the first 30 days following the purchase of the Lower Load Fund shares.)
(Table continued on following page) MCF 02/96 A-10 122
MULTIPLE CLASS LOWER LOAD NO LOAD FUNDS: FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B - ---------------- ------------------------------------- --------------------- ---------------- ------------- No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not directly purchased. Net Asset Value Load shares were Applicable if No Load shares were acquired upon acquired upon exchange of shares of any Load Fund exchange of shares of or any Lower Load Fund; Net Asset any Load Fund or any Value if No Load shares were acquired Lower Load Fund; upon exchange of Lower Load Fund otherwise, shares and were held for at least 30 Offering Price. days following the purchase of the Lower Load Fund shares. (No exchange privilege is available for the first 30 days following the acquisition of the Lower Load Fund shares.) Multiple Class Funds: Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS: Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Funds......... acquired upon exchange of any Load Applicable Fund. Otherwise, difference in sales charge will apply. No Load Funds... Offering Price if No Load shares were Net Asset Value if No Net Asset Value Not directly purchased. Net Asset Value Load shares were Applicable if No Load shares were acquired upon acquired upon exchange of shares of any Load Fund. exchange of shares of Difference in sales charge will apply any Load Fund or any if No Load shares were acquired upon Lower Load Fund; exchange of Lower Load Fund shares. otherwise, Offering Price. Multiple Class Funds: Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
An exchange is permitted only in the following circumstances: (a) if the funds offer more than one class of shares, the exchange must be between the same class of shares (e.g., Class A and Class B shares of a Multiple Class Fund cannot be exchanged for each other), except that Class C shares of AIM MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class Fund; (b) the dollar amount of the exchange must be at least equal to the minimum investment applicable to the shares of the fund acquired through such exchange; (c) the shares of the fund acquired through exchange must be qualified for sale in the state in which the shareholder resides; (d) the exchange must be made between accounts having identical registrations and addresses; (e) the full amount of the purchase price for the shares being exchanged must have already been received by the fund; (f) the account from which shares have been exchanged must be coded as having a certified taxpayer identification number on file or, in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign status) or Form W-9 (certifying exempt status) must have been received by the fund; (g) newly acquired shares (through either an initial or subsequent investment) are held in an account for at least ten business days, and all other shares are held in an account for at least one day, prior to the exchange; and (h) certificates representing shares must be returned before shares can be exchanged. THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER. THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE. There is no fee for exchanges among the AIM Funds. A service fee of $5 per transaction may, however, be charged by AIM Distributors on accounts of market timing investment firms to help to defray the costs of maintaining an automated exchange service. This service fee will be charged against the market timing account from which shares are being exchanged. Shares to be exchanged are redeemed at their net asset value as determined at the close of business on the day that an exchange request in proper form (described below) is received by AFS in its Houston, Texas office, provided that such request is received prior to 4:00 p.m. Eastern Time. Exchange requests received after this time will result in the redemption of shares at their net asset value as determined at the close of business on the next business day. 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 by AIM Distributors, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends (See "Dividends, Distributions and Tax Matters -- Dividends and Distributions," below), and MCF 02/96 A-11 123 the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. Shares purchased by check may not be exchanged until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." In the event of unusual market conditions, AIM Distributors reserves the right to reject any exchange request, if, in the judgment of AIM Distributors, the number of requests or the total value of the shares that are the subject of the exchange places a material burden on a fund. For example, the number of exchanges by investment managers making market timing exchanges may be limited. EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a written request to AFS. The request should contain the account registration and account number, the dollar amount or number of shares to be exchanged, and the names of the funds from which and into which the exchange is to be made. The request should comply with all of the requirements for redemption by mail, except those required for redemption of IRAs. See "How to Redeem Shares." EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange by telephone. If a shareholder does not wish to allow telephone exchanges by any person in his account, he should decline that option on the account application. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at the appropriate telephone number indicated under the caption "How to Purchase Shares." 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 applicable fund(s) as long as such request is received prior to 4:00 p.m. Eastern Time. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone exchange request that they reasonably believe to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXCHANGES OF CLASS B SHARES. A contingent deferred sales charge will not be imposed in connection with exchanges among Class B shares of Multiple Class Funds. For purposes of determining a shareholder's holding period of Class B shares in the calculation of the applicable contingent deferred sales charge, the period of time during which Class B shares were held prior to an exchange will be added to the holding period of Class B shares acquired in an exchange. - -------------------------------------------------------------------------------- HOW TO REDEEM SHARES Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the obligation of the fund(s) named on the cover page to redeem shares, AIM Distributors also repurchases shares. Although a contingent deferred sales charge may be applicable to certain redemptions, as described below, there is no redemption fee imposed when shares are redeemed or repurchased; however, dealers may charge service fees for handling repurchase transactions. MULTIPLE DISTRIBUTION SYSTEM. Class B shares purchased under the Multiple Distribution System may be redeemed on any business day of a Multiple Class Fund at the net asset value per share next determined following receipt of the redemption order, as described under the caption "Timing and Pricing of Redemption Orders," less the applicable contingent deferred sales charge shown in the table below. No deferred sales charge will be imposed (i) on redemptions of Class B shares following six years from the date such shares were purchased, (ii) on Class B shares acquired through reinvestments of dividends and distributions attributable to Class B shares or (iii) on amounts that represent capital appreciation in the shareholder's account above the purchase price of the Class B shares.
YEAR CONTINGENT DEFERRED SINCE SALES CHARGE AS PURCHASE %OF DOLLAR AMOUNT MADE SUBJECT TO CHARGE -------- --------------------- First...................................................... 5% Second..................................................... 4% Third...................................................... 3% Fourth..................................................... 3% Fifth...................................................... 2% Sixth...................................................... 1% Seventh and Following...................................... None
In determining whether a contingent deferred sales charge is applicable, it will be assumed that a redemption is made first, of any shares held in the shareholder's account that are not subject to such charge; second, of shares derived from reinvestment of dividends MCF 02/96 A-12 124 and distributions; third, of shares held for more than six years from the date such shares were purchased; and fourth, of shares held less than six years from the date such shares were purchased. The applicable sales charge will be applied against the lesser of the current market value of shares redeemed or their original cost. Contingent deferred sales charges on Class B shares will be waived on redemptions (1) following the registered shareholder's (or in the case of joint accounts, all registered joint owners') death or disability, as defined in Section 72(m)(7) of the Code (provided AIM Distributors is notified of such death or disability at the time of the redemption request and is provided with satisfactory evidence of such death or disability), (2) in connection with certain distributions from individual retirement accounts, custodial accounts maintained pursuant to Code Section 403(b), deferred compensation plans qualified under Code Section 457 and plans qualified under Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do not exceed on an annual basis 12% of the value of the shareholder's investment in Class B shares at the time the shareholder elects to participate in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a Multiple Class Fund to liquidate a shareholder's account if the aggregate net asset value of shares held in the account is less than the designated minimum account size described in the prospectus of such Multiple Class Fund and (5) effected by AIM of its investment in Class B shares. Waiver category (1) above applies only to redemptions: (i) made within one year following death or initial determination of disability and (ii) of Class B shares held at the time of death or initial determination of disability. Waiver category (2) above applies only to redemptions resulting from: (i) required minimum distributions to plan participants or beneficiaries who are age 70 1/2 or older, and only with respect to that portion of such distributions which does not exceed 12% annually of the participant's or beneficiary's account value; (ii) in kind transfers of assets where the participant or beneficiary notifies AIM Distributors of such transfer no later than the time such transfer occurs; (iii) tax-free rollovers or transfers of assets to another Retirement Plan invested in Class B shares of one or more Multiple Class Funds; (iv) tax-free returns of excess contributions or returns of excess deferral amounts; and (v) distributions upon the death or disability (as defined in the Code) of the participant or beneficiary. CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for purchases of Class B shares of a Multiple Class Fund and purchases of shares of the No Load Funds and Lower Load Funds, a contingent deferred sales charge of 1% applies to purchases of $1,000,000 or more that are redeemed within 18 months of the date of purchase. For a description of the AIM Funds participating in this program, see "Terms and Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the lesser of the value of the shares redeemed (excluding reinvested dividends and capital gain distributions) or the total original cost of such shares. In determining whether a contingent deferred sales charge is payable, and the amount of any such charge, shares not subject to the contingent deferred sales charge are redeemed first (including shares purchased by reinvested dividends and capital gains distributions and amounts representing increases from capital appreciation), and then other shares are redeemed in the order of purchase. No such charge will be imposed upon exchanges unless the shares acquired by exchange are redeemed within 18 months of the date the shares were originally purchased. For purposes of computing this 18-month period (i) shares of any Load Fund or Class C shares of AIM MONEY MARKET FUND which were acquired through an exchange of shares which previously were subject to the 1% contingent deferred sales charge will be credited with the period of time such exchanged shares were held, and (ii) shares of any Load Fund which are subject to the 1% contingent deferred sales charge and which were acquired through an exchange of shares of a Lower Load Fund or a No Load Fund which previously were not subject to the 1% contingent deferred sales charge will not be credited with the period of time such exchanged shares were held. The charge will be waived in the following circumstances: (1) redemptions of shares by employee benefit plans ("Plans") qualified under Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the Code and sponsored by nonprofit organizations as defined under Section 501(c)(3) of the Code, where (a) the initial amount invested by a Plan in one or more of the AIM Funds is at least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being redeemed were purchased by an employer-sponsored Plan with at least 100 eligible employees; provided, however, that Plans created under Section 403(b) of the Code which are sponsored by public educational institutions shall qualify under (a), (b) or (c) above on the basis of the value of each Plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the Plan or on the number of eligible employees; (2) redemptions of shares following the registered shareholder's (or in the case of joint accounts, all registered joint owners') death or disability, as defined in Section 72(m)(7) of the Code; (3) redemptions of shares purchased at net asset value by private foundations or endowment funds where the initial amount invested was at least $1,000,000; and (4) redemptions of shares purchased by an investor in amounts of $1,000,000 or more where such investor's dealer of record, due to the nature of the investor's account, notifies AIM Distributors prior to the time of investment that the dealer waives the payments otherwise payable to the dealer as described in the third paragraph under the caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM Funds." REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the Transfer Agent. Upon receipt of a redemption request in proper form, payment will be made as soon as practicable, but in any event will normally be made within seven days after receipt. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." Requests for redemption must include: (a) original signatures of each registered owner exactly as the shares are registered; (b) the Fund and the account number of shares to be redeemed; (c) share certificates, either properly endorsed or accompanied by a MCF 02/96 A-13 125 duly executed stock power, for the shares to be redeemed if such certificates have been issued and the shares are not in the custody of the Transfer Agent; (d) signature guarantees, as described below; and (e) any additional documents that may be required for redemption by corporations, partnerships, trusts or other entities. The burden is on the shareholder to inquire as to whether any additional documentation is required. Any request not in proper form may be rejected and in such case must be renewed in writing. In addition to these requirements, shareholders who have invested in a fund to establish an IRA, should include the following information along with a written request for either partial or full liquidation of fund shares: (a) a statement as to whether or not the shareholder has attained age 59 1/2; and (b) a statement as to whether or not the shareholder elects to have federal income tax withheld from the proceeds of the liquidation. REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone. If a shareholder does not wish to allow telephone redemptions by any person in his account, he should decline that option on the account application. The telephone redemption feature can be used only if: (a) the redemption proceeds are to be mailed to the address of record or wired to the pre-authorized bank account as indicated on the account application; (b) there has been no change of address of record on the account within the preceding 30 days; (c) the shares to be redeemed are not in certificate form; (d) the person requesting the redemption can provide proper identification information; and (e) the proceeds of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for the telephone redemption option. AIM Distributors has made arrangements with certain dealers and investment advisors to accept telephone instructions for the redemption of shares. AIM Distributors reserves the right to impose conditions on these dealers and investment advisors, including the condition that they enter into agreements (which contain additional conditions with respect to the redemption of shares) with AIM Distributors. The Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth at that item of the account application if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that same business day. If the redemption order is received after 11:30 a.m. and prior to 4:00 p.m. Eastern Time, the redemption will be made at the net asset value determined at 4:00 p.m. Eastern Time and payment will generally be transmitted on the next business day. REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY MARKET FUND). After completing the appropriate authorization form, shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement accounts or qualified plans. Checks may be drawn in any amount of $250 or more. Checks drawn against insufficient shares in the account, against shares held less than ten business days, or in amounts of less than the applicable minimum will be returned to the payee. The payee of the check may cash or deposit it in the same way as an ordinary bank check. When a check is presented to the Transfer Agent for payment, the Transfer Agent will cause a sufficient number of shares of such fund to be redeemed to cover the amount of the check. Shareholders are entitled to dividends on the shares redeemed through the day on which the check is presented to the Transfer Agent for payment. TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds are redeemed at their net asset value next computed after a request for redemption in proper form (including signature guarantees and other required documentation for written redemptions) is received by the Transfer Agent, except that Class B shares of the Multiple Class Funds, and Class A shares of the Multiple Class Funds and shares of the other AIM Funds that are subject to the contingent deferred sales charge program for large purchases described above, may be subject to the imposition of deferred sales charges that will be deducted from the redemption proceeds. See "Multiple Distribution System" and "Contingent Deferred Sales Charge Program for Large Purchases." Orders for the redemption of shares received in proper form by dealers prior to 4:00 p.m. Eastern Time on any business day of an AIM Fund and either received by the Transfer Agent in its Houston, Texas office prior to 5:00 p.m. Central Time on that day or transmitted by dealers to the Transfer Agent through the facilities of NSCC by 7:00 p.m. Eastern Time on that day, will be confirmed at the price determined as of the close of that day. Orders received by dealers after 4:00 p.m. Eastern Time will be confirmed at the price determined on the next business day of an AIM Fund. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent through the facilities of NSCC. Any resulting loss from the dealer's failure to submit a request for redemption within the prescribed time frame will be borne by that dealer. Telephone redemption requests must be made by 4:00 p.m. Eastern Time on any business day of an AIM Fund and will be confirmed at the price determined as of the close of that day. No AIM Fund will accept requests which specify a particular date for redemption or which specify any special conditions. Payment of the proceeds of redeemed shares is normally mailed within seven days following the redemption date. However, in the event of a redemption of shares purchased by check, the investor may be required to wait up to ten business days before the redemption proceeds are sent. See "Terms and Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special handling (such as wiring of funds or expedited delivery services) may be made by the Transfer Agent. The right of redemption may not be suspended or the date of payment upon redemption postponed except under unusual circumstances such as when trading on MCF 02/96 A-14 126 the NYSE is restricted or suspended. Payment of the proceeds of redemptions relating to shares for which checks sent in payment have not yet cleared will be delayed until it is determined that the check has cleared, which may take up to ten business days from the date that the check is received. SIGNATURE GUARANTEES. A signature guarantee is designed to protect the investor, the AIM Funds, AIM Distributors, and their agents by verifying the signature of each investor seeking to redeem, transfer, or exchange shares of an AIM Fund. Examples of when signature guarantees are required are: (1) redemptions by mail in excess of $50,000; (2) redemptions by mail if the proceeds are to be paid to someone other than the name(s) in which the account is registered; (3) written redemptions requesting proceeds to be sent by wire to other than the bank of record for the account; (4) redemptions requesting proceeds to be sent to a new address or an address that has been changed within the past 30 days; (5) requests to transfer the registration of shares to another owner; (6) telephone exchange and telephone redemption authorization forms; (7) changes in previously designated wiring instructions; and (8) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $50,000 or the proceeds are to be sent to the address of record. These requirements may be waived or modified upon notice to shareholders. Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission ("SEC"), and further provided that such guarantor institution is listed in one of the reference guides contained in the Transfer Agent's current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. The Transfer Agent will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS. REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption, a shareholder may invest all or part of the redemption proceeds in shares of the AIM Fund from which the redemption was made at the net asset value next computed after receipt by the Transfer Agent of the funds to be reinvested. The shareholder must ask the Transfer Agent for such privilege at the time of reinvestment. A realized gain on the redemption is taxable, and reinvestment will not alter any capital gains payable. If there has been a loss on the redemption, all of the loss may not be tax deductible, depending on the timing and amount reinvested. Under the Code, if the redemption proceeds of fund shares on which a sales charge was paid are reinvested in (or exchanged for) shares of the same fund within 90 days of the payment of the sales charge, the shareholder's basis in the fund shares redeemed may not include the amount of the sales charge paid, thereby reducing the loss or increasing the gain recognized from the redemption. Each AIM Fund may amend, suspend or cease offering this privilege at any time as to shares redeemed after the date of such amendment, suspension or cessation. This privilege may only be exercised once each year by a shareholder with respect to each AIM Fund. Shareholders who are assessed a contingent deferred sales charge in connection with the redemption of Class A shares of the Multiple Class Funds or shares of any other AIM Fund, and who subsequently reinvest a portion or all of the value of the redeemed shares in shares of the same AIM Fund within 90 days after such redemption may do so at net asset value if such privilege is claimed at the time of reinvestment. Such reinvested proceeds will not be subject to either a front-end sales charge at the time of reinvestment or an additional contingent deferred sales charge upon subsequent redemption. In order to exercise this reinvestment privilege, the shareholder must notify the Transfer Agent of his or her intent to do so at the time of reinvestment. This reinvestment privilege does not apply to Class B shares. - -------------------------------------------------------------------------------- DETERMINATION OF NET ASSET VALUE The net asset value per share (or share price) of each AIM Fund is determined as of 4:00 p.m. Eastern Time (12:00 noon and 4:00 p.m. Eastern Time with respect to AIM MONEY MARKET FUND), on each "business day" of a fund as previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of an AIM Fund's share will be determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available 15 minutes after the close of trading of the NYSE will generally be used. The net asset value per share is calculated by subtracting a class' liabilities from its assets and dividing the result by the total number of class shares outstanding. The determination of net asset value per share is made in accordance with generally accepted accounting principles. Among other items, liabilities include accrued expenses and dividends payable, and total assets include portfolio securities valued at their market value, as well as income accrued but not yet received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the fund's officers and in accordance with methods which are specifically authorized by its governing Board of Directors or Trustees. Short-term obligations with maturities of 60 days or less, and the securities held by the Money Market Funds, are valued at amortized cost as reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. MCF 02/96 A-15 127 Generally, trading in foreign securities, corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of an AIM Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which the values of the securities are determined and the close of the NYSE which will not be reflected in the computation of an AIM Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the applicable AIM Fund. - -------------------------------------------------------------------------------- DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS DIVIDENDS AND DISTRIBUTIONS Each AIM Fund's policy regarding the payment of dividends and distributions is set forth below.
DISTRIBUTIONS DISTRIBUTIONS OF NET OF NET DIVIDENDS FROM REALIZED REALIZED NET INVESTMENT SHORT-TERM LONG-TERM FUND INCOME CAPITAL GAINS CAPITAL GAINS - ----- ----------------------- --------------- --------------- AIM AGGRESSIVE GROWTH FUND.............. declared and paid annually annually annually AIM BALANCED FUND....................... declared and paid annually annually quarterly AIM CHARTER FUND........................ declared and paid annually annually quarterly AIM CONSTELLATION FUND.................. declared and paid annually annually annually AIM GLOBAL AGGRESSIVE GROWTH FUND....... declared and paid annually annually annually AIM GLOBAL GROWTH FUND.................. declared and paid annually annually annually AIM GLOBAL INCOME FUND.................. declared daily; paid annually annually monthly AIM GLOBAL UTILITIES FUND............... declared daily; paid annually annually monthly AIM GROWTH FUND......................... declared and paid annually annually annually AIM HIGH YIELD FUND..................... declared daily; paid annually annually monthly AIM INCOME FUND......................... declared daily; paid annually annually monthly AIM INTERMEDIATE GOVERNMENT FUND........ declared daily; paid annually annually monthly AIM INTERNATIONAL EQUITY FUND........... declared and paid annually annually annually AIM LIMITED MATURITY TREASURY SHARES.... declared daily; paid quarterly annually monthly AIM MONEY MARKET FUND................... declared daily; paid at least annually monthly annually AIM MUNICIPAL BOND FUND................. declared daily; paid annually annually monthly AIM TAX-EXEMPT BOND FUND OF CONNECTICUT........................... declared daily; paid annually annually monthly AIM TAX-EXEMPT CASH FUND................ declared daily; paid at least annually monthly annually AIM TAX-FREE INTERMEDIATE SHARES........ declared daily; paid annually annually monthly AIM VALUE FUND.......................... declared and paid annually annually annually AIM WEINGARTEN FUND..................... declared and paid annually annually annually
In determining the amount of capital gains, if any, available for distribution, net capital gains are offset against available net capital losses, if any, carried forward from previous fiscal periods. All dividends and distributions of an AIM Fund are automatically reinvested on the payment date in full and fractional shares of such fund, unless the shareholder has made an alternate election as to the method of payment. Dividends and distributions attributable to Class A, Class B or Class C shares are reinvested in additional shares of such Class, absent an election by a shareholder to receive cash or to have such dividends and distributions reinvested in Class A or Class B shares of another Multiple Class Fund, to the extent permitted. For funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date. Shareholders may elect, by written notice to the Transfer Agent, to receive such distributions, or the dividend portion thereof, in cash, or to invest such dividends and distributions in shares of another fund in the AIM Funds; provided that (i) dividends and distributions attributable to Class B shares may only be reinvested in Class B shares, (ii) dividends and distributions attributable to Class A shares may not be reinvested in Class B shares, and (iii) dividends and distributions attributable to the Class C shares of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in any Class B shares. Investors who have not previously selected such a reinvestment option on the account application form may contact the Transfer Agent at any time to obtain a form to authorize such reinvestments in another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales charges, and shares so purchased are automatically credited to the account of the shareholder. MCF 02/96 A-16 128 Dividends on Class B shares are expected to be lower than those for Class A or Class C shares because of higher distribution fees paid by Class B shares. Dividends on Class A, Class B and Class C 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, as discussed below. TAX MATTERS Each AIM Fund has qualified and intends to qualify for treatment as a regulated investment company under Subchapter M of the Code. As long as a fund qualifies for this tax treatment, it is not subject to federal income taxes on net investment income and capital gains that are distributed to shareholders. Each fund, for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M, is treated as a separate corporation. Therefore, no fund may offset its gains against another fund's losses and each fund must individually comply with all of the provisions of the Code which are applicable to its operations. TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to distribute substantially all of its net investment income and net realized capital gains to its shareholders, it is not expected that any such fund will be required to pay any federal income tax. Each AIM Fund also intends to meet the distribution requirements of the Code to avoid the imposition of a non-deductible 4% excise tax calculated as a percentage of certain undistributed amounts of taxable ordinary income and capital gain net income. Nevertheless, shareholders normally are subject to federal income taxes, and any applicable state and local income taxes, on the dividends and distributions received by them from a fund whether in the form of cash or additional shares of a fund, except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE INTERMEDIATE SHARES (the "Tax-Exempt Funds") which are exempt from federal tax. Dividends paid by a fund (other than capital gain distributions) may qualify for the federal 70% dividends received deduction for corporate shareholders to the extent of the qualifying dividends received by the fund on domestic common or preferred stock. It is not likely that dividends received from AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly after the end of each year, shareholders will receive information regarding the amount and federal income tax treatment of all distributions paid during the year. No gain or loss will be recognized by shareholders upon the automatic conversion of Class B shares of a Multiple Class Fund into Class A shares of such Fund. For each redemption of a fund's shares by a non-exempt shareholder, the fund or the securities dealer effecting the transaction is required to file an information return with the IRS. TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON. Under existing provisions of the Code, nonresident alien individuals, foreign partnerships and foreign corporations may be subject to federal income tax withholding at a 30% rate on income dividends and distributions (other than exempt-interest dividends and capital gain dividends) and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption. DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL INFORMATION. TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required to include the "exempt-interest" portion of dividends paid by the Tax-Exempt Funds in their gross income for federal income tax purposes. However, shareholders will be required to report the receipt of exempt-interest dividends and other tax-exempt interest on their federal income tax returns. Moreover, exempt-interest dividends from the Tax-Exempt Funds may be subject to state income taxes, may give rise to a federal alternative minimum tax liability, may affect the amount of social security benefits subject to federal income tax, may affect the deductibility of interest on certain indebtedness of the shareholder, and may have other collateral federal income tax consequences. The Tax-Exempt Funds may invest in Municipal Securities the interest on which will constitute an item of tax preference and which therefore could give rise to a federal alternative minimum tax liability for shareholders, and may invest up to 20% of their net assets in such securities and MCF 02/96 A-17 129 other taxable securities. For additional information concerning the alternative minimum tax and certain collateral tax consequences of the receipt of exempt-interest dividends, see the Statements of Additional Information applicable to the Tax-Exempt Funds. The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but will endeavor to avoid investments which would result in taxable dividends. The percentage of dividends which constitute exempt-interest dividends, and the percentage thereof (if any) which constitute an item of tax preference, will be determined annually. This percentage may differ from the actual percentages for any particular day. To the extent that dividends are derived from taxable investments or net realized short-term capital gains, they will constitute ordinary income for federal income tax purposes, whether received in cash or additional shares. Distributions of net long-term capital gains will be taxable as long-term capital gains, whether received in cash or additional shares, and regardless of the length of time a particular shareholder may have held his shares. From time to time, proposals have been introduced before Congress that would have the effect of reducing or eliminating the federal tax exemption on Municipal Securities. If such a proposal were enacted, the ability of the Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected. AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes dividends paid by mutual funds out of interest on U.S. Treasury and certain other U.S. Government obligations, and investors should consult with their own tax advisors concerning the availability of such exemption. AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do so, each of these funds may elect to pass through to shareholders credits for foreign taxes paid. If the fund makes such an election, a shareholder who receives a distribution (1) will be required to include in gross income his proportionate share of foreign taxes allocable to the distribution and (2) may claim a credit or deduction for such share for his taxable year in which the distribution is received, subject to the general limitations imposed on the allowance of foreign tax credits and deductions. Shareholders should also note that certain gains or losses attributable to fluctuations in exchange rates or foreign currency forward contracts may increase or decrease the amount of income of the fund available for distribution to shareholders, and should note that if such losses exceed other income during a taxable year, the fund would not be able to pay ordinary income dividends. - -------------------------------------------------------------------------------- GENERAL INFORMATION CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, serves as custodian for the portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND FUND and AIM LIMITED MATURITY TREASURY SHARES, for which The Bank of New York, 110 Washington Street, New York, New York 10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly-owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend payment agent. LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and has passed upon the legality of the shares offered pursuant to this Prospectus. SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should be directed to an A I M Fund Services, Inc. Client Services Representative by calling (713) 626-1919 (extension 5224) (in Houston), or toll-free at (800) 959-4246 (elsewhere). The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. OTHER INFORMATION. This Prospectus sets forth basic information that investors should know about the fund(s) named on the cover page prior to investing. Recipients of this Prospectus will be provided with a copy of the annual report of the fund(s) to which this Prospectus relates, upon request and without charge. A Statement of Additional Information has been filed with the SEC and is available upon request and without charge, by writing or calling AIM Distributors. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from this Prospectus, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. MCF 02/96 A-18 130 APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF CORPORATE BOND RATINGS Investment grade debt securities are those rating categories indicated by an asterisk (*). MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS: *AAA -- Bonds which are rated 'Aaa' are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. *AA -- Bonds which are rated 'Aa' are judged to be of high quality by all standards. Together with the 'Aaa' group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in 'Aaa' securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long term risks appear somewhat larger than in 'Aaa' securities. *A -- Bonds which are rated 'A' possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. *BAA -- Bonds which are rated 'Baa' are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. BA -- Bonds which are rated 'Ba' are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during 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. NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from 'Aa' through 'B' in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. STANDARD AND POOR'S CORPORATION CLASSIFICATIONS ARE AS FOLLOWS: *AAA -- Debt rated 'AAA' has the highest rating assigned by Standard & Poor's ("S&P"). Capacity to pay interest and repay principal is extremely strong. *AA -- Debt rated 'AA' has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree. *A -- Debt rated 'A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. *BBB -- Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher categories. BB, B, CCC, CC, C -- Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. 'BB' indicates the lowest degree of speculation and 'C' the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. A-19 131 BB -- Debt rated 'BB' has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The 'BB' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BBB-' rating. B -- Debt rated 'B' has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The 'B' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-' rating. CCC -- Debt rated 'CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The 'CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'B' or 'B-' rating. CC -- The rating 'CC' is typically applied to debt subordinated to senior debt that is assigned an actual or implied 'CCC' rating. C -- The rating 'C' is typically applied to debt subordinated to senior debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. C1 -- The rating 'C1' is reserved for income bonds on which no interest is being paid. D -- Debt rated 'D' is in payment default. The 'D' rating category is used when interest payments or principal or principal payments 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 if debt service payments are jeopardized. PLUS (+) OR MINUS (-): The rating from 'AA' to 'CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major categories. A-20 132 *BBB -- Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. BB -- Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified which could assist the obligor in satisfying its debt service requirements. B -- Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue. CCC -- Bonds have certain identifiable characteristics which, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment. CC -- Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time. C -- Bonds are in imminent default in payment of interest or principal. DDD, DD, AND D -- Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. 'DDD' represents the highest potential for recovery on these bonds, and 'D' represents the lowest potential for recovery. PLUS(+) MINUS (-) -- Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the 'AAA', 'DDD', 'DD', or 'D' categories. A-21 133 APPENDIX B - -------------------------------------------------------------------------------- DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES The following list includes certain common securities, issued or guaranteed by U.S. Government Agencies or Instrumentalities and does not purport to be exhaustive. EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the United States. FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a cooperatively owned, nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government. FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued by the Federal Home Loan Bank System. FHA DEBENTURES -- are debentures issued by the Federal Housing Authority of the U.S. Government. FHA INSURED NOTES -- are bonds issued by the Farmers Home Administration of the U.S. Government. FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds issued and guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its funds by selling mortgages (as well as participation interests in the mortgages) and by borrowing funds through the issuance of debentures and otherwise. FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent undivided interests in specified groups of conventional mortgage loans (and/or participation interests in those loans) underwritten and owned by FHLMC. At least 95% of the aggregate principal balance of the whole mortgage loans and/or participations in a group formed by FHLMC typically consists of single-family mortgage loans, and not more than 5% consists of multi-family loans. FHLMC Participation Certificates are not guaranteed by, and do not constitute a debt or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC Participation Certificates are issued in fully registered form only, in original unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million and $5 million. FHLMC guarantees to each registered holder of a Participation Certificate, to the extent of such holder's pro rata share (i) the timely payment of interest accruing at the applicable certificate rate on the unpaid principal balance outstanding on the mortgage loans, and (ii) collection of all principal on the mortgage loans without any offset or deductions. Pursuant to these guaranties, FHLMC indemnifies holders of Participation Certificates against any reduction in principal by reason of charges for property repairs, maintenance, and foreclosure. FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds issued and guaranteed by FNMA, a federally chartered and privately-owned corporation. FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage pass-through certificates issued and guaranteed by FNMA. FNMA Certificates represent a fractional undivided ownership interest in a pool of mortgage loans either provided from FNMA's own portfolio or purchased from primary lenders. The mortgage loans included in the pool are conventional, insured by the Federal Housing Administration or guaranteed by the Veterans Administration. FNMA Certificates are not backed by, nor entitled to, the full faith and credit of the U.S. Government. Loans not provided from FNMA's own portfolio are purchased only from primary lenders that satisfy certain criteria developed by FNMA, including depth of mortgage origination experience, servicing experience and financial capacity. FNMA may purchase an entire loan pool from a single lender, and issue Certificates backed by that loan pool alone, or may package a pool made up of loans purchased from various lenders. Various types of mortgage loans, and loans with varying interest rates, may be included in a single pool, although each pool will consist of mortgage loans related to one-family or two-to-four family residential properties. Substantially all FNMA mortgage pools currently consist of fixed interest rate and growing equity mortgage loans, although FNMA mortgage pools may also consist of adjustable interest rate mortgage loans or other types of mortgage loans. Each mortgage loan must conform to FNMA's published requirements or guidelines with respect to maximum principal amount, loan-to-value ratio, loan term, underwriting standards and insurance coverage. All mortgage loans are held by FNMA as trustee pursuant to a trust indenture for the benefit of Certificate holders. The trust indenture gives FNMA responsibility for servicing and administering the loans in a pool. FNMA contracts with the lenders or other servicing institutions to perform all services and duties customary to the servicing of mortgages, as well as duties specifically prescribed by FNMA, all under FNMA supervision. FNMA may remove service providers for cause. The pass-through rate on FNMA Certificates is the lowest annual interest rate borne by an underlying mortgage loan in the pool, less a fee to FNMA as compensation for servicing and for FNMA's guarantee. Lenders servicing the underlying mortgage loans receive as compensation a portion of the fee paid to FNMA, the excess yields on pooled loans with coupon rates above the lowest rate borne by any mortgage loan in the pool and certain other amounts collected, such as late charges. A-22 134 APPLICATION INSTRUCTIONS SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the social security number or taxpayer identification number (TIN) which appears in Section 1 of the Application complies with the following guidelines: - -------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D. ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF: ------------ -------------------- ------------ ------------------ Individual Individual Trust, Estate, Pension Trust, Estate, Pension Plan Trust Plan Trust and not personal TIN of fiduciary Joint Individual First individual listed in the "Account Registration" portion of the Application Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership, Minors/Unif. Other Organization Other Organization Transfers to Minors Legal Guardian Ward, Minor or Incompetent Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ------------------------------------------------------------------------------- Applications without a certified TIN will not be accepted unless the applicant is a nonresident alien, foreign corporation or foreign partnership and has attached a completed IRS Form W-8. BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS regulations, withhold 31% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a TIN and a certification that he is not subject to backup withholding. An investor is subject to backup withholding if: (1) the investor fails to furnish a correct TIN to the Fund, or (2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or (3) the investor is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or (4) the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) the investor does not certify his TIN. This applies only to reportable interest, dividend, broker or barter exchange accounts opened after 1983, or broker accounts considered inactive during 1983. Except as explained in (5) above, other reportable payments are subject to backup withholding only if (1) or (2) above applies. Certain payees and payments are exempt from backup withholding and information reporting and such entities should check the box "Exempt from Backup Withholding" on the Application. A complete listing of such exempt entities appears in the Instructions accompanying Form W-9 (which can be obtained from the IRS) and includes, among others, the following: - - a corporation - - an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) - - the United States or any of its agencies or instrumentalities - - a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities - - a foreign government or any of its political subdivisions, agencies or instrumentalities - - an international organization or any of its agencies or instrumentalities - - a foreign central bank of issue - - a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. - - a futures commission merchant registered with the Commodity Futures Trading Commission - - a real estate investment trust - - an entity registered at all times during the tax year under the Investment Company Act of 1940 - - a common trust fund operated by a bank under Section 584(a) - - a financial institution - - a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List - - a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. MCF 02/96 B-1 135 NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to appropriate withholding as described in the Prospectus under "Dividends, Distributions and Tax Matters." SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. The Transfer Agent reserves the right to cease to act as agent subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone exchange privilege at any time without notice. SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the new Account Application form, an investor appoints the Transfer Agent as his true and lawful attorney to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as agent subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor (see the applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges by Mail"). MCF 02/96 B-2 136 [AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R) Investment Advisor A I M Advisors, Inc. 11 Greenway Plaza, Suite 1919 Houston, TX 77046-1173 Transfer Agent A I M Fund Services, Inc. P.O. Box 4739 Houston, Texas 77210-4739 Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter A I M Distributors, Inc. P.O. Box 4739 Houston, TX 77210-4739 Independent Accountants KPMG Peat Marwick LLP 700 Louisiana NationsBank Building Houston, TX 77002 For more complete information about any other Fund in The AIM Family of Funds(R), including charges and expenses, please call (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere) or write to A I M Distributors, Inc. and request a free prospectus. Please read the prospectus carefully before you invest or send money. 137 STATEMENT OF ADDITIONAL INFORMATION AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND (SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.) 11 Greenway Plaza Suite 1919 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 FROM AUTHORIZED DEALERS OR BY WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739, OR BY CALLING (713) 626-1919, EXTENSION 5001 (IN HOUSTON) OR (800) 347-4246 (ELSEWHERE) ------------------------- Statement of Additional Information Dated: March 1, 1996 Relating to the Prospectus Dated: March 1, 1996 138 TABLE OF CONTENTS
PAGE INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 13 Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 22 Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Investment Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 23 THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
i 139 Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
ii 140 INTRODUCTION AIM International Funds, Inc. (the "Company") 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, which relates to the following portfolios of the Company: AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund (individually, a "Fund" and collectively, the "Funds"), is included in a Prospectus, dated March 1, 1996 (the "Prospectus"). Copies of the Prospectus and additional copies of this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Fund's shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). Investors must receive a Prospectus before they invest in the Funds. 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 Funds' current Prospectus, and in order to avoid repetition, reference will be made herein to sections of the Prospectus. Additionally, the Prospectus and this Statement of Additional Information omit certain information contained in the Company's Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from the Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE COMPANY THE COMPANY AND ITS SHARES The Company was organized in 1991 as a Maryland corporation, and is registered with the SEC as an open-end, series, management investment company. The Company currently consists of four separate portfolios: AIM International Equity Fund ("Equity Fund"), AIM Global Aggressive Growth Fund ("Aggressive Growth Fund"), AIM Global Growth Fund ("Growth Fund") and AIM Global Income Fund ("Income Fund"). Each portfolio of the Company offers both Class A and Class B shares. This Statement of Additional Information and the associated Prospectus relate solely to the Funds. Shares of the Equity Fund are offered through a separate prospectus and statement of additional information. As used in the Prospectus, the term "majority of the outstanding shares" of the Company, of a particular Fund or of a class of a Fund means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Company, such Fund or such class present at a meeting of shareholders, if the holders of more than 50% of the outstanding shares of the Company, such Fund or such class are present or represented by proxy or (ii) more than 50% of the outstanding shares of the Company, such Fund or such class. Each share of a Fund is entitled to one vote, to participate equally in dividends and distributions declared by the Board of Directors with respect to such Fund and, upon liquidation of the Fund, to participate proportionately in the Fund's net assets remaining after satisfaction of the Fund's outstanding liabilities. Fractional shares have proportionately the same rights, including voting rights, as are provided for full shares. 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 and 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 1 141 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. The following is a list of such publications or media entities: Advertising Age Financial World Nation's Business Barron's Forbes New York Times Best's Review Fortune Pension World Broker World Hartford Courant Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services: Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper Analytical Services
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. TOTAL RETURN CALCULATIONS Total returns quoted in advertising reflect all aspects of the applicable Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in such Fund's net asset value per share over the period. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a particular Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual total returns are a convenient means of comparing investment alternatives, investors should realize that a Fund's performance is not constant over time, but changes from year to year, and that average annual total returns do not represent the actual year-to-year performance of such Fund. In addition to average annual total returns, each Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns and other performance information may be quoted numerically or in tables, graphs or similar illustrations. Total returns may be quoted with or without taking the Class A shares' 4.75% maximum sales charge, or the Class B shares' 5% maximum contingent deferred sales charge ("CDSC") into account. Excluding sales charges from a total return calculation produces a higher total return figure. 2 142 YIELD QUOTATIONS The standard formula for calculating yield for the Income Fund, as described in the Prospectus, is as follows: YIELD = 2[((a-b)/(c x d) + 1)power of six-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. The yields for the Class A and Class B shares of the Income Fund for the 30-day period ended October 31, 1995 were as follows: Class A . . . . . . . . . . . 6.30% Class B . . . . . . . . . . . 6.12% HISTORICAL PORTFOLIO RESULTS The total returns for Class A shares of Aggressive Growth Fund, Growth Fund and Income Fund for the year ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1995 (which include the maximum sales charge of 4.75% and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return --------------------------- ----------------- Periods ended October 31, 1995 Periods ended October 31, 1995 ------------------------------ -------------------------------- One Since One Since Class A Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund 22.00% 21.54% 22.00% 24.67% Growth Fund 14.76% 15.24% 14.76% 17.38% Income Fund 10.56% 10.18% 10.56% 11.58%
The total returns for Class B shares of Aggressive Growth Fund, Growth Fund and Income Fund for the year ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1995 (which include the maximum contingent deferred sales charge of 5% and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return --------------------------- ----------------- Periods ended October 31, 1995 Periods ended October 31, 1995 ------------------------------ -------------------------------- One Since One Since Class B Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund 22.52% 22.87% 22.52% 26.20% Growth Fund 14.96% 16.30% 14.96% 18.60% Income Fund 10.56% 10.96% 10.56% 12.47%
3 143 During the one-year period ended October 31, 1995, a hypothetical $1,000 investment in the Class A shares of Aggressive Growth Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,219.95, $1,147.60 and $1,105.56, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. For the period September 15, 1994 (inception date) through October 31, 1995, a hypothetical $1,000 investment in the Class A shares of the Aggressive Growth Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,246.67, $1,173.82 and $1,115.77, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 1995, a hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,225.22, $1,149.60 and $1,105.57, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. For the period September 15, 1994 (inception date) through October 31, 1995, a hypothetical $1,000 investment in the Class B shares of the Aggressive Growth Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,262.00, $1,186.00 and $1,124.73, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. Each Fund's performance may be compared in advertising to the performance of other mutual funds in general, or of particular types of mutual funds, especially those with similar objectives. Such performance data may be prepared by Lipper Analytical Services, Inc. and other independent services which monitor the performance of mutual funds. The Funds may also advertise mutual fund performance rankings which have been assigned to each respective Fund by such monitoring services. Each Fund's performance may also be compared in advertising and other materials to the performance of comparative benchmarks such as indices of stocks comparable to those in which the Funds invest, as well as the following: Standard & Poor's 500 Stock Index Dow Jones Industrial Average Consumer Price Index Morgan Stanley Capital International Indices, Bond Buyer Index including: NASDAQ EAFE Index COFI Pacific Basin Index First Boston High Yield Index Pacific Ex Japan Index (a widely The Financial Times - Actuaries World Indices (a recognized series of wide range of comprehensive measures of indices in international stock price performance for the world's market major stock markets and regional areas) performance)
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 90 Day Treasury Bills Advertising for the Income Fund may from time to time include discussions of general economic conditions and interest rates. From time to time, sales literature and/or advertisements for any of the Funds may disclose the largest holdings in the Fund's portfolios. From time to time, each Fund's advertising may include discussions of general domestic and international economic conditions and interest rates, and may make reference to international economic sources such as The Bundesbank (the German equivalent of the U.S. Federal Reserve Board). Each Fund's advertising may also include references to the use of the Fund as part of an individual's overall retirement investment program. 4 144 From time to time, each 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. Also from time to time, sales literature and/or advertisements for the Funds may disclose (i) the largest holdings in the Funds' portfolios, (ii) certain selling group members and/or (iii) certain institutional shareholders. PORTFOLIO TRANSACTIONS AND BROKERAGE GENERAL BROKERAGE POLICY Subject to policies established by the Board of Directors of the Company, A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and sell securities for each Fund, for the selection of broker-dealers, for the execution of the Funds' investment portfolio transactions, for the allocation of brokerage fees in connection with such transactions, and where applicable, for the negotiation of commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. While AIM generally seeks reasonably competitive commission rates, the Funds do not necessarily pay the lowest commission or spread available. A portion of the securities in which the Funds invest are traded in over-the-counter ("OTC") markets, and in such transactions, a Fund deals directly with the dealers who make markets in the securities involved, except in those circumstances where better prices and executions are available elsewhere. Portfolio transactions placed through dealers serving as primary market makers are effected at net prices, generally without commissions as such, 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. In recent years, however, an increasing number of overseas stock markets have adopted a system of negotiated rates, although a number of markets continue to be subject to an established schedule of minimum commission rates. Foreign equity securities may be held by certain Funds in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or other securities representing underlying securities of foreign issuers, or securities convertible into foreign equity securities. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the United States securities markets, and EDRs, in bearer form, are designed for use in European securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in 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. AIM may from time to time determine target levels of commission business for AIM to transact with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be determined 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 attitude toward and interest in mutual funds in general and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular. No specific formula will be used in connection with any of the foregoing considerations in determining the target levels. However, if a broker has indicated a certain level of desired commissions in return for certain research services provided by the broker, this factor will be taken into consideration by AIM. 5 145 Subject to the overall objective of obtaining best net price and most favorable execution for the Funds, AIM may also consider sales of the Funds and of the other AIM Funds as a factor in the selection of broker-dealers to execute portfolio transactions for a Fund. AIM will seek, whenever possible, to recapture for the benefit of a Fund any commissions, fees, brokerage or similar payments paid by the Fund on portfolio transactions. Normally, the only fees which may be recaptured are the soliciting dealer fees on the tender of a Fund's portfolio securities in a tender or exchange offer. The Funds are not under any obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Brokers who provide supplemental investment research to AIM may receive orders for transactions by a Fund. Information so received will be in addition to and not in lieu of the services required to be performed by AIM under its agreements with such Fund, and the expenses of AIM will not necessarily be reduced as a result of the receipt of such supplemental information. Certain research services furnished by broker-dealers may be useful to AIM in connection with its services to other advisory clients, including the other AIM Funds. Also, a Fund may pay a higher price for securities or higher commissions in recognition of research services furnished by broker-dealers. Provisions of the Investment Company Act of 1940, as amended (the "1940 Act") and rules and regulations thereunder have been construed to prohibit the Funds from purchasing securities or instruments from, or selling securities or instruments to, any holder of 5% or more of the voting securities of any investment company managed or advised by AIM. The Funds have obtained an order of exemption from the SEC which permits a Fund to engage in certain transactions with such 5% holders, if a Fund complies with conditions and procedures designed to ensure that such transactions are executed at fair market value and present no conflicts of interest. AIM and its affiliates manage several other investment accounts, some of which may have investment objectives similar to those of the Funds. It is possible that, at times, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of such investment accounts. The position of each account, however, in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities 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, transactions in such securities will be allocated among the Fund(s) and such accounts in a manner deemed equitable by AIM. AIM may combine such transactions, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. Simultaneous transactions could, however, adversely affect the ability of a Fund to obtain or dispose of the full amount of a security which it seeks to purchase or sell. In some cases the procedure for allocating portfolio transactions among the 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, the main factors considered by AIM are the respective 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. From time to time, an identical security may be sold by an AIM Fund or another investment account advised by AIM or A I M Capital Management, Inc. ("AIM Capital") and simultaneously purchased by another investment account advised by AIM or AIM Capital, when such transactions comply with applicable rules and regulations and are deemed consistent with the investment objective(s) and policies of the investment accounts advised by AIM or AIM Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding transactions between investment accounts advised by AIM or AIM Capital have been adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Company. Although such transactions may result 6 146 in custodian, tax or other related expenses, no brokerage commissions or other direct transaction costs are generated by transactions among the investment accounts advised by AIM or AIM Capital. SECTION 28(E) STANDARDS Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall not be deemed to have acted unlawfully or to have breached its fiduciary duty solely because under certain circumstances it has caused an account to pay a higher commission than the lowest available. To obtain the benefit of 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," and that the services provided by a broker provide AIM with lawful and appropriate assistance in the performance of its investment decision-making responsibilities. Accordingly, the price to a Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered. Broker-dealers utilized by AIM may furnish statistical, research and other information or services which are deemed by AIM to be beneficial to the Funds' investment programs. Research services received from brokers supplement AIM's own research (and the research of sub-advisors to other clients of AIM), and may include the following types of information: statistical and background information on industry groups and individual companies; forecasts and interpretations with respect to United States and foreign economies, securities, markets, specific industry groups and individual companies; information on political developments; portfolio management strategies; performance information on securities and 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. Such information may be communicated electronically, orally or in written form. Research services may also include the providing of equipment used to communicate research information, the arranging of meetings with management of companies and the providing of access to consultants who supply research information. The outside research assistance is useful to AIM since the brokers utilized by AIM as a group tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, this research provides AIM with a diverse perspective on financial markets. Research services which are provided to AIM by brokers are available for the benefit of all accounts managed or advised by AIM or by sub-advisors to accounts managed or advised by AIM. In some cases, the research services are available only from the broker providing such services. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM is of the opinion that because the broker research supplements rather than replaces its research, the receipt of such research does not tend to decrease its expenses, but tends to improve the quality of its investment advice. However, to the extent that AIM would have purchased any such research services had such services not been provided by brokers, the expenses of such services to AIM could be considered to have been reduced accordingly. Certain research services furnished by broker-dealers may be useful to AIM in advising clients other than the Funds. Similarly, any research services received by AIM through the placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Funds. AIM is of the opinion that this material is beneficial in supplementing AIM's research and analysis; and, therefore, it may benefit the Funds by improving the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. 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. With respect to the Income Fund, purchase and sales of portfolio securities are generally transacted with the issuer or a primary market maker for the securities on a net basis, without any brokerage commission being paid by the Fund for such purchases. Purchases from dealers serving as primary market makers reflect 7 147 the spread between the bid and asked prices. Purchases and sales for the Aggressive Growth Fund and Growth Fund generally involve a broker, and consequently involve the payment of commissions. BROKERAGE COMMISSIONS PAID For the fiscal year ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1994, the Aggressive Growth Fund paid brokerage commissions of $1,409,761 and $59,076, respectively. For the fiscal year ended October 31, 1995, AIM allocated certain of Aggressive Growth Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $5,538,320 and the related brokerage commissions were $12,166. For the fiscal year ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1994, Growth Fund paid brokerage commissions of $161,100 and $9,933, respectively. For the fiscal year ended October 31, 1995, AIM allocated certain of Growth Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $1,174,661 and the related brokerage commissions were $2,136. For the fiscal year ended October 31, 1995 and the period September 15, 1994 (inception date) through October 31, 1994, Income Fund paid brokerage commissions of $6,939 and $0, respectively. For the fiscal year ended October 31, 1995, none of Income Fund's brokerage transactions were allocated to broker-dealers that provided AIM with certain research, statistical and other information. HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES The following discussion of certain investment strategies supplements the discussion set forth in the Prospectus under the heading "Hedging Strategies and Other Investment Techniques." Each Fund may seek to hedge its portfolio against movements in the equity markets, interest rates and exchange rates between currencies through the use of options, futures transactions, options on futures and foreign forward exchange transactions. Each Fund has authority to write (sell) covered call and put options on its portfolio securities, purchase put and call options on securities and engage in transactions in stock index options, stock index futures and financial futures, and related options on such futures. The Funds may also deal in certain forward contracts, including forward foreign exchange transactions, foreign currency options and futures, and related options on such futures. The Funds are authorized to enter into such options and futures transactions either on exchanges or in the OTC markets. Although certain risks are involved in options and futures transactions (as discussed in the Prospectus and below), AIM believes that, because the Funds will only engage in these transactions for hedging purposes, the options and futures portfolio strategies of the Funds will not subject the Funds to the risks frequently associated with the speculative use of options and futures transactions. While the Funds' use of hedging strategies is intended to reduce the volatility of the respective net asset value of each Fund's shares, a Fund's net asset value will nevertheless fluctuate. There can be no assurance that the hedging transactions of any of the Funds will be effective. HEDGING FOREIGN CURRENCY RISKS Generally, the foreign exchange transactions of a Fund will be conducted on a spot (cash) basis at the spot rate then prevailing for purchasing or selling currency in the foreign exchange market. However, the Funds have authority to deal in forward foreign exchange between currencies (including the U.S. dollar) as a hedge against possible variations in the foreign exchange rate between such currencies. This is accomplished through individually negotiated contractual agreements to purchase or to sell a specified currency at a specified future date and price set at the time of the contract. A Fund's dealings in forward foreign exchange may be with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. 8 148 The Funds may not position hedge with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in any such Fund's portfolio denominated or quoted in that particular foreign currency. The Funds will not attempt to hedge all of their respective portfolio positions and will enter into such transactions only to the extent, if any, deemed appropriate by AIM. None of the Funds will enter into a position hedging commitment if, as a result thereof, (1) the Aggressive Growth Fund or the Growth Fund would have more than 10% of the value of their respective total assets committed to such contracts, or (2) the Income Fund would have more than 40% of the value of its total assets committed to such contracts. None of the Funds will enter into a forward contract with a term of more than one year. In addition to the forward exchange contracts, the Funds may also purchase or sell listed or OTC foreign currency options, foreign currency futures and related options as a short or long hedge against possible variations in foreign exchange rates. The cost to a Fund of engaging in foreign currency transactions varies with such factors as the currencies involved, the length of the contract period and the market conditions then prevailing. Since transactions in foreign currency exchange usually are conducted on a principal basis, no fees or commissions are involved. Transactions involving forward exchange contracts and futures contracts and options thereon are subject to certain risks. A detailed discussion of such risks appears under the caption "Risk Factors in Options, Futures, Forward and Currency Transactions." WRITING COVERED CALL OPTIONS Each Fund is authorized to write (sell) covered call options on the securities in which it may invest and to enter into closing purchase transactions with respect to such options. Writing a call option obligates a Fund to sell or deliver the option's underlying security, in return for the strike price, upon exercise of the option. By writing a call option, a Fund receives an option premium from the purchaser of the call option. Writing covered call options is generally a profitable strategy if prices remain the same or fall. Through receipt of the option premium, a Fund would seek to mitigate the effects of a price decline. By writing covered call options, however, a Fund gives up the opportunity, while the option is in effect, to profit from any price increase in the underlying security above the option exercise price. In addition, a Fund's ability to sell the underlying security will be limited while the option is in effect unless the Fund effects a closing purchase transaction. WRITING COVERED PUT OPTIONS Each Fund is authorized to write (sell) covered put options on its portfolio securities and to enter into closing transactions with respect to such options. When a Fund writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, a Fund assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. A Fund may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option a Fund has written, however, the Fund must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. Each Fund may write put options as an alternative to purchasing actual securities. If security prices rise, a Fund would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that a Fund will also profit, because it should be able to close out the option at a lower price. If security prices fall, a Fund would expect to suffer a loss. This loss should be less than the loss a Fund would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. 9 149 PURCHASING PUT OPTIONS Each Fund is authorized to purchase put options to hedge against a decline in the market value of its portfolio securities. By buying a put option a Fund has the right (but not the obligation) to sell the underlying security at the exercise price, thus limiting the Fund's risk of loss through a decline in the market value of the security until the put option expires. The amount of any appreciation in the value of the underlying security will be partially offset by the amount of the premium paid by a Fund for the put option and any related transaction costs. Prior to its expiration, a put option may be sold in a closing sale transaction and profit or loss from the sale will depend on whether the amount received is more or less than the premium paid for the put option plus the related transaction costs. A closing sale transaction cancels out a Fund's position as the purchaser of an option by means of an offsetting sale of an identical option prior to the expiration of the option it has purchased. None of the Funds will purchase put options on securities (including stock index options discussed below) if as a result of such purchase, the aggregate cost of all outstanding options on securities held by a Fund would exceed 5% of the market value of the Fund's total assets. PURCHASING CALL OPTIONS Each Fund is also authorized to purchase call options. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). The Funds will purchase call options only in connection with "closing purchase transactions." COMBINED OPTION POSITIONS Each Fund, for hedging purposes, may purchase and write options in combination with each other to adjust the risk and return characteristics of the Fund's overall position. For example, a Fund may purchase a put option and write a covered call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contact. This technique, called a "straddle," enables a Fund to offset the cost of purchasing a put option with the premium received from writing the call option. However, by selling the call option, a Fund gives up the ability for potentially unlimited profit from the put option. Another possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. STOCK INDEX OPTIONS AND FUTURES AND FINANCIAL FUTURES Each Fund is authorized to engage in transactions in stock index options and futures and financial futures, and related options. A Fund may purchase or write put and call options on stock indices to hedge against the risks of market-wide stock price movements in the securities in which the Fund invests. Options on indices are similar to options on securities except that on exercise or assignment, the parties to the contract pay or receive an amount of cash equal to the difference between the closing value of the index and the exercise price of the option times a specified multiple. A Fund may invest in stock index options based on a broad market index, such as the S&P 500 Index, or on a narrow index representing an industry or market segment, such as the AMEX Oil & Gas Index. The Funds' investments in foreign stock index futures contracts and foreign interest rate futures contracts, and related options, are limited to only those contracts and related options that have been approved by the Commodities Futures Trading Commission ("CFTC") for investment by United States investors. Additionally, with respect to a Fund's investments in foreign options, unless such options are specifically authorized for investment by order of the CFTC or meet the definition of "trade option" as set forth in CFTC Regulation 32.4, a Fund will not make such investments. Each Fund may also purchase and sell stock index futures contracts and other financial futures contracts ("futures contracts") as a hedge against adverse changes in the market value of its portfolio securities 10 150 as described below. A futures contract is an agreement between two parties which obligates the purchaser of the futures contract to buy and the seller of a futures contract to sell a security for a set price on a future date. Unlike most other futures contracts a stock index futures contract does not require actual delivery of securities, but results in cash settlement based upon the difference in value of the index between the time the contract was entered into and the time of its settlement. A Fund may effect transactions in stock index futures contracts in connection with equity securities in which it invests and in financial futures contracts in connection with the debt securities in which it invests, if any. Transactions by a Fund in stock index futures and financial futures are subject to limitations as described below under "Restrictions on the Use of Futures Transactions." A Fund may sell futures contracts in anticipation of or during a market decline to attempt to offset the decrease in market value of the Fund's securities portfolio that might otherwise result. When a Fund is not fully invested in the securities markets and anticipates a significant market advance, the Fund may purchase futures in order to gain rapid market exposure that may in part or entirely offset increases in the cost of securities that the Fund intends to purchase. As such purchases are made, an equivalent amount of futures contracts will be terminated by offsetting sales. The Funds do not consider purchases of futures contracts to be a speculative practice under these circumstances. It is anticipated that, in a substantial majority of these transactions, the Fund will purchase such securities upon termination of the long futures position, whether the long position results from the purchase of a futures contract or the purchase of a call option, but under unusual circumstances (e.g., the Fund experiences a significant amount of redemptions) a long futures position may be terminated without the corresponding purchase of securities. The Funds are also authorized to purchase and write call and put options on futures contracts and stock indices in connection with their hedging activities. Generally, these strategies would be utilized under the same market and market sector conditions (i.e., conditions relating to specific types of investments) in which a Fund enters into futures transactions. A Fund may purchase put options or write call options on futures contracts and stock indices rather than selling the underlying futures contract in anticipation of a decrease in the market value of securities. Similarly, a Fund can purchase call options, or write put options on futures contracts and stock indices, as a substitute for the purchase of such futures to hedge against the increased cost resulting from an increase in the market value of securities which the Fund intends to purchase. Each Fund is also authorized to engage in options and futures transactions on U.S. and foreign exchanges and in options in the OTC markets ("OTC options"). In general, exchange traded contracts are third-party contracts (i.e., performance of the parties' obligations is guaranteed by an exchange or clearing corporation) with standardized strike prices and expiration dates. OTC options transactions are two-party contracts with price and terms negotiated by the buyer and seller. See "Restrictions on OTC Options" below for information as to restrictions on the use of OTC options. Each Fund is authorized to purchase or sell listed or OTC foreign security or currency options, foreign security or currency futures and related options as a short or long hedge against possible variations in foreign exchange rates and market movements. Such transactions could be effected with respect to hedges on non-U.S. dollar denominated securities owned by the Fund, sold by the Fund but not yet delivered, or committed or anticipated to be purchased by the Fund. As an illustration, a Fund may use such techniques to hedge the stated value in U.S. dollars of an investment in a yen-denominated security. In such circumstances, for example, the Fund can purchase a foreign currency put option enabling it to sell a specified amount of yen for U.S. dollars at a specified price by a future date. To the extent the hedge is successful, a loss in the value of the yen relative to the U.S. dollar will tend to be offset by an increase in the value of the put option. Certain differences exist between these hedging instruments. For example, foreign currency options provide the holder thereof the rights to buy or sell a currency at a fixed price on a future date. A futures contract on a foreign currency is an agreement between two parties to buy and sell a specified amount of a currency for a set price on a future date. Futures contracts and options on futures contracts are traded on boards of trade or futures exchanges. The Funds will not speculate in foreign security or currency options, futures or related options. None of the Funds will hedge a currency substantially in excess of the market value 11 151 of securities which any such Fund has committed or anticipates to purchase which are denominated in such currency, and in the case of securities which have been sold by such Fund but not yet delivered, the proceeds thereof in its denominated currency. None of the Funds will incur potential net liabilities of more than 25% of its total assets from foreign security or currency options, futures or related options. RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS The purchase or sale of a futures contract differs from the purchase or sale of a security in that no price or premium is paid or received. Instead, an amount of cash or securities acceptable to the broker and the relevant contract market, which varies, but is generally about 5% of the contract amount, must be deposited with the broker. This amount is known as "initial margin" and represents a "good faith" deposit assuring the performance of both the purchaser and seller under the futures contract. Subsequent payments to and from the broker, called "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates making the long and short positions in the futures contracts more or less valuable, a process known as "marking to market." At any time prior to the settlement date of the futures contract, the position may be closed out by taking an opposite position which will operate to terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid to or released by the broker and the purchaser realizes a loss or gain. In addition, a nominal commission is paid on each completed sale transaction. Regulations of the CFTC applicable to the Funds require that all of the Funds' futures and options on futures transactions constitute bona fide hedging transactions and that the Funds not enter into such transactions if, immediately thereafter, the sum of the amount of initial margin deposits on a Fund's existing futures positions and premiums paid for related options would exceed 5% of the market value of such Fund's total assets. However, if an option is "in-the-money" (the price of the option exceeds the strike price), the in-the-money portion may be excluded in computing the 5% limit. RESTRICTIONS ON OTC OPTIONS The Funds will engage in transactions involving OTC options, including over-the-counter stock index options, over-the-counter foreign security and currency options and options on foreign security and currency futures, only with member banks of the Federal Reserve System and primary dealers in U.S. Government securities or with affiliates of such banks or dealers which have capital of at least $50 million or whose obligations are guaranteed by an entity having capital of at least $50 million. The Funds will acquire only those OTC options for which AIM believes a Fund can receive on each business day at least two independent bids or offers (one of which will be from an entity other than a party to the option). The Staff of the SEC has taken the position that purchased OTC options and the assets used as cover for written OTC options are illiquid securities. Therefore, the Funds have each adopted an operating policy pursuant to which each Fund will not purchase or sell OTC options (including OTC options on futures contracts) if, as a result of such transaction, the sum of (i) the market value of OTC options currently outstanding which are held by a Fund, (ii) the market value of the underlying securities covered by OTC call options currently outstanding which were sold by such Fund, (iii) margin deposits on the Fund's existing OTC options on futures contracts, and (iv) the market value of all other assets of the Fund which are illiquid or are not otherwise readily marketable, would exceed 10% of the net assets of such Fund, taken at market value. However, if an OTC option is sold by a Fund to a primary U.S. Government securities dealer recognized by the Federal Reserve Bank of New York, and the Fund has the unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then such Fund will treat as illiquid such amount of the underlying securities as is equal to the repurchase price less the amount by which the option is "in-the-money" (current market value of the underlying security minus the option's strike price). The repurchase price with primary dealers is typically a formula price which is generally based on a multiple of the premium received for the option, plus the amount by which the option is "in-the-money." This policy as to OTC options is not a fundamental policy of the Funds and may be amended by the Board of Directors of the 12 152 Company without approval of the Funds' respective shareholders. However, the Funds will not change or modify this policy prior to the change or modification by the SEC staff of its position. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS The Funds will not use leverage in their options and futures strategies. Such investments will be made for hedging purposes only. The Funds will hold securities or other options or futures positions whose values are expected to offset their obligations under the hedge strategies. None of the Funds will enter into an option or futures position that exposes a Fund to an obligation to another party unless it owns either (i) an offsetting position in securities or other options or futures contracts or (ii) cash, receivables and short-term debt securities with a value sufficient to cover its potential obligations. The Funds will comply with guidelines established by the SEC with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will segregate cash and high grade liquid debt securities with its custodian bank in the amount prescribed. The segregated securities will not be sold while the futures or option strategy is outstanding, unless they are replaced with similar securities. As a result, there is a possibility that segregation of a large percentage of a Fund's assets could impede portfolio management or the Fund's ability to meet redemption requests or other current obligations. RISK FACTORS IN OPTIONS, FUTURES, FORWARD AND CURRENCY TRANSACTIONS The use of options and futures transactions to hedge a Fund's portfolio involves the risk of imperfect correlation in movements in the price of options and futures and movements in the price of securities or currencies which are the subject of the hedge. If the price of the option or future moves more or less than the price of hedged securities or currencies, the Fund will experience a gain or loss which will not be completely offset by movements in the price of the subject of the hedge. The successful use of options and futures also depends on AIM's ability to correctly predict price movements in the market involved in a particular options or futures transaction. To compensate for imperfect correlations, the Funds may purchase or sell stock index options or futures contracts in a greater dollar amount than the hedged securities if the volatility of the hedged securities is historically greater than the volatility of the stock index options or futures contracts. Conversely, the Funds may purchase or sell fewer stock index options or futures contracts, if the historical price volatility of the hedged securities is less than that of the stock index options or futures contracts. The risk of imperfect correlation generally tends to diminish as the maturity date of the stock index option or futures contract approaches. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which a Fund cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid. The Funds intend to enter into options and futures transactions, on an exchange or in the OTC market, only if there appears to be a liquid secondary market for such options or futures or, in the case of OTC transactions, AIM believes a Fund can receive on each business day at least two independent bids or offers. However, there can be no assurance that a liquid secondary market will exist at any specific time. Thus, it may not be possible to close an options or futures position. The inability to close options and futures positions also could have an adverse impact on a Fund's ability to effectively hedge its portfolio. There is also the risk of loss by a Fund of margin deposits or collateral in the event of bankruptcy of a broker with whom the Fund has an open position in an option, a futures contract or related option. The exchanges on which options on portfolio securities and currency options are traded have generally established limitations governing the maximum number of call or put options on the same underlying security or currency (whether or not covered) which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written in one or more accounts or through one or more brokers). "Trading limits" are imposed on the maximum number of contracts which any person may trade on a particular trading day. AIM does not believe that these trading and position limits will have any adverse impact on the portfolio strategies for hedging the Funds' portfolios. 13 153 Because the Funds will engage in the options and futures transactions described above solely in connection with their hedging activities, AIM does not believe such options and futures transactions necessarily will have any significant effect on the portfolio turnover rate of any of the Funds. REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS Each Fund may enter into repurchase agreements and reverse repurchase agreements. A repurchase agreement is an instrument under which a Fund acquires ownership of a debt security and the seller (usually a broker or bank) agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of bankruptcy or other default of a seller of a repurchase agreement, the Fund may experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (b) a possible subnormal level of income and lack of access to income during this period; and (c) expenses of enforcing its rights. A repurchase agreement is collateralized by the security acquired by the Fund and its value is marked to market daily in order to minimize the Fund's risk. Repurchase agreements usually are for short periods, such as one or two days, but may be entered into for longer periods of time. A reverse repurchase agreement involves the sale of securities held by a Fund, with an agreement that the Fund will repurchase such securities at an agreed-upon price, date, and interest payment. It is the current operating policy of the Aggressive Growth Fund and the Growth Fund to enter into reverse repurchase agreements (which are considered to be borrowings under the 1940 Act) only for temporary or emergency purposes and not as a means to increase income. The Income Fund may enter into such transactions as a means to enhance portfolio returns. The Funds will enter into reverse repurchase agreements only when the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. During the time a reverse repurchase agreement is outstanding, the applicable Fund will segregate U.S. Treasury obligations having a value equal to the repurchase price under such reverse repurchase agreement. Any investment gains made by a Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the investment performance resulting from the investment of borrowings obtained through reverse repurchase agreements fails to cover the cost of such borrowings to the Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. LENDING OF PORTFOLIO SECURITIES For the purpose of realizing additional income, the Funds may make secured loans of portfolio securities amounting to not more than 33-1/3% of each Fund's respective total assets. Securities loans are made to banks, brokers and other financial institutions pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the value of the securities lent marked to market on a daily basis. The collateral received will consist of cash, U.S. Government securities, letters of credit or such other collateral as may be permitted under the applicable Fund's investment program. While the securities are being lent, 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 Funds have a right to call each of their respective loans and obtain the securities on five business days' notice or, in connection with securities trading on foreign markets, within such longer period of time which coincides with the normal settlement period for purchases and sales of such securities in such foreign markets. The Funds will not have the right to vote securities while they are being lent, but each Fund will call a loan in anticipation of any important vote. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delay in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. Loans will only be made to persons 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. 14 154 SHORT SALES Each Fund may from time to time enter into short sales transactions. A Fund will not make short sales of securities or maintain a short position unless at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against the box." Such short sales will be used by the Funds for the purpose of deferring recognition of gain or loss for federal income tax purposes. In no event may more than 10% of the value of a Fund's total assets be deposited or pledged as collateral for such sales at any time. RULE 144A SECURITIES Each Fund may purchase securities which, while privately placed, are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. AIM, under the supervision of the Company's Board of Directors, will consider whether securities purchased under Rule 144A are illiquid and thus subject to each Fund's restriction of investing no more than 15% of its total assets in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and of marketplace trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its total assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. INVESTMENT RESTRICTIONS The following fundamental policies and investment restrictions have been adopted by the Funds and, except as noted, such policies cannot be changed without approval by the vote of a majority of the outstanding voting securities of the applicable Fund, as defined in the 1940 Act. The Funds may not: 1. Purchase or sell real estate or interests in real estate (except that this restriction does not preclude investments in marketable securities of companies engaged in real estate activities). 2. Purchase or sell commodities or commodity contracts, except that the Funds may purchase and sell stock index and currency options, stock index futures, interest rate futures, financial futures and currency futures contracts and related options on such futures. 3. Purchase any security on margin, except that the Funds may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by the Fund of initial or variation margin in connection with futures or related options transactions shall not be considered the purchase of a security on margin. 15 155 4. Make loans, although the Funds may (a) purchase money market securities and enter into repurchase agreements, (b) acquire bonds, debentures, notes and other debt securities, governmental obligations and certificates of deposit, and (c) lend portfolio securities. 5. Issue senior securities, except to the extent permitted by the 1940 Act, including permitted borrowings. 6. Underwrite securities of other persons, except to the extent that a Fund may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. 7. Purchase or sell interests in oil, gas or other mineral exploration or development programs. 8. Purchase the securities of any issuer if, as a result, more than 25% of the value of a Fund's total assets, taken at market value, would be invested in the securities of issuers having their principal business activities in the same industry. This restriction does not apply to obligations issued or guaranteed by the U.S. Government or by any of its agencies or instrumentalities but will (unless and until SEC changes its position) apply to foreign government obligations unless the SEC permits their exclusion. 9. Purchase a security if, as a result, with respect to 75% of the value of a Fund's total assets, taken at market value, more than 5% of a Fund's total assets, taken at market value, would be invested in the securities of any one issuer (including repurchase agreements with any one entity), except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. This restriction does not apply to the Income Fund. 10. Purchase a security if, as a result, with respect to 50% of the value of the Fund's total assets taken at market value, more than 5% of the value of the Fund's total assets, taken at market value, would be invested in securities of any one issuer, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. This restriction applies only to the Income Fund. 11. Purchase a security if, as a result, more than 10% of the outstanding voting securities of any issuer would be held by a Fund. The following restrictions are non-fundamental and may be changed by the Company's Board of Directors. Pursuant to such restrictions, the Funds will not: 12. Invest in securities of an issuer (including predecessors and unconditional guarantors) which has a record of less than three years of continuous operations. 13. Make investments for the purpose of exercising control or management. 14. Lend portfolio securities in excess of 33-1/3% of total assets, taken at market value; provided that loans of portfolio securities shall be made in accordance with the guidelines set forth under the heading "Lending of Portfolio Securities." 15. Invest in securities which are illiquid if more than 15% of a Fund's total assets, taken at market value, would be invested in such securities. 16 156 16. Effect short sales of securities, except that a Fund may make short sales "against the box" to the extent that the value of the securities sold short, in the aggregate, does not represent more than 10% of the Fund's total assets, taken at market value, at any given time. Percentage restrictions apply as of the time of investment without regard to later increases or decreases in the values of securities or total assets. Subject to investment restriction number 14 above, the Funds may from time to time lend securities from their respective portfolios to brokers, dealers and financial institutions such as banks and trust companies and receive collateral in cash or securities issued or guaranteed by the U.S. Government which will be maintained in an amount equal to at least 100% of the current market value of the loaned securities. Such cash will be invested in short-term securities, which will increase the current income of the applicable Fund. Such loans will not be for more than 30 days and will be terminable at any time. The Funds will have the right to regain record ownership of loaned securities to exercise beneficial rights such as voting rights, subscription rights and rights to dividends, interest or other distributions. The Funds may pay reasonable fees to persons unaffiliated with the Funds for services in arranging such loans. With respect to the lending of portfolio securities, there is the risk of failure by the borrower to return the securities involved in such transactions. See the information under the caption "Hedging Strategies and Other Investment Techniques -- Lending Portfolio Securities" above. The Funds may each invest in warrants, valued at the lower of cost or market, to the extent that the value of such warrants, in the aggregate, does not exceed 5% of the value of a Fund's net assets. Included in that amount, but not to exceed 2% of the value of a Fund's net assets, may be warrants which are not listed on national exchanges. In order to permit the sale of the Funds' shares in certain states, the Funds may from time to time make commitments that are more restrictive than the restrictions described above. For example, as of the date of this Statement of Additional Information, the Funds have undertaken (1) not to invest more than 10% of their respective total assets in restricted securities (Arkansas), (2) to provide investors with written notification at least 30 days prior to any change in the investment objective of any Fund (Missouri), (3) not to invest in real estate limited partnerships (Texas), (4) not to purchase or retain securities of any issuer if the directors and officers of the Company and AIM who own more than 0.5% of the securities of such issuer together beneficially own more than 5% of the securities of such issuer (Ohio), (5) not to invest any assets of the Funds in the securities of other investment companies, except by purchase in the open market where no commission or profit to a sponsor or dealer results from the purchase other than the customary broker's commission, or except when the purchase is part of a plan of merger, consolidation, reorganization, or acquisition (Ohio) and (6) not to engage in writing put and call options on securities unless the options are issued by the Options Clearing Corporation, and the aggregate value of the securities underlying the calls or obligations underlying the puts determined as of the date the options are sold shall not exceed 25% of the Funds' respective total net assets (California). Should a Fund determine that any such commitment is no longer in the best interests of the Fund and its shareholders, the Fund will revoke the commitment by terminating sales of its shares in the states involved. Each Fund's ability and decisions to purchase or sell portfolio securities may be affected by laws or regulations relating to the convertibility and repatriation of assets. Because the shares of a Fund are redeemable on a daily basis in U.S. dollars, the Funds intend to manage their portfolios so as to give reasonable assurance that they will be able to obtain U.S. dollars to the extent necessary to meet anticipated redemptions. Under present conditions, it is not believed that these considerations will have any significant effect on the Funds' portfolio strategies. 17 157 MANAGEMENT DIRECTORS AND OFFICERS The directors and officers of the Company and their principal occupations during the last five years are set forth below. Unless otherwise indicated, the address of each director and officer is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046. *CHARLES T. BAUER, Director and Chairman (76) Director, Chairman and Chief Executive Officer, A I M Management Group Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company; and Director, AIM Global Advisors Limited, A I M Global Management Company Limited and AIM Global Ventures Co. BRUCE L. CROCKETT, Director (51) COMSAT Corporation 6560 Rock Spring Drive Bethesda, MD 20817 Director, President and Chief Executive Officer, COMSAT Corporation (includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video Enterprises, COMSAT RSI and COMSAT International Ventures). Previously, President and Chief Operating Officer, COMSAT Corporation; President, World Systems Division, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT; (each of the COMSAT companies listed above is an international communication, information and entertainment-distribution services company). OWEN DALY II, Director (71) Six Blythewood Road Baltimore, MD 21210 Director, Cortland Trust Inc. (investment company). Formerly, Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. **CARL FRISCHLING, Director (59) 919 Third Avenue New York, NY 10022 Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm). Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson Gubar Brodsky & Frischling (law firm). ROBERT H. GRAHAM, Director and President (49) Director, President and Chief Operating Officer, A I M Management Group Inc.; Director and President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures - ---------------------------------- * A director who is an "interested person" of A I M Advisors, Inc. and the Company as defined in the 1940 Act. ** A director who is an "interested person" of the Company as defined in the 1940 Act. 18 158 Co., A I M Institutional Fund Services, Inc. and Fund Management Company; and Senior Vice President, AIM Global Advisors Limited. JOHN F. KROEGER, Director (71) 24875 Swan Road - Martingham Box 464 St. Michaels, MD 21663 Director, Flag Investors International Fund, Inc., Flag Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm). LEWIS F. PENNOCK, Director (53) 8955 Katy Freeway, Suite 204 Houston, TX 77024 Attorney in private practice in Houston, Texas. IAN W. ROBINSON, Director (72) 183 River Drive Tequesta, FL 33469 Formerly, Executive Vice President and Chief Financial Officer, Bell Atlantic Management Services, Inc. (provider of centralized management services to telephone companies); Executive Vice President, Bell Atlantic Corporation (parent of seven telephone companies); and Vice President and Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone Company. LOUIS S. SKLAR, Director (56) Transco Tower, 50th Floor 2800 Post Oak Blvd. Houston, TX 77056 Executive Vice President, Development and Operations, Hines Interests Limited Partnership (real estate development). ***JOHN J. ARTHUR, Senior Vice President and Treasurer (51) Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice President and Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures Co. - ---------------------------------- *** Mr. Arthur and Ms. Relihan are married to each other. 19 159 GARY T. CRUM, Senior Vice President (48) Director and President, A I M Capital Management, Inc.; Director and Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., AIM Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures Co.; Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global Advisors Limited. ***CAROL F. RELIHAN, Vice President and Secretary (41) Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice President, General Counsel and Secretary, A I M Management Group Inc.; Vice President and General Counsel, Fund Management Company; Vice President and Secretary, A I M Global Associates, Inc. and A I M Global Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Advisors Limited and AIM Global Ventures Co.; and Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc. DANA R. SUTTON, Vice President and Assistant Treasurer (37) Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. ROBERT G. ALLEY, Vice President (47) Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. Formerly, Senior Fixed Income Money Manager, Waddell and Reed, Inc. MELVILLE B. COX, Vice President (52) Vice President, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and Assistant Vice President, A I M Distributors; Inc. and Fund Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments; Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and Vice President, Integrated Resources Life Insurance Co. and Capitol Life Insurance Co. JONATHAN C. SCHOOLAR, Vice President (34) Director and Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. The standing committees of the Board of Directors are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting with the Company's auditors to review audit procedures and results and to consider any matters arising from an audit to be brought to the attention of the directors as a whole with respect to the Company's fund accounting or its internal accounting controls, and for considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. - ---------------------------------- *** Mr. Arthur and Ms. Relihan are married to each other. 20 160 The members of the Investments Committee are Messrs. Bauer, Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible for reviewing portfolio compliance, brokerage allocation, portfolio investment pricing issues, interim dividend and distribution issues, and considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. The members of the Nominating and Compensation Committee are Messrs. Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and Compensation Committee is responsible for considering and nominating individuals to stand for election as directors who are not interested persons as long as the Company maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the compensation payable to the disinterested directors, and considering such matters as may from time to time be set forth in a charter adopted by the Board of Directors and such committee. REMUNERATION OF DIRECTORS Each director is reimbursed for expenses incurred in attending each meeting of the Board of Directors or any committee thereof. Each director who is not also an officer of the Company is compensated for his or her services according to a fee schedule which recognizes the fact that such director also serves as a director or trustee of other AIM Funds advised or managed by AIM. Each such director receives a fee, allocated among the AIM Funds, which consists of an annual retainer component and a meeting fee component. 21 161 Set forth below is information regarding compensation paid or accrued for each director of the Company:
====================================================================================================== Retirement Benefits Aggregate Accrued Total Compensation By All AIM Compensation Director from Company(1) Funds(2) from all AIM Funds(3) -------- --------------- ----------- --------------------- CHARLES T. BAUER $ 0 $ 0 $ 0 - ------------------------------------------------------------------------------------------------------ BRUCE L. CROCKETT 3,670 3,655 57,750 - ------------------------------------------------------------------------------------------------------ OWEN DALY II 3,734 18,662 58,125 - ------------------------------------------------------------------------------------------------------ CARL FRISCHLING 3,721 11,323 57,250 - ------------------------------------------------------------------------------------------------------ ROBERT H. GRAHAM 0 0 0 - ------------------------------------------------------------------------------------------------------ JOHN F. KROEGER 3,813 22,313 58,125 - ------------------------------------------------------------------------------------------------------ LEWIS F. PENNOCK 3,622 5,067 58,125 - ------------------------------------------------------------------------------------------------------ IAN W. ROBINSON 3,639 15,381 56,750 - ------------------------------------------------------------------------------------------------------ LOUIS S. SKLAR 3,708 6,632 57,250 ======================================================================================================
- ---------------- (1) The total amount of compensation deferred by all directors of the Company during the fiscal year ended October 31, 1995, including interest earned thereon, was $14,093. (2) During the fiscal year ended October 31, 1995, the total amount of expenses allocated to the Company in respect of such retirement benefits was $2,087. Data reflect compensation earned for the calendar year ended December 31, 1995. (3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as director or trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling, Robinson and Sklar each serves as director or trustee of a total of 10 AIM Funds. Data reflect total compensation earned during the calendar year ended December 31, 1995. AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each director (who is not a employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Directors. Pursuant to the Plan, the normal retirement date is the date on which the eligible director has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "AIM Funds"). Each eligible director is entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to 75% of the retainer paid or accrued by the AIM Funds for such director during the twelve-month period immediately preceding the director's retirement (including amounts deferred under a separate agreement between the AIM Funds and the director) for the number of such Director's years of service (not in excess of 10 years of service) completed with respect to any of the AIM Funds. Such benefit is payable to each eligible director in quarterly installments. If an eligible director dies after attaining the normal retirement date but before receipt of any benefits under the Plan commences, the director's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased director, 22 162 for no more than ten years beginning the first day of the calendar quarter following the date of the director's death. Payments under the Plan are not secured or funded by any AIM Fund. Set forth below is a table that shows the estimated annual benefits payable to an eligible director upon retirement assuming various compensation and years of service classifications. The estimated credited years of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 8, 9, 18, 18, 14, 8 and 6 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT Annual Compensation Paid By All AIM Funds $60,000 $65,000 ========================================== Number of 10 $45,000 $48,750 Years of ------------------------------------------ Service With 9 $40,500 $43,875 the AIM ------------------------------------------ Funds 8 $36,000 $39,000 ------------------------------------------ 7 $31,500 $34,125 ------------------------------------------ 6 $27,000 $29,250 ------------------------------------------ 5 $22,500 $24,375 ==========================================
DEFERRED COMPENSATION AGREEMENTS Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this paragraph only, the "deferring directors") have each executed a Deferred Compensation Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the deferring directors may elect to defer receipt of up to 100% of their compensation payable by the Company, and such amounts are placed into a deferral account. Currently, the deferring directors may select various AIM Funds in which all or part of his deferral account shall be deemed to be invested. Distributions from the deferring directors' deferral accounts will be paid in cash, in generally equal quarterly installments over a period of ten years beginning on the date the deferring director's retirement benefits commence under the Plan. The Company's Board of Directors, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring director's termination of service as a director of the Company. If a deferring director dies prior to the distribution of amounts in his deferral account, the balance of the deferral account will be distributed to his designated beneficiary in a single lump sum payment as soon as practicable after such deferring director's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the deferring directors have the status of unsecured creditors of the Company and of each other AIM Fund from which they are deferring compensation. The Company paid the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel , counsel to the Board of Directors, $4,313, $3,693 and $2,160 in legal fees for services provided to Aggressive Growth Fund, Growth Fund and Income Fund, respectively, during the fiscal year ended October 31, 1995. Mr. Frischling, a Director of the Company, is a partner in such firm. INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS AIM is a wholly-owned subsidiary of A I M Management Group Inc., a holding company that has been engaged in the financial services business since 1976. 23 163 AIM and the Company have adopted a Code of Ethics which requires investment personnel and certain other employees (a) to pre-clear personal securities transactions subject to the Code, (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, and (iii) transactions involving securities being considered for investment by an AIM Fund and (d) to abide by certain other provisions under the Code. The Code also prohibits investment personnel and certain other employees from purchasing securities in an initial public offering. Personal trading reports are reviewed periodically by AIM, and the Board of Directors reviews quarterly and annual reports (including information on any substantial violations of the Code). Sanctions for violations of the Code may include censure, monetary penalties, suspension or termination of employment. The Company, on behalf of the Funds, has entered into an Investment Advisory Agreement and an Administrative Services Agreement with AIM. See "Management" in the Prospectus. The Investment Advisory Agreement provides that each Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions; taxes, legal, accounting, auditing or governmental fees; the cost of preparing share certificates; custodian, transfer and shareholder service agent costs; expenses of issue, sale, redemption and repurchase of shares; expenses of registering and qualifying shares for sale; expenses relating to directors and shareholders meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Company on behalf of a Fund in connection with membership in investment company organizations; the cost of printing copies of prospectuses and statements of additional information distributed to each Fund's shareholders; and all other charges and costs of a Fund's operations unless otherwise expressly provided. The Investment Advisory Agreement provides that if, for any fiscal year, the total of all ordinary business expenses of each Fund, including all investment advisory fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses, such as litigation costs, exceed the applicable expense limitations imposed by state securities regulations in any state in which the Fund's shares are qualified for sale, as such limitations may be raised or lowered from time to time, the aggregate of all such investment advisory fees shall be reduced by the amount of such excess. The amount of any such reduction to be borne by AIM shall be deducted from the monthly investment advisory fee otherwise payable to AIM during such fiscal year. If required pursuant to such state securities regulations, AIM will reimburse each Fund no later than the last day of the first month of the next succeeding fiscal year for any such annual operating expenses (after reduction of all investment advisory fees in excess of such limitation). The Investment Advisory Agreement for the Funds provides that such agreement will continue in effect until June 30, 1996, and from year to year thereafter only if such continuance is specifically approved at least annually by the Company's Board of Directors and by the affirmative vote of a majority of the directors who are not parties to the agreement or "interested persons" of any such party (the "Non-Interested Directors") by votes cast in person at a meeting called for such purpose. The Investment Advisory Agreement was initially approved by the Company's Board of Directors (including the affirmative vote of all of the Non-Interested Directors) on June 15, 1994. The agreement became effective as of July 1, 1994. The agreement provides that the Funds or AIM may terminate such agreement on sixty (60) days' written notice without penalty. The Investment Advisory Agreement terminates automatically in the event of its assignment. Under the agreement, AIM is entitled to receive from each Fund a fee calculated at the annual rates of: AIM GLOBAL AGGRESSIVE GROWTH FUND Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.90% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
24 164 AIM GLOBAL GROWTH FUND Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.85% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.80%
AIM GLOBAL INCOME FUND Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.70% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.65%
AIM may from time to time voluntarily waive or reduce its fees, while retaining its ability to be reimbursed for such fee prior to the end of each fiscal year. Fee waivers or reductions other than those contained in the Advisory Agreement, may be modified or terminated at any time and without notice to investors. For the fiscal year ended October 31, 1995, AIM received advisory fees from Aggressive Growth Fund and Growth Fund in the amounts of $1,106,197 and $125,323, respectively. For the fiscal year ended October 31, 1995, AIM waived advisory fees for Growth Fund and Income Fund in the amount of $19,558 and $55,087, respectively. For the period September 15, 1994 (inception date) through October 31, 1994 AIM waived advisory fees for Aggressive Growth Fund, Growth Fund and Income Fund in the amount of $13,551, $2,816 and $2,099, respectively. The Administrative Services Agreement for the Funds provides that AIM may perform, or arrange for the performance of, certain accounting, shareholder servicing and other administrative services to each Fund which are not required to be performed by AIM under the Investment Advisory Agreement. For such services, AIM is entitled to receive from each Fund reimbursement of AIM's costs or such reasonable compensation as may be approved by the Company's Board of Directors. The Administrative Services Agreement provides that such agreement will continue in effect until June 30, 1996, and shall continue in effect from year to year thereafter only if such continuance is specifically approved at least annually by the Company's Board of Directors, including the Non-Interested Directors, by votes cast in person at a meeting called for such purpose. The Administrative Services Agreement was approved by the Company's Board of Directors (including the Non-Interested Directors) on June 15, 1994. The agreement became effective as of July 1, 1994. For the fiscal year ended October 31, 1995, AIM received reimbursement of administrative services costs from Aggressive Growth Fund, Growth Fund and Income Fund in the amounts of $25,218, $21,984 and $29,858, respectively. For the period September 15, 1994 (inception date) through October 31, 1994 AIM received reimbursement of administrative services cost from Aggressive Growth Fund, Growth Fund and Income Fund in the amount of $3,939, $2,686 and $2,508, respectively. In addition, the Transfer Agency and Service Agreement for the Funds provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent and wholly-owned subsidiary of AIM, will perform certain shareholder services for the Funds for a fee per account serviced. The Transfer Agency and Service Agreement provides that AFS will process orders for purchases, redemptions and exchanges of shares, prepare and transmit payments for dividends and distributions declared by the Funds, maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. The Transfer Agency and Service Agreement became effective on November 1, 1994. 25 165 For the period November 1, 1994 through October 31, 1995, AFS received transfer agency and shareholder services fees with respect to Aggressive Growth Fund, Growth Fund and Income Fund in the amount of $258,683, $33,579 and $9,321. AIM reimbursed AFS pursuant to a services agreement which was terminated during the fourth quarter of 1994 for providing shareholder servicing for the Aggressive Growth Fund, Growth Fund and Income Fund for the period September 15, 1994 (inception date) through October 31, 1994 in the amounts of $1,439, $186 and $24, respectively. THE DISTRIBUTION PLANS THE CLASS A PLAN. The Company has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of the Funds (the "Class A Plan"). The Class A Plan provides that the Class A shares pay 0.50% per annum of their average daily net assets 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. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class A shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class A shares. Activities appropriate for financing under the Class A 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 Plan. THE CLASS B PLAN. The Company 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 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. AIM Distributors may transfer and sell its rights to payments under the Class B Plan in order to finance distribution expenditures in respect of Class B shares. BOTH PLANS. Pursuant to an incentive program, AIM Distributors may enter into agreements ("Shareholder Service Agreements") with investment dealers selected from time to time by AIM Distributors for the provision of distribution assistance in connection with the sale of the Funds' shares to such dealers' customers, and for the provision of continuing personal shareholder services to customers who may from time to time directly or beneficially own shares of the Funds. The distribution assistance and continuing personal shareholder services to be rendered by dealers under the Shareholder Service Agreements may include, but shall not be limited to, the following: distributing sales literature; answering routine customer inquiries concerning the Funds; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of the Funds' shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in the Funds' shares; and providing such other information and services as the Funds or the customer may reasonably request. 26 166 Under the Plans, in addition to the Shareholder Service Agreements authorizing payments to selected dealers, banks may enter into Shareholder Service Agreements authorizing payments under the Plans to be made to banks which provide services to their customers who have purchased shares. Services provided pursuant to Shareholder Service Agreements with banks may include some or all of the following: answering shareholder inquiries regarding a Fund and the Company; performing sub-accounting; establishing and maintaining shareholder accounts and records; processing customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by the bank; forwarding applicable prospectuses, proxy statements, reports and notices to bank clients who hold Fund shares; and such other administrative services as a Fund reasonably may request, to the extent permitted by applicable statute, rule or regulation. Similar agreements may be permitted under the Plans for institutions which provide recordkeeping for and administrative services to 401(k) plans. Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement 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 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 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 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. For the fiscal year ended October 31, 1995, the Funds paid the following amounts under the Class A Plan and the Class B Plan:
% of Class' average daily net assets Class A Plan Class B Plan Class A Class B ------------ ------------ ------- ------- Aggressive Growth Fund $402,786 $423,536 0.50% 1.00% Growth Fund 50,259 69,931 0.50% 1.00% Income Fund 29,618 19,459 0.50% 1.00%
27 167 An estimate by category of actual fees paid by the Aggressive Growth Fund under the Class A Plan and Class B Plan during the year ended October 31, 1995 follows:
Class A Plan Class B Plan ------------ ------------ Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ 8,699 $ 70,922 Printing and mailing prospectuses (other than to current shareholders . . . . . . . . . . . . . . . . $ 1,933 $ 11,987 Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,900 $ 22,975 Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 317,652 Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 389,254 $ -0- Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
An estimate by category of actual fees paid by the Growth Fund under the Class A Plan and Class B Plan during the year ended October 31, 1995 follows:
Class A Plan Class B Plan ------------ ------------ Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ 5,827 $ 11,312 Printing and mailing prospectuses (other than to current shareholders . . . . . . . . . . . . . . . . $ 971 $ 2,057 Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,942 $ 4,114 Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 52,448 Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 41,519 $ -0- Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
An estimate by category of actual fees paid by the Income Fund under the Class A Plan and Class B Plan during the year ended October 31, 1995 follows:
Class A Plan Class B Plan ------------ ------------ Advertising . . . . . . . . . . . . . . . . . . . . . . . . $ 2,551 $ 3,892 Printing and mailing prospectuses (other than to current shareholders . . . . . . . . . . . . . . . . $ 851 $ 973 Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ -0- Compensation to Underwriters . . . . . . . . . . . . . . . . $ -0- $ 14,594 Compensation to Dealers . . . . . . . . . . . . . . . . . . . $ 26,216 $ -0- Compensation to Sales Personnel . . . . . . . . . . . . . . . $ -0- $ -0-
The Plans require AIM Distributors to provide the Board of Directors 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 Directors 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 Directors, including a majority of the directors who are not "interested persons" (as defined in the 1940 Act) of the Company and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans ("Qualified Directors"). In approving the Plans in accordance with the requirements of Rule 12b-1, the directors considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Funds 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 28 168 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 until June 30, 1996 and each year thereafter, as long as such continuance is specifically approved at least annually by the Board of Directors, including a majority of the Qualified Directors. The Plans may be terminated by the vote of a majority of the Independent Directors, 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 directors, including a majority of the Qualified Directors, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Qualified Directors is committed to the discretion of the Qualified Directors. In the event the Class A Plan is amended in a manner which the Board of Directors determines would materially increase the charges paid under the Class A 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 Directors 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 Plan, on the one hand, and the Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.50% of average daily net assets of each Fund's Class A shares 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 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 the Funds' shares is set forth in the Prospectus under the headings "How to Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master Distribution Agreement with AIM Distributors relating to the Class A shares of the Funds was approved by the Board of Directors on September 10, 1994. A Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Funds was also approved by the Board of Directors on September 10, 1994. Both 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 Funds), and any promotional or sales literature used by AIM Distributors or furnished by AIM Distributors to dealers in connection with the public offering of the Funds' shares, including expenses of advertising in connection with such public offerings. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds. AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B shares of the Funds at the time of such sales. Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales 29 169 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 Company (on behalf of any class of the Funds) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of the Funds and their Class B shareholders to pay Contingent Deferred Sales Charges. For the fiscal year ended October 31, 1995, the total sales charges paid in connection with the sale of Class A shares of Aggressive Growth Fund, Growth Fund and Income Fund were $4,770,524, $473,172 and $156,910, respectively. AIM Distributors retained $779,090, $82,337 and $27,115 of such sales charges for Aggressive Growth, Growth Fund and Income Fund, respectively. For the period September 15, 1994 (inception date) through October 31, 1994, the total sales charges paid in connection with the sale of Class A shares of Aggressive Growth Fund, Growth Fund and Income Fund were $436,203, $46,883 and $13,085, respectively. AIM Distributors retained $43,586, $5,382 and $2,102 of such sales charges for Aggressive Growth, Growth Fund and Income Fund, respectively. During the fiscal year ended October 31, 1995, AIM Distributors received commissions of $68,427, $25,155 and $3,877 in contingent deferred sales charges imposed on redemptions of Fund shares of Aggressive Growth Fund, Growth Fund and Income Fund, respectively. During the period September 15, 1994 (inception date) through October 31, 1994, AIM Distributors received commissions of $79, $880 and $0 in contingent deferred sales charges imposed on redemptions of Class B shares of Aggressive Growth Fund, Growth Fund and Income Fund, respectively. 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 headings "How to Purchase Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special Plans." The sales charge normally deducted on purchases of Class A shares of each Fund is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Fund's Class A shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons who, because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., because of the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interest that such persons, and certain other persons whose purchases result in relatively low expenses of distribution, be permitted to purchase Class A shares of 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 in the Prospectus. 30 170 Complete information concerning the method of exchanging shares of the Funds for shares of the other AIM Funds is set forth in the Prospectus under the heading "Exchange Privilege." Information concerning redemption of the Funds' shares is set forth in the Prospectus under the heading "How to Redeem Shares." In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Fund (Telephone: (713) 626-1919, Extension 5001 (in Houston) or (800) 959-4246 (elsewhere)) and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of a Fund next determined after the repurchase order is received. Such arrangement is subject to timely receipt by A I M Fund Services, Inc. (a wholly-owned subsidiary of A I M Advisors, Inc.), the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by 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. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange is restricted, as determined by applicable rules and regulations of the SEC, (b) the New York Stock Exchange 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. NET ASSET VALUE DETERMINATION In accordance with current SEC rules and regulations, the net asset value per share of a Fund is determined once daily as of 4:00 p.m. Eastern time on each business day of the Fund. In the event the New York Stock Exchange 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 New York Stock Exchange on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available fifteen (15) minutes after the close of trading of the New York Stock Exchange will generally be used. Each Class' net asset value per share is determined by subtracting the Class' liabilities (e.g., the expenses) from the Class' assets, and dividing the result by the total number of Class shares outstanding. Determination of the Class' net asset value per share is made in accordance with generally accepted accounting principles. Securities listed or traded on U.S. or foreign securities exchanges or included in a national market system are valued at the last quoted sales price. Exchange listed convertible debt securities are valued at the mean between the last bid and asked prices obtained from broker-dealers. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost, which approximates fair market value. Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of such securities used in computing the net asset value of a Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the New York Stock Exchange. 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 New York Stock Exchange which will not be reflected in the computation of a Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. 31 171 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS Income dividends and capital gains 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 the Prospectus under the caption "Special Plans -- Automatic Dividend Investment Plan." If a shareholder's account does not have any shares in it on a dividend or capital gains 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 each Fund and its shareholders that are not described in the Funds' 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 Funds' Prospectus is not intended as a substitute for careful tax planning. Investors are urged to consult their tax advisers with specific reference to their own tax situation. Qualification as a Regulated Investment Company. As stated in the Funds' Prospectus, each Fund intends to qualify each year as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order to qualify for tax treatment as a regulated investment company under the Code, each Fund is required, among other things, to derive at least 90% of its gross income in each taxable year from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies and other income (including but not limited to gains from options, futures or forward contracts derived with respect to the Fund's business of investing in such stock, securities or currencies) (the "Income Requirement"); and derive less than 30% of its gross income (exclusive of certain gains from designated hedging transactions that are offset by realized or unrealized losses on offsetting positions) in each taxable year from the sale or other disposition of any of the following investments, if such investments are held for less than three months (the "Short-Short Gain Test"): (a) stock or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options, futures or forward contracts (other than options, futures or forward contracts on foreign currencies); and (c) foreign currencies (or options, futures or forward contracts on foreign currencies), but only if such currencies (or options, futures or forward contracts) are not directly related to the Fund's principal business of investing in stock or securities (or options and futures with respect to stock or securities). Foreign currency gains (including gains from options, futures or forward contracts on foreign currencies) that are not "directly related" to a Fund's principal business may, under regulations not yet issued, not be qualifying income for purposes of the Income Requirement. At the close of each quarter of its taxable year, at least 50% of the value of each Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Test"). For purposes of the Asset Diversification Test, it is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or foreign government backing the particular currency. Consequently, a Fund may find it necessary to seek a ruling from the Internal Revenue Service on this issue or to curtail its trading in forward foreign currency exchange contracts in order to stay within the limits of the Asset Diversification Test. 32 172 If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. Fund Distributions. Under the Code, each Fund is exempt from U.S. federal income tax on its net investment income and realized capital gains which it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (net investment income and the excess of net short-term capital gain over net long-term capital loss) and its net exempt-interest income for the year. Distributions of investment company taxable income will be taxable to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in shares. Each Fund also intends to distribute to shareholders substantially all of the excess of its net long-term capital gain over net short-term capital loss as a capital gain dividend. Capital gain dividends are taxable to shareholders as a long-term capital gain, regardless of the length of time a shareholder has held his shares. Treasury regulations permit a regulated investment company in determining its investment company taxable income and undistributed net capital gain for any taxable year to elect to treat all or part of any net capital loss, any net long-term capital loss, or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year. A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute in each calendar year an amount equal to 98% of their ordinary taxable income for the calendar year plus 98% of their "capital gain net income" (excess of capital gains over capital losses) for the one-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. For purposes of the excise tax, a regulated investment company shall (1) offset a net ordinary loss for any calendar year in determining its capital gain net income for the one-year period ending on October 31 of such calendar year and (2) exclude foreign currency gains and losses incurred after October 31 of any year in determining the amount of ordinary taxable income for the current calendar year (and, instead, to include such gains and losses in determining ordinary taxable income for the succeeding calendar year). Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments in order to make sufficient distributions to avoid excise tax liability and that such liquidation may affect the ability of the Fund to satisfy the Short-Short Gain Test. Investment in Foreign Financial Instruments. Under Code Section 988, gains or losses from certain foreign currency forward contracts or fluctuations in exchange rates will generally be treated as ordinary income or loss. Such Code Section 988 gains or losses will increase or decrease the amount of a Fund's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Fund's net capital gains. Additionally, if Code Section 988 losses exceed other investment company taxable income during a taxable year, the Fund would not be able to pay any ordinary income dividends, and any such dividends paid before the losses were realized, but in the same taxable year, would be recharacterized as a return of capital to shareholders, thereby reducing the tax basis of Fund shares. Some of the forward foreign currency exchange contracts, options and futures contracts that the Funds may enter into will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts are treated as if they are sold for their fair market value on the last business day of the taxable year, regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, 33 173 entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end deemed disposition of Section 1256 contracts is combined with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year (including gain or loss arising as a consequence of the year-end deemed sale of such contracts) is deemed to be 60% long-term and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) generally treated as ordinary income or loss. Generally, the hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders. Each Fund may make one or more of the elections available under the Code which are applicable to straddles. If a Fund makes any of the elections, the amount, character, and timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the election(s) made. The rules applicable under certain of the elections may operate to accelerate the recognition of gains or losses from the affected straddle positions. Because application of the straddle and conversion transaction rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may be increased or decreased as compared to a fund that did not engage in such hedging transactions. Requirements relating to each Fund's tax status as a regulated investment company, including (in particular) the Short-Short Gain Test, may limit the extent to which a Fund will be able to engage in transactions in options and futures contracts. PFIC Investments. Each Fund may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. Under the PFIC rules, an "excess distribution" received with respect to PFIC stock is treated as having been realized ratably over the period during which the Fund held the PFIC stock. The Fund itself will be subject to tax on the portion, if any, of the excess distribution that is allocated to the Fund's holding period in prior taxable years (and an interest factor will be added to the tax, as if the tax had actually been payable in such prior taxable years) even though the Fund distributes the corresponding income to shareholders. Excess distributions include any gain from the sale of PFIC stock as well as certain distributions from a PFIC. All excess distributions are taxable as ordinary income. Each Fund may be able to elect alternative tax treatment with respect to PFIC stock. Under one such election, a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether any distributions are received from the PFIC. If this election is made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. In addition, other elections may become available that would affect the tax treatment of PFIC stock held by the Fund. The Funds' intentions to qualify annually as regulated investment companies may limit their elections with respect to PFIC stock. 34 174 Because the application of the PFIC rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock, the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gains, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock. Redemption or Exchange of Shares. Upon a redemption or exchange of shares, a shareholder will recognize a taxable gain or loss depending upon his or her basis in the shares. Unless the shares are disposed of as part of a conversion transaction, such gain or loss will be treated as capital gain or loss if the shares are capital assets in the shareholder's hands and will be long-term or short-term, depending upon the shareholder's holding period for the shares. Any loss recognized by a shareholder on the sale of Fund shares held six months or less will be treated as a long-term capital loss to the extent of any distributions of net capital gains received by the shareholder with respect to such shares. If a shareholder exercises the exchange privilege within 90 days of acquiring Class A shares, then the loss such shareholder recognizes on the exchange will be reduced (or the gain increased) to the extent the sales charge paid upon the purchase of Class A shares reduces any charge such shareholder would have owed upon purchase of the new Class A shares in the absence of the exchange privilege. Instead, such sales charge will be treated as an amount paid for the new Class A shares. In addition, any loss recognized on a sale or exchange will be disallowed to the extent that disposed Class A shares or Class B shares are replaced within the 61-day period beginning 30 days before and ending 30 days after the disposition of such shares. In such a case, the basis of the shares acquired will be increased to reflect the disallowed loss. Shareholders should particularly note that this loss disallowance rule applies even where shares are automatically replaced under the dividend reinvestment plan. Foreign Income Taxes. Investment income received by each Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Funds to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested in various countries is not known. If more than 50% of the value of a Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income taxes paid by the Fund that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign taxes in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign taxes may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax. Generally, a credit for foreign taxes is subject to the limitation that it may not exceed the shareholder's U.S. tax (determined without regard to the availability of the credit) attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from a Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. Each Fund's gains from the sale of stock and securities and certain currency fluctuation gains and losses will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income taxes paid by a Fund. Backup Withholding. Under certain provisions of the Code, the Funds may be required to withhold 31% of reportable dividends, capital gains distributions and redemption payments ("backup withholding"). Generally, shareholders subject to backup withholding will be those for whom a certified taxpayer identification 35 175 number is not on file with the Company or who, to the Company's knowledge, have furnished an incorrect number, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. When establishing an account, an investor must provide his or her taxpayer identification number and certify under penalty of perjury that such number is correct and that he or she is not otherwise subject to backup withholding. Corporate shareholders and other shareholders specified in the Code are exempt from backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder's U.S. federal income tax liability. Foreign Shareholders. Dividends from a Fund's investment company taxable income and distributions constituting returns of capital paid to a nonresident alien individual, a foreign trust or estate, foreign corporation, or foreign partnership (a "foreign shareholder") generally will be subject to U.S. withholding tax at a rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from the Fund's election to treat any foreign income taxes paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign taxes treated as having been paid by them. A foreign shareholder generally will not be subject to U.S. taxation on gain realized upon the redemption or exchange of shares of a Fund or on capital gain dividends. In the case of a foreign shareholder who is a nonresident alien individual, however, gain realized upon the sale or redemption of shares of a Fund and capital gain dividends ordinarily will be subject to U.S. income tax at a rate of 30% (or lower applicable treaty rate) if such individual is physically present in the U.S. for 183 days or more during the taxable year and certain other conditions are met. In the case of a foreign shareholder who is a nonresident alien individual, the Funds may be required to withhold U.S. federal income tax at a rate of 31% unless proper notification of such shareholder's foreign status is provided. Notwithstanding the foregoing, if distributions by the Funds are effectively connected with a U.S. trade or business of a foreign shareholder, then dividends from such Fund's investment company taxable income, capital gains, and any gains realized upon the sale of shares of the Fund will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens or domestic corporations. Transfers by gift of shares of a Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in any of the Funds. Miscellaneous Considerations; Effect of Future Legislation. The foregoing general discussion of federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on February 20, 1996. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Rules of state and local taxation of dividend and capital gain distributions from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other U.S. state and local tax rules affecting investments in the Funds. 36 176 MISCELLANEOUS INFORMATION AUDIT REPORTS The Board of Directors will issue to shareholders at least semi-annually the Funds' financial statements. Financial statements, audited by independent auditors, will be issued annually. The firm of KPMG Peat Marwick LLP serves as the auditors of each Fund. LEGAL MATTERS Legal matters for the Company are passed upon by Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania. 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. Under its contract with the Company relating to each Fund, the Custodian is authorized to establish separate accounts in foreign currencies and to cause foreign securities owned by each Fund to be held in its offices outside the United States and with certain foreign banks and securities depositories. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by each Fund, and performs certain other ministerial duties. A I M Fund Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of A I M Advisors, Inc., P.O. Box 4739, Houston, Texas 77210-4739, is a transfer and dividend disbursing agent for the Class A and Class B shares of each of the Funds. Each Fund pays the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time. Texas Commerce Bank National Association, P. O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM Funds. SHAREHOLDER INQUIRIES The Transfer Agent may impose certain copying charges for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. PRINCIPAL HOLDERS OF SECURITIES To the best knowledge of the Company, the names and addresses of the holders of 5% or more of the outstanding shares of each class of each of the Company's portfolios as of February 1, 1996, and the amount of outstanding shares held by such holders are set forth below: 37 177
Percent Name and Address Owned of Fund of Record Owner Record Only* - ---- ---------------- ------------ AIM International Equity Fund - Merrill Lynch, Pierce, 31.40%** Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Aggressive Growth Fund - Merrill Lynch, Pierce 20.09% Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Growth Fund - Merrill, Lynch, Pierce, 14.13% Class A shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Income Fund - Citibank, N.A. Collateral Agent Under 16.92% Class A shares Pledge and Security Agreement dated 8/20/93 among Citibank, N.A. and A I M Management Group Inc. et al. 11 Greenway Plaza, Suite 1919 Houston, TX 77046 AIM International Equity Fund - Merrill, Lynch, Pierce, 32.63%** Class B shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Aggressive Growth Fund - Merrill, Lynch, Pierce 26.85%** Class B shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286 AIM Global Growth Fund - Merrill, Lynch, Pierce 24.10% Class B shares Fenner & Smith Mutual Fund Operations P. O. Box 45286 Jacksonville, FL 32232-5286
- ------------------------ * The Company has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. ** A shareholder who holds 25% or more of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 38 178 As of February 1, 1996, the directors and officers of the Company as a group owned less than 1% of the outstanding shares of the Funds and the other portfolios of the Company. OTHER INFORMATION The Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the portfolios of the Company have filed with the SEC under the 1933 Act and the 1940 Act, and reference is hereby made to the Registration Statement for further information with respect to each portfolio of the Company and the securities offered hereby. The Registration Statement is available for inspection by the public at the Securities and Exchange Commission in Washington, D.C. 39 179 APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF MONEY MARKET OBLIGATIONS The following list does not purport to be an exhaustive list of all Money Market Obligations, and the Funds reserve the right to invest in Money Market Obligations other than those listed below: 1. GOVERNMENT OBLIGATIONS. U.S. GOVERNMENT DIRECT OBLIGATIONS --Bills, notes, and bonds issued by the U.S. Treasury. U.S. GOVERNMENT AGENCIES SECURITIES --Certain federal agencies such as the Government National Mortgage Association have been established as instrumentalities of the U. S. Government to supervise and finance certain types of activities. Issues of these agencies, while not direct obligations of the U. S. Government, are either backed by the full faith and credit of the United States or are guaranteed by the Treasury or supported by the issuing agencies' right to borrow from the Treasury. FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated obligations issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities that are determined by the Fund's investment advisor to be of comparable quality to the other obligations in which the Fund may invest. Such securities also include debt obligations of supranational entities. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. The percentage of the Fund's assets invested in securities issued by foreign governments will vary depending on the relative yields of such securities, the economic and financial markets of the countries in which the investments are made and the interest rate climate of such countries. 2. BANK INSTRUMENTS. BANKERS' ACCEPTANCES --A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less. CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity. TIME DEPOSITS --A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market. EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S. dollar-denominated obligation issued by a foreign branch of a domestic bank. YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S. dollar-denominated obligation issued by a domestic branch of a foreign bank. 40 180 3. COMMERCIAL INSTRUMENTS. COMMERCIAL PAPER --The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months. VARIABLE RATE MASTER DEMAND NOTES --Variable rate master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with the issuers. The interest rate on a variable amount master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. 4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual undertaking whereby the seller of securities (limited to U.S. Government securities, including securities issued or guaranteed by the U.S. Treasury or the various agencies and instrumentalities of the U.S. Government) agrees to repurchase the securities at a specified price on a future date determined by negotiations. 41 181 APPENDIX B - -------------------------------------------------------------------------------- DESCRIPTION OF CORPORATE BOND RATINGS Investment grade debt securities are those rating categories indicated by an asterisk ( * ). MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS: *Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. *Aa Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. *A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium- grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. *Baa Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. 42 182 Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa and A groups when assigning ratings to industrial development bonds and bonds secured by either a letter of credit or bond insurance. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. STANDARD AND POOR'S CORPORATION CLASSIFICATIONS ARE AS FOLLOWS: *AAA Debt rated 'AAA' has the highest rating assigned by Standard & Poor's ("S&P"). Capacity to pay interest and repay principal is extremely strong. *AA Debt rated 'AA' has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in a small degree. *A Debt rated 'A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. *BBB Debt rated 'BBB' regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher categories. BB, B, CCC, CC, C Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. 'BB' indicates the lowest degree of speculation and 'C' the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. 43 183 BB Debt rated 'BB' has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The 'BB' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BBB-' rating. B Debt rated 'B' has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The 'B' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-' rating. CCC Debt rated 'CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The 'CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'B' or 'B-' rating. CC The rating 'CC' is typically applied to debt subordinated to senior debt that is assigned an actual or implied 'CCC' rating. C The rating 'C' is typically applied to debt subordinated to senior debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. C1 The rating 'C1' is reserved for income bonds on which no interest is being paid. D Debt rated 'D' is in payment default. The 'D' rating category is used when interest payments or principal or principal payments 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 if debt service payments are jeopardized. PLUS (+) OR MINUS (-) The rating from 'AA' to 'CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major categories. 44 184 DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS: *AAA Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt. *AA+, AA and AA- High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. *A+, A and A- Protection factors are average but adequate. However, risk factors are more variable and greater in periods of economic stress. *BBB+, BBB and BBB- Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles. BB+, BB and BB- Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions or company fortunes. Overall quality may move up or down frequently within this category. B+, B and B- Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in quality rating within this category or into a higher or lower quality rating grade. CCC Well below investment grade securities. May be in default or have considerable uncertainty as to timely payment of interest, preferred dividends and/or principal. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments. DD Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments. DP Preferred stock with dividend arrearages. 45 185 FITCH INVESTORS SERVICE, INC.'S BOND RATINGS ARE AS FOLLOWS: *AAA Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. *AA Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated 'AAA.' Because bonds rated in the 'AAA' and 'AA' categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated 'F-1+.' *A Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings. *BBB Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. BB Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified which could assist the obligor in satisfying its debt service requirements. B Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue. CCC Bonds have certain identifiable characteristics which, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment. CC Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time. C Bonds are in imminent default in payment of interest or principal. 46 186 DDD, DD, and D Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. 'DDD' represents the highest potential for recovery on these bonds, and 'D' represents the lowest potential for recovery. PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the 'AAA', 'DDD', 'DD', or 'D' categories. 47 187 FINANCIAL STATEMENTS FS 188 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Global Aggressive Growth Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1995, and the related statement of operations for the year then ended, and the statement of changes in net assets and financial highlights for the year then ended and the period September 15, 1994 (date operations commenced) through October 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Aggressive Growth Fund as of October 31, 1995, the results of its operations for the year then ended, and changes in its net assets and the financial highlights for the year then ended and the period September 15, 1994 (date operations commenced) through October 31, 1994, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas December 8, 1995 FS-1 189 FINANCIALS SCHEDULE OF INVESTMENTS October 31, 1995
SHARES MARKET VALUE DOMESTIC COMMON STOCKS-39.92% ADVERTISING/BROADCASTING-0.06% 5,000 American Radio Systems Corp.(a) $ 112,500 --------------------------------------------------------------------------------------------- 600 Belo (A.H.) Corp. 20,775 --------------------------------------------------------------------------------------------- 2,700 Sinclair Broadcast Group Inc.-Class A(a) 56,025 --------------------------------------------------------------------------------------------- 189,300 --------------------------------------------------------------------------------------------- AUTOMOBILE/TRUCKS PARTS & TIRES-0.17% 8,000 Borg-Warner Automotive, Inc. 236,000 --------------------------------------------------------------------------------------------- 15,000 Mark IV Industries, Inc. 292,500 --------------------------------------------------------------------------------------------- 528,500 --------------------------------------------------------------------------------------------- BEVERAGES-0.22% 14,200 Canandaigua Wine Co., Inc.-Class A(a) 681,600 --------------------------------------------------------------------------------------------- BUSINESS SERVICES-0.76% 25,000 Alternative Resources Corp.(a) 775,000 --------------------------------------------------------------------------------------------- 19,900 Brandon Systems Corp. 358,200 --------------------------------------------------------------------------------------------- 2,600 Equifax Inc. 101,400 --------------------------------------------------------------------------------------------- 12,200 Healthcare COMPARE Corp.(a) 451,400 --------------------------------------------------------------------------------------------- 15,800 Olsten Corp. (The) 608,300 --------------------------------------------------------------------------------------------- 2,294,300 --------------------------------------------------------------------------------------------- COMPUTER MINI/PCS-1.05% 900 CDW Computer Centers, Inc.(a) 43,650 --------------------------------------------------------------------------------------------- 20,000 COMPAQ Computer Corp.(a) 1,115,000 --------------------------------------------------------------------------------------------- 23,800 Dell Computer Corp.(a) 1,109,675 --------------------------------------------------------------------------------------------- 11,800 Sun Microsystems, Inc.(a) 920,400 --------------------------------------------------------------------------------------------- 3,188,725 --------------------------------------------------------------------------------------------- COMPUTER NETWORKING-3.51% 6,600 ADC Telecommunications, Inc.(a) 264,000 --------------------------------------------------------------------------------------------- 22,800 ALANTEC Corp.(a) 815,100 --------------------------------------------------------------------------------------------- 7,900 Allen Group Inc. 193,550 --------------------------------------------------------------------------------------------- 16,600 Ascend Communications, Inc.(a) 1,079,000 --------------------------------------------------------------------------------------------- 25,000 Auspex Systems, Inc.(a) 353,125 --------------------------------------------------------------------------------------------- 9,100 Bay Networks, Inc.(a) 602,875 --------------------------------------------------------------------------------------------- 12,700 Cascade Communications Corp.(a) 904,875 --------------------------------------------------------------------------------------------- 24,700 Cheyenne Software, Inc.(a) 515,613 --------------------------------------------------------------------------------------------- 12,000 CIDCO, Inc.(a) 355,500 --------------------------------------------------------------------------------------------- 16,800 Cisco Systems, Inc.(a) 1,302,000 --------------------------------------------------------------------------------------------- 7,000 DSC Communications Corp.(a) 259,000 --------------------------------------------------------------------------------------------- 27,000 DSP Group Inc.(a) 438,750 --------------------------------------------------------------------------------------------- 19,100 FORE Systems, Inc.(a) 1,012,300 --------------------------------------------------------------------------------------------- 9,000 Lannet Data Communications Ltd.(a) 258,750 ---------------------------------------------------------------------------------------------
FS-2 190 FINANCIALS
SHARES MARKET VALUE Computer Networking-(continued) 5,900 Network Equipment Technologies, Inc.(a) $ 192,488 - --------------------------------------------------------------------------------------------- 23,800 PairGain Technologies, Inc.(a) 1,017,450 - --------------------------------------------------------------------------------------------- 24,900 Tekelec(a) 361,050 - --------------------------------------------------------------------------------------------- 7,400 Tellabs, Inc.(a) 251,600 - --------------------------------------------------------------------------------------------- 10,200 3Com Corp.(a) 479,400 - --------------------------------------------------------------------------------------------- 1,975 TransPro, Inc.(a) 21,725 - --------------------------------------------------------------------------------------------- 10,678,151 - --------------------------------------------------------------------------------------------- COMPUTER PERIPHERALS-2.54% 10,000 Adaptec Inc.(a) 445,000 - --------------------------------------------------------------------------------------------- 19,200 Alliance Semiconductor Corp.(a) 590,400 - --------------------------------------------------------------------------------------------- 42,300 Chips & Technologies, Inc.(a) 370,125 - --------------------------------------------------------------------------------------------- 11,300 Digi International, Inc.(a) 302,275 - --------------------------------------------------------------------------------------------- 16,800 Integrated Process Equipment Corp.(a) 623,700 - --------------------------------------------------------------------------------------------- 11,000 Medic Computer Systems, Inc.(a) 585,750 - --------------------------------------------------------------------------------------------- 13,300 Microchip Technology Inc.(a) 527,844 - --------------------------------------------------------------------------------------------- 65,000 Mylex Corp.(a) 1,210,625 - --------------------------------------------------------------------------------------------- 13,600 Oak Technology, Inc.(a) 744,600 - --------------------------------------------------------------------------------------------- 12,400 Oracle Systems Corp.(a) 540,950 - --------------------------------------------------------------------------------------------- 11,900 Read-Rite Corp.(a) 415,013 - --------------------------------------------------------------------------------------------- 51,000 Wind River Systems(a) 1,377,000 - --------------------------------------------------------------------------------------------- 7,733,282 - --------------------------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES-6.90% 30,000 Acclaim Entertainment, Inc.(a) 708,750 - --------------------------------------------------------------------------------------------- 50,000 Activision, Inc.(a) 837,500 - --------------------------------------------------------------------------------------------- 13,756 Adobe Systems, Inc. 784,092 - --------------------------------------------------------------------------------------------- 8,800 Bell & Howell Holdings Co.(a) 220,000 - --------------------------------------------------------------------------------------------- 18,000 Cadence Design Systems, Inc.(a) 580,500 - --------------------------------------------------------------------------------------------- 5,100 Checkfree Corp.(a) 107,738 - --------------------------------------------------------------------------------------------- 19,000 Cognos, Inc.(a) 605,625 - --------------------------------------------------------------------------------------------- 30,250 Computer Associates International, Inc. 1,663,751 - --------------------------------------------------------------------------------------------- 45,000 Computervision Corp.(a) 528,750 - --------------------------------------------------------------------------------------------- 26,200 CyCare Systems, Inc.(a) 812,200 - --------------------------------------------------------------------------------------------- 4,600 Dendrite International, Inc.(a) 79,925 - --------------------------------------------------------------------------------------------- 20,000 Diamond Multimedia Systems, Inc.(a) 590,000 - --------------------------------------------------------------------------------------------- 4,400 Eagle Point Software Corp.(a) 84,700 - --------------------------------------------------------------------------------------------- 22,600 Electronic Arts, Inc.(a) 827,725 - --------------------------------------------------------------------------------------------- 30,000 Expert Software, Inc.(a) 622,500 - --------------------------------------------------------------------------------------------- 7,500 HBO & Co. 530,625 - --------------------------------------------------------------------------------------------- 32,450 HCIA, Inc.(a) 884,263 - --------------------------------------------------------------------------------------------- 18,000 Hummingbird Communications Ltd.(a) 774,000 - --------------------------------------------------------------------------------------------- 27,700 Imnet Systems, Inc.(a) 702,888 - --------------------------------------------------------------------------------------------- 9,000 Informix Corp.(a) 262,125 - ---------------------------------------------------------------------------------------------
FS-3 191 FINANCIALS
SHARES MARKET VALUE Computer Software/Services-(continued) 36,600 Intersolv, Inc.(a) $ 576,450 - --------------------------------------------------------------------------------------------- 2,900 Logic Works, Inc.(a) 44,225 - --------------------------------------------------------------------------------------------- 2,600 Microsoft Corp.(a) 260,000 - --------------------------------------------------------------------------------------------- 23,200 Netscape Communications Corp.(a) 2,041,601 - --------------------------------------------------------------------------------------------- 8,000 Network General Corp.(a) 332,000 - --------------------------------------------------------------------------------------------- 5,000 Parametric Technology Corp.(a) 334,375 - --------------------------------------------------------------------------------------------- 6,600 Platinum Technology, Inc.(a) 120,450 - --------------------------------------------------------------------------------------------- 6,700 Premenos Technology Corp.(a) 262,975 - --------------------------------------------------------------------------------------------- 25,000 Rational Software Corp.(a) 390,626 - --------------------------------------------------------------------------------------------- 40,000 S3, Inc.(a) 685,000 - --------------------------------------------------------------------------------------------- 13,600 Seer Technologies, Inc. 204,000 - --------------------------------------------------------------------------------------------- 25,000 Shared Medical Systems Corp. 965,625 - --------------------------------------------------------------------------------------------- 4,100 Smith Micro Software, Inc.(a) 50,225 - --------------------------------------------------------------------------------------------- 35,000 Softdesk, Inc.(a) 813,750 - --------------------------------------------------------------------------------------------- 30,700 SoftKey International, Inc.(a) 967,050 - --------------------------------------------------------------------------------------------- 16,700 Synopsys, Inc.(a) 626,250 - --------------------------------------------------------------------------------------------- 3,100 Verity, Inc.(a) 113,925 - --------------------------------------------------------------------------------------------- 20,996,184 - --------------------------------------------------------------------------------------------- CONGLOMERATES-0.23% 25,000 Acme-Cleveland Corp. 546,875 - --------------------------------------------------------------------------------------------- 8,000 Helen Of Troy, Ltd.(a) 151,000 - --------------------------------------------------------------------------------------------- 697,875 - --------------------------------------------------------------------------------------------- ELECTRONIC COMPONENTS/MISCELLANEOUS-2.05% 30,000 Aetrium, Inc.(a) 652,500 - --------------------------------------------------------------------------------------------- 6,200 AVX Corp. 192,975 - --------------------------------------------------------------------------------------------- 16,000 Brooks Automation, Inc.(a) 288,000 - --------------------------------------------------------------------------------------------- 20,700 California Amplifier, Inc.(a) 558,900 - --------------------------------------------------------------------------------------------- 15,000 Electro Scientific Industries, Inc.(a) 465,000 - --------------------------------------------------------------------------------------------- 45,000 General Scanning, Inc.(a) 540,000 - --------------------------------------------------------------------------------------------- 1,785 Harman International Industries, Inc. 82,333 - --------------------------------------------------------------------------------------------- 30,000 Information Storage Devices, Inc.(a) 652,500 - --------------------------------------------------------------------------------------------- 19,200 Jabil Industries, Inc.(a) 324,000 - --------------------------------------------------------------------------------------------- 4,600 Oak Industries Inc.(a) 96,025 - --------------------------------------------------------------------------------------------- 11,700 PRI Automation Inc.(a) 432,900 - --------------------------------------------------------------------------------------------- 41,300 PSC, Inc.(a) 423,325 - --------------------------------------------------------------------------------------------- 12,300 Semitool, Inc.(a) 199,875 - --------------------------------------------------------------------------------------------- 30,800 Telxon Corp. 712,250 - --------------------------------------------------------------------------------------------- 18,600 Teradyne, Inc.(a) 620,775 - --------------------------------------------------------------------------------------------- 6,241,358 - ---------------------------------------------------------------------------------------------
FS-4 192 FINANCIALS
SHARES MARKET VALUE ELECTRONIC/PC DISTRIBUTORS-0.54% 8,500 Arrow Electronics, Inc.(a) $ 431,375 - --------------------------------------------------------------------------------------------- 25,000 Kent Electronics(a) 1,218,750 - --------------------------------------------------------------------------------------------- 1,650,125 - --------------------------------------------------------------------------------------------- FINANCE (CONSUMER CREDIT)-1.04% 7,000 ADVANTA Corp.-Class A 271,250 - --------------------------------------------------------------------------------------------- 12,200 CMAC Investment Corp. 579,500 - --------------------------------------------------------------------------------------------- 13,950 Concord EFS, Inc.(a) 481,275 - --------------------------------------------------------------------------------------------- 19,200 Credit Acceptance Corp.(a) 451,200 - --------------------------------------------------------------------------------------------- 11,200 General Acceptance Corp.(a) 296,800 - --------------------------------------------------------------------------------------------- 15,600 Green Tree Financial Corp. 415,350 - --------------------------------------------------------------------------------------------- 16,600 Medaphis Corp.(a) 527,050 - --------------------------------------------------------------------------------------------- 3,750 Money Store, Inc. (The) 150,000 - --------------------------------------------------------------------------------------------- 3,172,425 - --------------------------------------------------------------------------------------------- FOOD PROCESSING-0.07% 8,500 Performance Food Group Co.(a) 197,625 - --------------------------------------------------------------------------------------------- FUNERAL SERVICES-0.05% 6,600 Equity Corp. International(a) 138,600 - --------------------------------------------------------------------------------------------- GAMING-0.16% 25,000 Players International, Inc.(a) 268,750 - --------------------------------------------------------------------------------------------- 11,900 Trump Hotels & Casino Resorts, Inc.(a) 202,300 - --------------------------------------------------------------------------------------------- 471,050 - --------------------------------------------------------------------------------------------- HOTELS/MOTELS-0.18% 10,200 La Quinta Inns, Inc. 262,650 - --------------------------------------------------------------------------------------------- 30,000 Prime Hospitality Corp.(a) 296,250 - --------------------------------------------------------------------------------------------- 558,900 - --------------------------------------------------------------------------------------------- INSURANCE (MULTI-LINE PROPERTIES)-0.49% 30,900 HCC Insurance Holding, Inc.(a) 1,073,775 - --------------------------------------------------------------------------------------------- 3,200 United Dental Care, Inc.(a) 97,600 - --------------------------------------------------------------------------------------------- 8,000 Vesta Insurance Group, Inc. 323,000 - --------------------------------------------------------------------------------------------- 1,494,375 - --------------------------------------------------------------------------------------------- LEISURE & RECREATION-1.08% 45,000 Cannondale Corp.(a) 720,000 - --------------------------------------------------------------------------------------------- 43,400 Hollywood Entertainment Corp.(a) 1,160,950 - --------------------------------------------------------------------------------------------- 35,000 Moovies, Inc.(a) 573,125 - --------------------------------------------------------------------------------------------- 35,000 Ride, Inc.(a) 844,375 - --------------------------------------------------------------------------------------------- 3,298,450 - --------------------------------------------------------------------------------------------- MACHINERY (HEAVY)-0.01% 700 AGCO Corp. 31,325 - --------------------------------------------------------------------------------------------- MEDICAL (DRUGS)-0.53% 5,000 Alpharma, Inc.-Class A 120,000 - --------------------------------------------------------------------------------------------- 18,100 Cardinal Health, Inc. 929,888 - ---------------------------------------------------------------------------------------------
FS-5 193 FINANCIALS
SHARES MARKET VALUE Medical (Drugs)-(continued) 4,000 Gulf South Medical Supply, Inc.(a) $ 83,000 - --------------------------------------------------------------------------------------------- 20,250 Mylan Laboratories, Inc. 384,750 - --------------------------------------------------------------------------------------------- 2,200 Watson Pharmaceuticals, Inc.(a) 98,450 - --------------------------------------------------------------------------------------------- 1,616,088 - --------------------------------------------------------------------------------------------- MEDICAL (PATIENT SERVICES)-3.54% 40,000 AHI Healthcare Systems, Inc.(a) 560,000 - --------------------------------------------------------------------------------------------- 22,100 American Medical Response, Inc.(a) 638,138 - --------------------------------------------------------------------------------------------- 28,519 Apria Healthcare Group, Inc.(a) 616,723 - --------------------------------------------------------------------------------------------- 30,000 Arbor Health Care Co.(a) 510,000 - --------------------------------------------------------------------------------------------- 16,600 Genesis Health Ventures, Inc.(a) 479,325 - --------------------------------------------------------------------------------------------- 6,000 Healthsource, Inc.(a) 318,000 - --------------------------------------------------------------------------------------------- 30,000 HEALTHSOUTH Corp.(a) 783,750 - --------------------------------------------------------------------------------------------- 7,500 Horizon Healthcare Corp.(a) 151,875 - --------------------------------------------------------------------------------------------- 25,900 Lincare Holdings, Inc.(a) 644,263 - --------------------------------------------------------------------------------------------- 14,000 Living Centers of America, Inc.(a) 362,250 - --------------------------------------------------------------------------------------------- 4,500 MedPartners, Inc.(a) 126,000 - --------------------------------------------------------------------------------------------- 22,900 Multicare Companies, Inc.(a) 429,375 - --------------------------------------------------------------------------------------------- 4,000 Myriad Genetics, Inc.(a) 108,000 - --------------------------------------------------------------------------------------------- 18,800 Omnicare, Inc.(a) 681,500 - --------------------------------------------------------------------------------------------- 200 Pediatrix Medical Group, Inc.(a) 4,325 - --------------------------------------------------------------------------------------------- 25,400 Phamis, Inc.(a) 641,350 - --------------------------------------------------------------------------------------------- 13,000 PhyCor, Inc.(a) 477,750 - --------------------------------------------------------------------------------------------- 5,500 Physician Reliance Network, Inc.(a) 182,875 - --------------------------------------------------------------------------------------------- 38,600 Rotech Medical Corp.(a) 878,150 - --------------------------------------------------------------------------------------------- 5,700 St. Jude Medical, Inc.(a) 303,525 - --------------------------------------------------------------------------------------------- 25,000 Sterling Healthcare Group(a) 343,750 - --------------------------------------------------------------------------------------------- 18,500 Summit Care Corp.(a) 383,875 - --------------------------------------------------------------------------------------------- 16,400 Sybron International Corp. 697,000 - --------------------------------------------------------------------------------------------- 25,000 Tokos Medical Corp.(a) 231,250 - --------------------------------------------------------------------------------------------- 7,800 Vencor, Inc.(a) 216,450 - --------------------------------------------------------------------------------------------- 10,769,499 - --------------------------------------------------------------------------------------------- MEDICAL INSTRUMENTS/PRODUCTS-1.30% 34,200 Biomet, Inc.(a) 568,575 - --------------------------------------------------------------------------------------------- 25,100 CONMED Corp.(a) 878,500 - --------------------------------------------------------------------------------------------- 6,800 Cordis Corp.(a) 751,400 - --------------------------------------------------------------------------------------------- 9,100 Empi, Inc.(a) 202,475 - --------------------------------------------------------------------------------------------- 9,100 Nellcor Puritan Bennett, Inc.(a) 523,250 - --------------------------------------------------------------------------------------------- 25,800 Patterson Dental Co.(a) 645,000 - --------------------------------------------------------------------------------------------- 25,000 ResMed, Inc.(a) 375,000 - --------------------------------------------------------------------------------------------- 3,944,200 - --------------------------------------------------------------------------------------------- OFFICE AUTOMATION-0.18% 20,700 Corporate Express, Inc.(a) 540,788 - ---------------------------------------------------------------------------------------------
FS-6 194 FINANCIALS
SHARES MARKET VALUE OFFICE PRODUCTS-0.13% 11,500 Reynolds & Reynolds Co.-Class A $ 409,688 - --------------------------------------------------------------------------------------------- POLLUTION CONTROL-0.34% 12,300 Asyst Technologies, Inc.(a) 516,600 - --------------------------------------------------------------------------------------------- 24,400 USA Waste Services, Inc.(a) 512,400 - --------------------------------------------------------------------------------------------- 1,029,000 - --------------------------------------------------------------------------------------------- PUBLISHING-0.01% 800 Media General, Inc.-Class A 22,200 - --------------------------------------------------------------------------------------------- RESTAURANTS-1.45% 25,000 Buffets, Inc.(a) 312,500 - --------------------------------------------------------------------------------------------- 15,000 Cracker Barrel Old Country Store, Inc. 255,000 - --------------------------------------------------------------------------------------------- 26,700 Daka International, Inc.(a) 811,013 - --------------------------------------------------------------------------------------------- 72,100 Landry's Seafood Restaurants, Inc.(a) 973,350 - --------------------------------------------------------------------------------------------- 25,000 Outback Steakhouse, Inc.(a) 784,375 - --------------------------------------------------------------------------------------------- 57,900 Sonic Corp.(a) 1,273,800 - --------------------------------------------------------------------------------------------- 4,410,038 - --------------------------------------------------------------------------------------------- RETAIL (FOOD & DRUGS)-0.27% 5,200 Eckerd Corp.(a) 206,050 - --------------------------------------------------------------------------------------------- 18,000 Kroger Co.(a) 600,750 - --------------------------------------------------------------------------------------------- 806,800 - --------------------------------------------------------------------------------------------- RETAIL (STORES)-3.08% 15,800 AutoZone, Inc.(a) 391,050 - --------------------------------------------------------------------------------------------- 20,200 Bed Bath & Beyond, Inc.(a) 631,250 - --------------------------------------------------------------------------------------------- 6,200 Circuit City Stores, Inc. 206,925 - --------------------------------------------------------------------------------------------- 37,800 Creative Computers, Inc.(a) 1,096,201 - --------------------------------------------------------------------------------------------- 25,000 Dollar General Corp. 612,500 - --------------------------------------------------------------------------------------------- 19,900 Duty Free International, Inc. 283,575 - --------------------------------------------------------------------------------------------- 25,800 Eastbay, Inc.(a) 548,250 - --------------------------------------------------------------------------------------------- 4,700 Gadzooks, Inc.(a) 86,950 - --------------------------------------------------------------------------------------------- 11,200 General Nutrition Companies, Inc.(a) 278,600 - --------------------------------------------------------------------------------------------- 27,000 Global DirectMail Corp.(a) 735,750 - --------------------------------------------------------------------------------------------- 27,100 Gymboree Corp.(a) 613,138 - --------------------------------------------------------------------------------------------- 26,200 Heilig-Meyers Co. 481,425 - --------------------------------------------------------------------------------------------- 9,000 MacFrugal's Bargains Close-Outs, Inc.(a) 106,875 - --------------------------------------------------------------------------------------------- 13,000 Men's Wearhouse, Inc. (The)(a) 507,000 - --------------------------------------------------------------------------------------------- 25,000 Petco Animal Supplies, Inc.(a) 700,000 - --------------------------------------------------------------------------------------------- 5,100 Proffitt's, Inc.(a) 119,212 - --------------------------------------------------------------------------------------------- 3,600 Staples, Inc.(a) 95,850 - --------------------------------------------------------------------------------------------- 2,000 Sunglass Hut International Inc.(a) 54,500 - --------------------------------------------------------------------------------------------- 18,600 Talbots, Inc. 451,050 - --------------------------------------------------------------------------------------------- 37,900 Thompson PBE, Inc.(a) 691,675 - ---------------------------------------------------------------------------------------------
FS-7 195 FINANCIALS
SHARES MARKET VALUE Retail (Stores)-(Continued) 25,000 Tractor Supply Co.(a) $ 393,750 - --------------------------------------------------------------------------------------------- 6,600 Viking Office Products, Inc.(a) 293,700 - --------------------------------------------------------------------------------------------- 9,379,226 - --------------------------------------------------------------------------------------------- SCIENTIFIC INSTRUMENTS-0.38% 20,000 Input/Output, Inc.(a) 747,500 - --------------------------------------------------------------------------------------------- 8,000 Varian Associates, Inc. 411,000 - --------------------------------------------------------------------------------------------- 1,158,500 - --------------------------------------------------------------------------------------------- SEMICONDUCTORS-5.70% 35,900 Advanced Technology Materials, Inc.(a) 390,413 - --------------------------------------------------------------------------------------------- 9,400 Altera Corp.(a) 568,700 - --------------------------------------------------------------------------------------------- 11,400 Applied Materials, Inc.(a) 571,425 - --------------------------------------------------------------------------------------------- 11,000 Atmel Corp.(a) 343,750 - --------------------------------------------------------------------------------------------- 23,400 Cirrus Logic, Inc.(a) 985,725 - --------------------------------------------------------------------------------------------- 7,350 Credence Systems Corp.(a) 274,706 - --------------------------------------------------------------------------------------------- 22,000 Cypress Semiconductor Corp.(a) 775,500 - --------------------------------------------------------------------------------------------- 35,000 Elantec Semiconductor, Inc.(a) 253,750 - --------------------------------------------------------------------------------------------- 1,900 ESS Technology, Inc.(a) 57,000 - --------------------------------------------------------------------------------------------- 20,000 FSI International, Inc.(a) 475,000 - --------------------------------------------------------------------------------------------- 42,000 Integrated Device Technology, Inc.(a) 798,000 - --------------------------------------------------------------------------------------------- 13,150 Integrated Silicon Solution, Inc.(a) 411,760 - --------------------------------------------------------------------------------------------- 5,500 Intel Corp. 384,313 - --------------------------------------------------------------------------------------------- 18,200 International Rectifier Corp.(a) 821,275 - --------------------------------------------------------------------------------------------- 25,000 Kemet Corp.(a) 862,501 - --------------------------------------------------------------------------------------------- 12,600 LAM Research Corp.(a) 767,025 - --------------------------------------------------------------------------------------------- 21,300 Lattice Semiconductor Corp.(a) 836,025 - --------------------------------------------------------------------------------------------- 6,600 Maxim Integrated Products, Inc.(a) 493,350 - --------------------------------------------------------------------------------------------- 27,600 MEMC Electronic Materials, Inc.(a) 883,201 - --------------------------------------------------------------------------------------------- 10,700 Merix Corp.(a) 395,900 - --------------------------------------------------------------------------------------------- 13,000 Micron Technology Inc. 918,126 - --------------------------------------------------------------------------------------------- 9,700 Novellus Systems, Inc.(a) 668,088 - --------------------------------------------------------------------------------------------- 29,000 Paradigm Technology, Inc.(a) 638,000 - --------------------------------------------------------------------------------------------- 10,500 Sanmina Corp.(a) 567,000 - --------------------------------------------------------------------------------------------- 3,500 Silicon Valley Group, Inc.(a) 113,313 - --------------------------------------------------------------------------------------------- 16,300 Solectron Corp.(a) 656,075 - --------------------------------------------------------------------------------------------- 30,300 Triquint Semiconductor, Inc.(a) 689,325 - --------------------------------------------------------------------------------------------- 37,400 Tylan General, Inc.(a) 598,400 - --------------------------------------------------------------------------------------------- 50,000 Vitesse Semiconductor Corp.(a) 587,500 - --------------------------------------------------------------------------------------------- 23,400 VLSI Technology Inc.(a) 549,900 - --------------------------------------------------------------------------------------------- 17,335,046 - --------------------------------------------------------------------------------------------- SHOES & RELATED APPAREL-0.19% 19,500 Wolverine World Wide, Inc. 585,000 - ---------------------------------------------------------------------------------------------
FS-8 196 FINANCIALS
SHARES MARKET VALUE TELECOMMUNICATIONS-1.33% 37,000 Brightpoint, Inc.(a) $ 703,000 - ------------------------------------------------------------------------------------------------ 2,600 LCI International, Inc.(a) 46,800 - ------------------------------------------------------------------------------------------------ 26,000 Mobilemedia Corp.(a) 682,500 - ------------------------------------------------------------------------------------------------ 21,400 Octel Communications Corp.(a) 730,275 - ------------------------------------------------------------------------------------------------ 22,200 Periphonics Corp.(a) 543,900 - ------------------------------------------------------------------------------------------------ 8,000 Tel-Save Holdings, Inc.(a) 111,000 - ------------------------------------------------------------------------------------------------ 20,000 Teltrend, Inc.(a) 590,000 - ------------------------------------------------------------------------------------------------ 15,000 TESSCO Technologies, Inc.(a) 393,750 - ------------------------------------------------------------------------------------------------ 19,600 U.S. Long Distance Corp.(a) 252,350 - ------------------------------------------------------------------------------------------------ 4,053,575 - ------------------------------------------------------------------------------------------------ TEXTILES-0.29% 15,000 Nautica Enterprises, Inc.(a) 513,750 - ------------------------------------------------------------------------------------------------ 9,800 Tommy Hilfiger Corp.(a) 373,625 - ------------------------------------------------------------------------------------------------ 887,375 - ------------------------------------------------------------------------------------------------ TRANSPORTATION-0.09% 7,800 Fritz Companies, Inc.(a) 273,000 - ------------------------------------------------------------------------------------------------ Total Domestic Common Stocks 121,462,173 - ------------------------------------------------------------------------------------------------ FOREIGN STOCKS & OTHER EQUITY INTERESTS-51.02% ARGENTINA-0.35% 46,000 Buenos Aires Embotellado S.A.-Class B-ADR (Beverages-Soft Drinks)(a) 1,052,250 - ------------------------------------------------------------------------------------------------ AUSTRALIA-0.36% 247,328 QBE Insurance Group Ltd. (Insurance-Broker) 1,092,704 - ------------------------------------------------------------------------------------------------ AUSTRIA-1.32% 9,000 Austria Mikro Systeme International AG (Semiconductors) 1,667,930 - ------------------------------------------------------------------------------------------------ 23,000 Flughafen Wien AG (Transportation) 1,477,351 - ------------------------------------------------------------------------------------------------ 14,000 Oesterreichische Elektrizitaitswirtschafts AG (Verbundgesellschaft)-Class A (Electric Services) 855,425 - ------------------------------------------------------------------------------------------------ 4,000,706 - ------------------------------------------------------------------------------------------------ BELGIUM-0.64% 17,200 Barco Industries (Conglomerates) 1,937,525 - ------------------------------------------------------------------------------------------------ CANADA-1.69% 100,000 Circo Craft Co., Inc. (Electronic Components/Miscellaneous)(a) 634,423 - ------------------------------------------------------------------------------------------------ 26,350 Corel Corp. (Computer Software/Services)(a) 451,244 - ------------------------------------------------------------------------------------------------ 166,500 Extendicare, Inc. (Insurance-Life & Health)(a) 1,755,346 - ------------------------------------------------------------------------------------------------ 40,300 GEAC Computer Corp. Ltd. (Computer Software/Services)(a) 556,463 - ------------------------------------------------------------------------------------------------ 24,000 Intertape Polymer Group, Inc. (Containers) 703,090 - ------------------------------------------------------------------------------------------------ 190,000 Mitel Corp. (Telecommunications)(a) 1,045,865 - ------------------------------------------------------------------------------------------------ 5,146,431 - ------------------------------------------------------------------------------------------------
FS-9 197 FINANCIALS
SHARES MARKET VALUE CHILE-1.11% 33,800 Compania de Telefonos de Chile S.A. ADR (Telecommunications) $ 2,433,600 - --------------------------------------------------------------------------------------------- 41,700 Santa Isabel S.A.-ADR (Retail-Stores)(a) 943,463 - --------------------------------------------------------------------------------------------- 3,377,063 - --------------------------------------------------------------------------------------------- DENMARK-2.06% 38,000 Bang & Olufsen Holdings A/S (Electronic Components/Miscellaneous) 1,175,329 - --------------------------------------------------------------------------------------------- 7,100 Brodrene Hartman A/S (Containers) 1,780,198 - --------------------------------------------------------------------------------------------- 4,800 Danske Traelastkompagni (Building Materials) 342,606 - --------------------------------------------------------------------------------------------- 20,000 Kobenhavns Lufthavne (Airlines) 1,500,733 - --------------------------------------------------------------------------------------------- 40,000 Lindab AB-Class B (Building Materials) 871,156 - --------------------------------------------------------------------------------------------- 9,950 Radiometer A/S-Class B (Medical Instruments/Products) 608,217 - --------------------------------------------------------------------------------------------- 6,278,239 - --------------------------------------------------------------------------------------------- FINLAND-1.40% 52,500 Cultor Oy (Food Processing) 2,175,347 - --------------------------------------------------------------------------------------------- 60,000 Finnlines Oy (Transportation) 1,094,735 - --------------------------------------------------------------------------------------------- 37,000 Tietotehdas Oy-Class B (Computer Software/Services) 1,001,742 - --------------------------------------------------------------------------------------------- 4,271,824 - --------------------------------------------------------------------------------------------- FRANCE-4.05% 7,750 Altran Technologies, S.A. (Telecommunications) 1,107,799 - --------------------------------------------------------------------------------------------- 20,000 BIS S.A. (Business Services)(a) 1,873,173 - --------------------------------------------------------------------------------------------- 14,400 Bollore Technologies S.A. (Electronic Components/Miscellaneous)(a) 1,289,790 - --------------------------------------------------------------------------------------------- 2,800 Christian Dalloz (Security & Safety Services)(a) 629,843 - --------------------------------------------------------------------------------------------- 12,900 Hermes International (Retail-Stores) 2,268,666 - --------------------------------------------------------------------------------------------- 11,000 Industrielle de Transports Automobiles S.A. (Transportation) 1,887,282 - --------------------------------------------------------------------------------------------- 20,500 M6 Metropole Television (Advertising/Broadcasting) 1,903,234 - --------------------------------------------------------------------------------------------- 22,000 Scor S.A. (Insurance Multi-Line Properties) 655,937 - --------------------------------------------------------------------------------------------- 2,035 Sidel S.A. (Machinery-Miscellaneous) 706,617 - --------------------------------------------------------------------------------------------- 12,322,341 - --------------------------------------------------------------------------------------------- GERMANY-1.59% 2,000 Computer 2000 A.G. (Computer Software/Services) 690,537 - --------------------------------------------------------------------------------------------- 2,850 Escada A.G.-Preferred (Textiles) 514,279 - --------------------------------------------------------------------------------------------- 1,800 Fresenius A.G.-Preferred (Medical Instruments/Products) 1,438,619 - --------------------------------------------------------------------------------------------- 1,750 Hugo Boss A.G.-Preferred (Textiles) 1,460,820 - --------------------------------------------------------------------------------------------- 1,200 Springer (Axel) Verlag A.G. (Publishing) 724,637 - --------------------------------------------------------------------------------------------- 4,828,892 - --------------------------------------------------------------------------------------------- HONG KONG-4.13% 830,000 ASM Pacific Technology (Electronic Components/Miscellaneous) 783,656 - --------------------------------------------------------------------------------------------- 1,841,000 CDL Hotels International Ltd. (Hotels/Motels) 833,387 - --------------------------------------------------------------------------------------------- 3,760,000 China Hong Kong Photo Products Holdings, Ltd. (Consumer Non-Durables) 1,725,913 - --------------------------------------------------------------------------------------------- 1,586,033 First Pacific Co. Ltd. (Conglomerates) 1,825,486 - --------------------------------------------------------------------------------------------- 329,000 Hutchison Whampoa Ltd. (Conglomerates) 1,812,677 - --------------------------------------------------------------------------------------------- 1,000,000 M.C. Packaging Ltd. (Containers) 426,684 - ---------------------------------------------------------------------------------------------
FS-10 198 FINANCIALS
SHARES MARKET VALUE Hong Kong-(continued) 415,000 New World Infrastructure (Conglomerates)(a) $ 729,981 - --------------------------------------------------------------------------------------------- 186,000 Sun Hung Kai Properties Ltd. (Real Estate) 1,485,508 - --------------------------------------------------------------------------------------------- 931,000 Vatronix International (Electronic Components/Miscellaneous) 1,776,098 - --------------------------------------------------------------------------------------------- 4,500,000 Yue Yuen Industrial Holdings (Shoes & Related Apparel) 1,178,590 - --------------------------------------------------------------------------------------------- 12,577,980 - --------------------------------------------------------------------------------------------- INDIA-0.02% 3,500 Reliance Industries Ltd. GDS (Textiles)(a) 54,670 - --------------------------------------------------------------------------------------------- INDONESIA-2.68% 819,500 PT Astra International (Automobile/Trucks Parts & Tires) 1,641,887 - --------------------------------------------------------------------------------------------- 352,000 PT Bank International Indonesia (Banking) 1,232,232 - --------------------------------------------------------------------------------------------- 214,000 PT Hanjaya Mandala Sampoerna (Tobacco) 1,978,864 - --------------------------------------------------------------------------------------------- 236,000 PT Jaya Real Property (Home Building) 672,875 - --------------------------------------------------------------------------------------------- 908,000 PT Matahari Putra Prima (Retail-Stores) 1,899,164 - --------------------------------------------------------------------------------------------- 283,000 PT Semen Gresik (Building Materials) 735,226 - --------------------------------------------------------------------------------------------- 8,160,248 - --------------------------------------------------------------------------------------------- ISRAEL-0.62% 45,000 Tadiran Ltd. (Telecommunications) 984,375 - --------------------------------------------------------------------------------------------- 30,000 Tower Semiconductor Ltd. (Semiconductors)(a) 907,500 - --------------------------------------------------------------------------------------------- 1,891,875 - --------------------------------------------------------------------------------------------- ITALY-1.79% 195,000 Arnoldo Mondadori Editore S.p.A. (Publishing) 1,443,538 - --------------------------------------------------------------------------------------------- 124,000 Brembo S.p.A. (Automobile/Trucks Parts & Tires)(a) 1,544,865 - --------------------------------------------------------------------------------------------- 2,300 De Rigo S.p.A.-ADR (Medical Instruments/Products) 47,438 - --------------------------------------------------------------------------------------------- 53,500 Gewiss S.p.A. (Electronic Components/Miscellaneous) 670,931 - --------------------------------------------------------------------------------------------- 138,000 Marzotto & Figli S.p.A. (Textiles) 878,732 - --------------------------------------------------------------------------------------------- 81,000 Safilo S.p.A. (Manufacturing-Miscellaneous) 858,782 - --------------------------------------------------------------------------------------------- 5,444,286 - --------------------------------------------------------------------------------------------- JAPAN-2.39% 32,680 Alpine Electronics (Electronic Components/Miscellaneous) 453,646 - --------------------------------------------------------------------------------------------- 23,000 Exedy Corp. (Automobile/Trucks Parts & Tires) 357,495 - --------------------------------------------------------------------------------------------- 61,000 FCC Co., Ltd. (Automobile/Trucks Parts & Tires) 1,878,391 - --------------------------------------------------------------------------------------------- 24,000 I-O Data Device Inc. (Computer Peripherals) 1,712,694 - --------------------------------------------------------------------------------------------- 21,000 Kyocera Corp. (Electronic Components/Miscellaneous) 1,720,319 - --------------------------------------------------------------------------------------------- 6,000 Ralse Company Ltd. (Retail-Stores) 112,322 - --------------------------------------------------------------------------------------------- 6,000 Shohkoh Fund (Finance-Asset Management) 1,044,040 - --------------------------------------------------------------------------------------------- 7,278,907 - --------------------------------------------------------------------------------------------- MALAYSIA-2.74% 305,000 Arab Malaysian Finance Berhad (Finance-Asset Management) 1,068,280 - --------------------------------------------------------------------------------------------- 540,000 Bandar Raya Developments Berhad (Real Estate) 807,556 - --------------------------------------------------------------------------------------------- 238,000 Gamuda Berhad (Engineering & Construction) 992,837 - --------------------------------------------------------------------------------------------- 199,000 IOI Properties Berhad (Real Estate) 418,988 - ---------------------------------------------------------------------------------------------
FS-11 199 FINANCIALS
SHARES MARKET VALUE Malaysia-(continued) 185,000 Malayan Banking Berhad (Banking) $ 1,492,522 - --------------------------------------------------------------------------------------------- 508,000 Nylex Berhad (Chemicals) 1,489,413 - --------------------------------------------------------------------------------------------- 333,000 United Engineers Berhad (Machinery-Miscellaneous) 2,070,603 - --------------------------------------------------------------------------------------------- 8,340,199 - --------------------------------------------------------------------------------------------- MEXICO-0.72% 25,000 Grupo Simec, S.A. de C.V. (Steel)(a) 162,500 - --------------------------------------------------------------------------------------------- 155,000 Kimberly-Clark de Mexico S.A. (Paper & Forest Products) 2,023,157 - --------------------------------------------------------------------------------------------- 2,185,657 - --------------------------------------------------------------------------------------------- NETHERLANDS-3.25% 15,700 Aalberts Industries N.V. (Metals-Miscellaneous) 920,427 - --------------------------------------------------------------------------------------------- 51,600 Ahrend Groep N.V. (Furniture) 1,824,838 - --------------------------------------------------------------------------------------------- 13,400 ASM Lithography Holding N.V.-ADR(a) (Semiconductors) 664,975 - --------------------------------------------------------------------------------------------- 25,600 Getronics N.V. (Computer Software/Services) 1,221,751 - --------------------------------------------------------------------------------------------- 18,000 International - Muller N.V. (Conglomerates) 1,289,136 - --------------------------------------------------------------------------------------------- 8,800 Madge N.V. (Computer Networking)(a) 368,500 - --------------------------------------------------------------------------------------------- 3,600 Philips Electronics N.V.-New York Shares-ADR (Electronic Components/Miscellaneous) 139,050 - --------------------------------------------------------------------------------------------- 46,400 Randstad Holdings N.V. (Business Services) 2,093,823 - --------------------------------------------------------------------------------------------- 30,800 Samas-Groep N.V. (Office Automation) 1,346,939 - --------------------------------------------------------------------------------------------- 9,869,439 - --------------------------------------------------------------------------------------------- NORWAY-1.57% 53,000 Nera A.S. ADR (Telecommunications)(a) 1,881,500 - --------------------------------------------------------------------------------------------- 53,000 Sysdeco Group A.S. (Business Services)(a) 1,166,051 - --------------------------------------------------------------------------------------------- 274,500 Tomra Systems A.S. (Pollution Control) 1,732,431 - --------------------------------------------------------------------------------------------- 4,779,982 - --------------------------------------------------------------------------------------------- PANAMA-0.47% 34,300 Banco Latinoamericano de Exportaciones, S.A. (Banking) 1,432,025 - --------------------------------------------------------------------------------------------- PERU-0.74% 20,000 Cementos Lima S.A.-Comun (Building Materials)(a) 296,825 - --------------------------------------------------------------------------------------------- 61,702 Cementos Lima S.A.-Trabajo (Building Materials)(a) 89,778 - --------------------------------------------------------------------------------------------- 1,050,000 CPT Telefonica del Peru S.A.-Class B (Telecommunications)(a) 1,875,000 - --------------------------------------------------------------------------------------------- 2,261,603 - --------------------------------------------------------------------------------------------- PHILIPPINES-0.71% 15,057,000 Metro Pacific Corp. (Conglomerates) 2,170,847 - --------------------------------------------------------------------------------------------- PORTUGAL-0.42% 78,900 Cimpor Cimentos de Portugal S.A. (Building Materials)(a) 1,284,072 - --------------------------------------------------------------------------------------------- SINGAPORE-0.77% 149,000 Cerebos Pacific Ltd. (Food/Processing) 927,955 - --------------------------------------------------------------------------------------------- 113,000 City Developments Ltd. (Real Estate) 699,752 - --------------------------------------------------------------------------------------------- 80,400 United OverSeas Bank Ltd. (Banking) 705,505 - --------------------------------------------------------------------------------------------- 2,333,212 - ---------------------------------------------------------------------------------------------
15 200 FINANCIALS
SHARES MARKET VALUE SPAIN-1.25% 155,000 Amper S.A. (Telecommunications)(a) $ 2,108,066 - ------------------------------------------------------------------------------------------------------ 17,200 Cristaleria Espanola S.A. (Building Materials)(a) 1,070,992 - ------------------------------------------------------------------------------------------------------ 25,000 Prosegur, CIA de Seguridad S.A. (Business Services)(a) 612,428 - ------------------------------------------------------------------------------------------------------ 3,791,486 - ------------------------------------------------------------------------------------------------------ SWEDEN-1.86% 20,300 Autoliv AB (Automobile/Trucks Parts & Tires) 1,164,699 - ------------------------------------------------------------------------------------------------------ 50,000 Hoganas AB-Class B (Metals) 1,347,770 - ------------------------------------------------------------------------------------------------------ 71,000 Kalmar Industries AB (Machinery-Heavy) 1,154,715 - ------------------------------------------------------------------------------------------------------ 17,000 Lindab AB-Class B (Building Materials) 366,081 - ------------------------------------------------------------------------------------------------------ 23,760 Telefonaktiebolaget L.M. Ericsson - ADR (Telecommunications) 507,500 - ------------------------------------------------------------------------------------------------------ 30,000 WM-Data A.B.-Class B (Computer Software/Services) 1,102,310 - ------------------------------------------------------------------------------------------------------ 5,643,075 - ------------------------------------------------------------------------------------------------------ SWITZERLAND-0.13% 400 Ascom Holdings AG (Telecommunications) 384,039 - ------------------------------------------------------------------------------------------------------ THAILAND-2.16% 55,000 Alphatec Electronic Public Co. Ltd. (Electronic Components/Miscellaneous) 716,868 - ------------------------------------------------------------------------------------------------------ 51,600 Bank of Ayudhya Ltd. (Banking) 297,317 - ------------------------------------------------------------------------------------------------------ 184,800 KR Precision Public Co. (Electronic Components/Miscellaneous) 1,336,523 - ------------------------------------------------------------------------------------------------------ 252,670 Krung Thai Bank PLC (Banking) 1,004,054 - ------------------------------------------------------------------------------------------------------ 78,900 Land & House Co. Ltd. (Home Building) 1,272,935 - ------------------------------------------------------------------------------------------------------ 415,500 Thai Theparos Food Product Public Co. Ltd. (Food/Processing)(a) 1,345,649 - ------------------------------------------------------------------------------------------------------ 48,600 United Communication Industry (Telecommunications) 610,276 - ------------------------------------------------------------------------------------------------------ 6,583,622 - ------------------------------------------------------------------------------------------------------ UNITED KINGDOM-8.03% 450,000 Amstrad PLC (Electronic Components/Miscellaneous) 2,073,914 - ------------------------------------------------------------------------------------------------------ 573,000 Astec BSR PLC (Electronic Components/Miscellaneous) 1,014,641 - ------------------------------------------------------------------------------------------------------ 174,000 Capital Radio PLC (Leisure & Recreation) 1,246,198 - ------------------------------------------------------------------------------------------------------ 345,000 Charles Baynes PLC (Conglomerates) 559,090 - ------------------------------------------------------------------------------------------------------ 17,000 Danka Business Systems PLC-ADR (Office Automation) 569,500 - ------------------------------------------------------------------------------------------------------ 404,000 Dewhirst Group PLC (Textiles) 1,194,434 - ------------------------------------------------------------------------------------------------------ 88,000 Dorling Kindersley Holdings PLC (Publishing) 751,304 - ------------------------------------------------------------------------------------------------------ 150,000 Eurotherm PLC (Electronic Components/Miscellaneous) 1,344,665 - ------------------------------------------------------------------------------------------------------ 89,000 Laird Group PLC (Automobile/Trucks Parts & Tires) 586,063 - ------------------------------------------------------------------------------------------------------ 200,000 Logica PLC (Computer Software/Services) 1,514,625 - ------------------------------------------------------------------------------------------------------ 690,000 London International Group PLC (Cosmetics & Toiletries) 1,429,090 - ------------------------------------------------------------------------------------------------------ 325,000 Medeva PLC (Medical-Drugs) 1,400,198 - ------------------------------------------------------------------------------------------------------ 147,000 Misys PLC (Computer Software/Services) 1,385,169 - ------------------------------------------------------------------------------------------------------ 108,000 Oxford Instruments PLC (Electronic Components/Miscellaneous) 734,229 - ------------------------------------------------------------------------------------------------------ 351,000 P & P PLC (Computer Peripherals) 832,411 - ------------------------------------------------------------------------------------------------------ 200,000 PizzaExpress PLC (Restaurants) 613,438 - ------------------------------------------------------------------------------------------------------
FS-13 201 FINANCIALS
SHARES MARKET VALUE United Kingdom-(continued) 197,500 Sage Group PLC (The) (Computer Software/Services) $ 790,000 - ----------------------------------------------------------------------------------------------------- 130,000 Spirax Sarco Engineering PLC (Engineering & Construction) 1,241,423 - ----------------------------------------------------------------------------------------------------- 77,200 St. Ives Group PLC (Containers) 530,940 - ----------------------------------------------------------------------------------------------------- 201,000 Stagecoach Holdings PLC (Transportation) 813,533 - ----------------------------------------------------------------------------------------------------- 157,000 Unitech PLC (Electronic Components/Miscellaneous) 1,315,574 - ----------------------------------------------------------------------------------------------------- 360,000 Vickers PLC (Automobile Manufacturers) 1,428,617 - ----------------------------------------------------------------------------------------------------- 117,100 Yorkshire-Tyne Tees Television Holdings PLC (Advertising/Broadcasting) 1,062,695 - ----------------------------------------------------------------------------------------------------- 24,431,751 - ----------------------------------------------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 155,206,950 - ----------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT REPURCHASE AGREEMENT-4.72%(b) $14,369,687 Daiwa Securities America, Inc., 5.90%, 11/01/95(c) 14,369,687 - ----------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS-95.66% 291,038,810 - ----------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-4.34% 13,189,132 - ----------------------------------------------------------------------------------------------------- NET ASSETS-100.00% $ 304,227,942 =====================================================================================================
Abbreviations: ADR-American Depository Receipt GDS-Global Depository Security NOTES TO SCHEDULE OF INVESTMENTS: (a) Non-income producing security. (b) Collateral on repurchase agreements, including the Fund's pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102 percent of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds managed by the investment advisor. (c) Joint repurchase agreement entered into 10/31/95 with a maturing value of $401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations, 8.375% due 08/15/08. See Notes to Financial Statements. FS-14 202 FINANCIALS STATEMENT OF ASSETS AND LIABILITIES October 31, 1995 ASSETS: Investments, at market value (cost $260,822,054) $291,038,810 - ---------------------------------------------------------------------------------------- Foreign currencies, at market value (cost $8,009,214) 8,033,065 - ---------------------------------------------------------------------------------------- Receivables for: Investments sold 4,450,214 - ---------------------------------------------------------------------------------------- Capital stock sold 9,898,990 - ---------------------------------------------------------------------------------------- Dividends and interest 179,377 - ---------------------------------------------------------------------------------------- Investment for deferred compensation plan 2,378 - ---------------------------------------------------------------------------------------- Other assets 27,309 - ---------------------------------------------------------------------------------------- Total assets 313,630,143 - ---------------------------------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 8,454,571 - ---------------------------------------------------------------------------------------- Capital stock reacquired 285,769 - ---------------------------------------------------------------------------------------- Deferred compensation 2,378 - ---------------------------------------------------------------------------------------- Accrued advisory fees 276,945 - ---------------------------------------------------------------------------------------- Accrued administrative services fees 5,906 - ---------------------------------------------------------------------------------------- Accrued directors' fees 578 - ---------------------------------------------------------------------------------------- Accrued distribution fees 188,196 - ---------------------------------------------------------------------------------------- Accrued transfer agent fees 78,054 - ---------------------------------------------------------------------------------------- Accrued operating expenses 109,804 - ---------------------------------------------------------------------------------------- Total liabilities 9,402,201 - ---------------------------------------------------------------------------------------- Net assets applicable to shares outstanding $304,227,942 ======================================================================================== NET ASSETS: Class A $186,028,579 ======================================================================================== Class B $118,199,363 ======================================================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: CLASS A: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 14,208,862 ======================================================================================== CLASS B: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 9,079,367 ======================================================================================== CLASS A: Net asset value and redemption price per share $ 13.09 ======================================================================================== Offering price per share: (Net asset value of $13.09 divided by 95.25%) $ 13.74 ======================================================================================== CLASS B: Net asset value and offering price per share $ 13.02 ========================================================================================
See Notes to Financial Statements. FS-15 203 FINANCIALS STATEMENT OF OPERATIONS For the year ended October 31, 1995 INVESTMENT INCOME: Dividends (net of $142,464 foreign withholding tax) $ 1,071,004 - -------------------------------------------------------------------------------------------------- Interest 550,062 - -------------------------------------------------------------------------------------------------- Total investment income 1,621,066 - -------------------------------------------------------------------------------------------------- EXPENSES: Advisory fees 1,106,197 - -------------------------------------------------------------------------------------------------- Administrative services fees 25,218 - -------------------------------------------------------------------------------------------------- Directors' fees 6,163 - -------------------------------------------------------------------------------------------------- Distribution fees-Class A 402,786 - -------------------------------------------------------------------------------------------------- Distribution fees-Class B 423,536 - -------------------------------------------------------------------------------------------------- Custodian fees 231,972 - -------------------------------------------------------------------------------------------------- Transfer agent fees-Class A 252,909 - -------------------------------------------------------------------------------------------------- Transfer agent fees-Class B 158,231 - -------------------------------------------------------------------------------------------------- Other 199,934 - -------------------------------------------------------------------------------------------------- Total expenses 2,806,946 - -------------------------------------------------------------------------------------------------- Net investment income (loss) (1,185,880) - -------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on sales of: Investment securities 2,496,983 - -------------------------------------------------------------------------------------------------- Foreign currencies (82,782) - -------------------------------------------------------------------------------------------------- 2,414,201 - -------------------------------------------------------------------------------------------------- Unrealized appreciation of: Investment securities 29,749,588 - -------------------------------------------------------------------------------------------------- Foreign currencies 37,127 - -------------------------------------------------------------------------------------------------- 29,786,715 - -------------------------------------------------------------------------------------------------- Net gain on investment securities and foreign currencies 32,200,916 - -------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $31,015,036 ==================================================================================================
See Notes to Financial Statements. FS-16 204 FINANCIALS STATEMENT OF CHANGES IN NET ASSETS For the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994
1995 1994 OPERATIONS: Net investment income (loss) $ (1,185,880) $ 2,281 - ----------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies 2,414,201 (45,494) - ----------------------------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 29,786,715 470,005 - ----------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 31,015,036 426,792 - ----------------------------------------------------------------------------------------------------------------- Share transactions-net: Class A 146,731,096 17,086,103 - ----------------------------------------------------------------------------------------------------------------- Class B 101,870,873 6,098,042 - ----------------------------------------------------------------------------------------------------------------- Net increase in net assets 279,617,005 23,610,937 - ----------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 24,610,937 1,000,000 - ----------------------------------------------------------------------------------------------------------------- End of period $304,227,942 $ 24,610,937 ================================================================================================================= NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $272,738,461 $ 24,184,145 - ----------------------------------------------------------------------------------------------------------------- Undistributed net investment income (loss) -- 2,281 - ----------------------------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies 1,232,761 (45,494) - ----------------------------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 30,256,720 470,005 - ----------------------------------------------------------------------------------------------------------------- $304,227,942 $ 24,610,937 =================================================================================================================
See Notes to Financial Statements. FS-17 205 FINANCIALS NOTES TO FINANCIAL STATEMENTS October 31, 1995 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Aggressive Growth Fund (the "Fund") is an investment portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company consisting of four separate series portfolios: AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund currently offers two different classes of shares: the Class A shares and the Class B shares. Class A shares are sold with a front-end sales charge. Class B shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- Investment securities are valued at the last sales price on the exchange on which the securities are traded or, lacking any sales, at the mean between the closing bid and asked prices on the day of valuation. If a mean is not available, as is the case in some foreign markets, the closing bid will be used absent a last sales price. Securities traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) are valued at the mean between the closing bid and asked prices on the valuation date. Securities reported on the NASDAQ National Market System are valued at the last sales price on the valuation date or absent a last sales price, at the mean of the closing bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors. Investments with maturities of 60 days or less are valued on the basis of amortized cost which approximates market value. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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 Board of Directors. B. 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. C. Foreign Currency Contracts -- A forward 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 forward 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 forward 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. D. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on an accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. On October 31, 1995, undistributed net investment income (loss) was increased by $1,183,599, paid-in capital reduced by $47,653 and undistributed net realized gains reduced by $1,135,946 in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassifications discussed above. E. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. FS-18 206 FINANCIALS F. Expenses -- Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to both classes, e.g. advisory fees, are allocated between them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1 billion of the Fund's average daily net assets, plus 0.85% of the Fund's average daily net assets in excess of $1 billion. Under the terms of the master investment advisory agreement, AIM will, if necessary, reduce its fee or make payments to the Fund to the extent necessary to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Fund's shares are qualified for sale. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1995, AIM was reimbursed $25,218 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency services to the Fund. During the year ended October 31, 1995, AFS was paid $258,683 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A shares and the Class B shares of the Fund. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and with respect to the Fund's Class B shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to the Class A Plan, pays AIM Distributors an annual rate of 0.50% of the average daily net assets attributable to the Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs. Of the total compensation payable, the Fund pays a service fee of 0.25% to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of this amount, the Fund pays a service fee of 0.25% of the average daily net assets of the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. Any amounts not paid as a service fee under such 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. AIM Distributors may, from time to time, assign, transfer or pledge to one or more designees, its rights to all or a designated portion of (a) compensation received by AIM Distributors from the Fund pursuant to the Class B Plan (but not AIM Distributors' duties and obligations pursuant to the Class B Plan) and (b) any contingent deferred sales charges received by AIM Distributors related to the Class B shares. During the year ended October 31, 1995, the Class A shares and the Class B shares paid AIM Distributors $402,786 and $423,536, respectively, as compensation under the Plans. AIM Distributors received commissions of $779,090 from the sales of the Class A shares of the Fund during the year ended October 31, 1995. 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, 1995, AIM Distributors received commissions of $68,427 in contingent deferred sales charges imposed on redemptions of Class B shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1995, the Fund incurred legal fees of $4,313 for services rendered by the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-BANK BORROWINGS The Fund has a $1,900,000 committed line of credit with Chemical Bank of New York. Interest on borrowings under the line of credit is payable on maturity or prepayment date. During the period July 20, 1995 (effective date of Credit Agreement) through October 31, 1995, the Fund did not borrow under the line of credit agreement. The Fund is charged an administrative fee, payable quarterly, at the annual rate of $1,900. FS-19 207 FINANCIALS NOTE 5-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, 1995, on a tax basis, was $298,878,439 and $73,237,889, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 1995 is as follows: Aggregate unrealized appreciation of investment securities $38,788,721 - ---------------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (8,606,889) - ---------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities $30,181,832 ========================================================================================
Cost of investments for tax purposes is $260,856,978. NOTE 6-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 were as follows:
1995 1994 ---------------------------- ------------------------------ SHARES AMOUNT SHARES AMOUNT ---------- ------------ ------------ ------------ Sold: Class A 13,970,703 $165,030,476 1,716,450 $17,229,786 - ----------------------------------- ---------- ------------ ------------ ------------ Class B 8,888,670 106,907,530 607,443 6,099,880 - ----------------------------------- ---------- ------------ ------------ ------------ Reacquired: Class A (1,563,927) (18,299,380) (14,364) (143,683) - ----------------------------------- ---------- ------------ ------------ ------------ Class B (416,562) (5,036,657) (184) (1,838) - ----------------------------------- ---------- ------------ ------------ ------------ 20,878,884 $248,601,969 2,309,345 $23,184,145 =================================== ========== ============ ============ ============
NOTE 7-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a Class A share and Class B share outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994.
CLASS A CLASS B ------------------------ ------------------------ 1995 1994 1995 1994 -------- -------- -------- ------- Net asset value, beginning of period $ 10.22 $ 10.00 $ 10.21 $ 10.00 - ------------------------------------ -------- -------- -------- ------- Income from investment operations: Net investment income (loss) (0.09)(a) -- (0.14)(a) -- - ------------------------------------ -------- -------- -------- ------- Net gains on securities (both realized and unrealized) 2.96 0.22 2.95 0.21 - ------------------------------------ -------- -------- -------- ------- Total from investment operations 2.87 0.22 2.81 0.21 - ------------------------------------ -------- -------- -------- ------- Net asset value, end of period $ 13.09 $ 10.22 $ 13.02 $10.21 ==================================== ======== ======== ======== ======= Total return(b) 28.08% 2.20% 27.52% 2.10% ==================================== ======== ======== ======== ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $186,029 $ 18,410 $118,199 $6,201 ==================================== ======== ======== ======== ======= Ratio of expenses to average net assets 2.11%(c) 2.02%(d) 2.62%(e) 2.54%(d) ==================================== ======== ======== ======== ======= Ratio of net investment income (loss) to average net assets (0.68)%(c) 0.27%(d) (1.19)%(e) (0.25)%(d) ==================================== ======== ======== ======== ======= Portfolio turnover rate 64% 2% 64% 2% ==================================== ======== ======== ======== =======
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (c) Ratios are based on average net assets of $80,557,274. (d) Annualized. After fee waivers and expense reimbursements. (e) Ratios are based on average net assets of $42,353,541. FS-20 208 AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Global Growth Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1995, and the related statement of operations for the year then ended, and the statement of changes in net assets and financial highlights for the year then ended and the period September 15, 1994 (date operations commenced) through October 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Growth Fund as of October 31, 1995, the results of its operations for the year then ended, and changes in its net assets and the financial highlights for the year then ended and the period September 15, 1994 (date operations commenced) through October 31, 1994, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas December 8, 1995 FS-21 209 FINANCIALS SCHEDULE OF INVESTMENTS October 31, 1995
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-29.44% AEROSPACE/DEFENSE-0.47% 500 Boeing Co. (The) $ 32,813 - -------------------------------------------------------------------------------------------- 800 Sundstrand Corp. 49,000 - -------------------------------------------------------------------------------------------- 1,200 United Technologies Corp. 106,500 - -------------------------------------------------------------------------------------------- 188,313 - -------------------------------------------------------------------------------------------- APPLIANCES-0.12% 2,000 Newell Co. 48,250 - -------------------------------------------------------------------------------------------- AUTOMOBILE/TRUCKS PARTS & TIRES-0.40% 3,500 Echlin, Inc. 125,125 - -------------------------------------------------------------------------------------------- 2,000 Mark IV Industries, Inc. 39,000 - -------------------------------------------------------------------------------------------- 164,125 - -------------------------------------------------------------------------------------------- AUTOMOBILE (MANUFACTURERS)-0.23% 1,800 Chrysler Corp. 92,925 - -------------------------------------------------------------------------------------------- BANKING-0.76% 3,000 CoreStates Financial Corp. 109,125 - -------------------------------------------------------------------------------------------- 2,500 Norwest Corp. 73,750 - -------------------------------------------------------------------------------------------- 5,000 Southern National Corp. 128,750 - -------------------------------------------------------------------------------------------- 311,625 - -------------------------------------------------------------------------------------------- BUILDING MATERIALS-0.65% 6,500 American Standard, Inc.(a) 173,875 - -------------------------------------------------------------------------------------------- 3,200 ServiceMaster L.P. 90,800 - -------------------------------------------------------------------------------------------- 264,675 - -------------------------------------------------------------------------------------------- BEVERAGES (SOFT DRINKS)-0.23% 1,800 PepsiCo Inc. 94,950 - -------------------------------------------------------------------------------------------- BUSINESS SERVICES-0.66% 1,100 Equifax Inc. 42,900 - -------------------------------------------------------------------------------------------- 1,200 Healthcare COMPARE Corp.(a) 44,400 - -------------------------------------------------------------------------------------------- 3,900 Manpower Inc. 105,787 - -------------------------------------------------------------------------------------------- 2,000 Olsten Corp. 77,000 - -------------------------------------------------------------------------------------------- 270,087 - -------------------------------------------------------------------------------------------- CHEMICALS (SPECIALTY)-0.41% 3,000 Grace (W.R.) & Co. 167,250 - -------------------------------------------------------------------------------------------- COMPUTER MAINFRAMES-0.31% 1,300 International Business Machines Corp. 126,425 - -------------------------------------------------------------------------------------------- COMPUTER MINI/PCS-0.71% 3,300 COMPAQ Computer Corp.(a) 183,975 - -------------------------------------------------------------------------------------------- 2,000 Digital Equipment Corp.(a) 108,250 - -------------------------------------------------------------------------------------------- 292,225 - --------------------------------------------------------------------------------------------
FS-22 210 FINANCIALS
MARKET SHARES VALUE COMPUTER NETWORKING-1.60% 3,200 Bay Networks, Inc.(a) $ 212,000 - -------------------------------------------------------------------------------------------- 2,000 Cabletron Systems, Inc.(a) 157,250 - -------------------------------------------------------------------------------------------- 2,000 Cisco Systems, Inc.(a) 155,000 - -------------------------------------------------------------------------------------------- 2,800 3Com Corp.(a) 131,600 - -------------------------------------------------------------------------------------------- 655,850 - -------------------------------------------------------------------------------------------- COMPUTER PERIPHERALS-0.77% 2,500 Adaptec Inc.(a) 111,250 - -------------------------------------------------------------------------------------------- 8,000 PixTech, Inc.(a) 79,000 - -------------------------------------------------------------------------------------------- 2,800 Seagate Technology(a) 125,300 - -------------------------------------------------------------------------------------------- 315,550 - -------------------------------------------------------------------------------------------- COMPUTER SOFTWARE/SERVICES-2.07% 400 Adobe Systems, Inc. 22,800 - -------------------------------------------------------------------------------------------- 1,600 BMC Software Inc.(a) 57,000 - -------------------------------------------------------------------------------------------- 3,000 Cadence Design Systems, Inc.(a) 96,750 - -------------------------------------------------------------------------------------------- 4,000 Computer Associates International, Inc. 220,000 - -------------------------------------------------------------------------------------------- 4,700 Dendrite International, Inc.(a) 81,663 - -------------------------------------------------------------------------------------------- 400 Microsoft Corp.(a) 40,000 - -------------------------------------------------------------------------------------------- 3,000 Netscape Communications Corp.(a) 264,000 - -------------------------------------------------------------------------------------------- 3,800 Seer Technologies, Inc.(a) 57,000 - -------------------------------------------------------------------------------------------- 200 Sterling Software, Inc.(a) 9,225 - -------------------------------------------------------------------------------------------- 848,438 - -------------------------------------------------------------------------------------------- CONGLOMERATES-0.03% 500 Dial Corp. (The) 12,187 - -------------------------------------------------------------------------------------------- CONTAINERS-0.22% 2,000 First Brands Corp. 91,500 - -------------------------------------------------------------------------------------------- COSMETICS & TOILETRIES-0.12% 600 Procter & Gamble Co. 48,600 - -------------------------------------------------------------------------------------------- ELECTRONIC COMPONENTS/MISCELLANEOUS-0.64% 3,200 Anixter International Inc.(a) 61,200 - -------------------------------------------------------------------------------------------- 1,100 AVX Corp. 34,237 - -------------------------------------------------------------------------------------------- 5,000 Teradyne, Inc.(a) 166,875 - -------------------------------------------------------------------------------------------- 262,312 - -------------------------------------------------------------------------------------------- ELECTRONIC/PC DISTRIBUTORS-0.74% 2,500 Arrow Electronics, Inc.(a) 126,875 - -------------------------------------------------------------------------------------------- 3,500 Avnet, Inc. 176,313 - -------------------------------------------------------------------------------------------- 303,188 - -------------------------------------------------------------------------------------------- FINANCE (ASSET MANAGEMENT)-0.24% 4,500 Paine Webber Group Inc. 99,000 - -------------------------------------------------------------------------------------------- FINANCE (CONSUMER CREDIT)-1.87% 5,200 Countrywide Credit Industries, Inc. 115,050 - -------------------------------------------------------------------------------------------- 2,400 Dean Witter, Discover & Co. 119,400 - -------------------------------------------------------------------------------------------- 1,600 Federal Home Loan Mortgage Corp. 110,800 - -------------------------------------------------------------------------------------------- 2,400 Finova Group, Inc. 108,600 - --------------------------------------------------------------------------------------------
FS-23 211 FINANCIALS
MARKET SHARES VALUE Finance (Consumer Credit)-continued 4,300 MBNA Corp. $ 158,563 - -------------------------------------------------------------------------------------------- 2,500 Student Loan Marketing Association 147,187 - -------------------------------------------------------------------------------------------- 100 SunAmerica, Inc. 6,225 - -------------------------------------------------------------------------------------------- 765,825 - -------------------------------------------------------------------------------------------- FOOD/PROCESSING-0.52% 900 ConAgra, Inc. 34,763 - -------------------------------------------------------------------------------------------- 2,100 Heinz (H. J.) Co. 97,650 - -------------------------------------------------------------------------------------------- 5,600 Hudson Foods, Inc. 79,100 - -------------------------------------------------------------------------------------------- 211,513 - -------------------------------------------------------------------------------------------- FUNERAL SERVICES-0.12% 1,200 Loewen Group, Inc. 48,056 - -------------------------------------------------------------------------------------------- GAMING-0.21% 6,500 Station Casinos, Inc.(a) 84,500 - -------------------------------------------------------------------------------------------- HOTELS/MOTELS-0.10% 1,500 La Quinta Motor Inns, Inc. 38,625 - -------------------------------------------------------------------------------------------- INSURANCE (LIFE & HEALTH)-0.24% 3,500 United Companies Financial Corp. 98,875 - -------------------------------------------------------------------------------------------- INSURANCE (MULTI-LINE PROPERTY)-0.51% 3,000 ACE, Ltd. 102,000 - -------------------------------------------------------------------------------------------- 800 CIGNA Corp. 79,300 - -------------------------------------------------------------------------------------------- 1,400 Prudential Reinsurance Holdings, Inc. 28,525 - -------------------------------------------------------------------------------------------- 209,825 - -------------------------------------------------------------------------------------------- MEDICAL (DRUGS)-1.71% 5,000 Abbott Laboratories 198,750 - -------------------------------------------------------------------------------------------- 1,000 American Home Products Corp. 88,625 - -------------------------------------------------------------------------------------------- 2,000 AmeriSource Health Corp.(a) 54,500 - -------------------------------------------------------------------------------------------- 500 Johnson & Johnson 40,750 - -------------------------------------------------------------------------------------------- 2,000 Mallinckrodt Group, Inc. 69,500 - -------------------------------------------------------------------------------------------- 3,750 Mylan Laboratories, Inc. 71,250 - -------------------------------------------------------------------------------------------- 1,200 Pfizer Inc. 68,850 - -------------------------------------------------------------------------------------------- 2,000 Schering-Plough Corp. 107,250 - -------------------------------------------------------------------------------------------- 699,475 - -------------------------------------------------------------------------------------------- MEDICAL (INSTRUMENTS/PRODUCTS)-0.77% 800 Becton, Dickinson and Co. 52,000 - -------------------------------------------------------------------------------------------- 2,700 Biomet, Inc.(a) 44,887 - -------------------------------------------------------------------------------------------- 600 Cordis Corp.(a) 66,300 - -------------------------------------------------------------------------------------------- 800 Medtronic, Inc. 46,200 - -------------------------------------------------------------------------------------------- 900 St. Jude Medical, Inc. 47,925 - -------------------------------------------------------------------------------------------- 1,300 Sybron International Corp.(a) 55,250 - -------------------------------------------------------------------------------------------- 312,562 - -------------------------------------------------------------------------------------------- MEDICAL (SERVICES)-1.30% 3,320 Apria Healthcare Group, Inc.(a) 71,795 - -------------------------------------------------------------------------------------------- 1,600 Columbia/HCA Healthcare Corp. 78,600 - -------------------------------------------------------------------------------------------- 1,500 Healthsource, Inc.(a) 79,500 - --------------------------------------------------------------------------------------------
FS-24 212 FINANCIALS
MARKET SHARES VALUE Medical (Services)-continued 5,000 Healthsouth Rehabilitation Corp.(a) $ 130,625 - -------------------------------------------------------------------------------------------- 3,800 Lincare Holdings Inc.(a) 94,525 - -------------------------------------------------------------------------------------------- 2,800 Vencor, Inc.(a) 77,700 - -------------------------------------------------------------------------------------------- 532,745 - -------------------------------------------------------------------------------------------- OFFICE AUTOMATION-0.19% 600 Xerox Corp. 77,850 - -------------------------------------------------------------------------------------------- OFFICE PRODUCTS-0.35% 4,000 Reynolds & Reynolds Co.-Class A 142,500 - -------------------------------------------------------------------------------------------- OIL & GAS (SERVICES)-0.15% 1,500 Halliburton Co. 62,250 - -------------------------------------------------------------------------------------------- RESTAURANTS-0.16% 4,600 Buffets, Inc.(a) 57,500 - -------------------------------------------------------------------------------------------- 300 Outback Steakhouse, Inc.(a) 9,413 - -------------------------------------------------------------------------------------------- 66,913 - -------------------------------------------------------------------------------------------- RETAIL (FOOD & DRUG)-0.75% 2,200 Hannaford Bros. Co. 57,475 - -------------------------------------------------------------------------------------------- 1,400 Jack Eckerd Corp.(a) 55,475 - -------------------------------------------------------------------------------------------- 2,600 Kroger Co.(a) 86,775 - -------------------------------------------------------------------------------------------- 2,300 Safeway Inc.(a) 108,675 - -------------------------------------------------------------------------------------------- 308,400 - -------------------------------------------------------------------------------------------- RETAIL (STORES)-2.25% 3,600 AutoZone, Inc.(a) 89,100 - -------------------------------------------------------------------------------------------- 5,500 Circuit City Stores, Inc. 183,563 - -------------------------------------------------------------------------------------------- 6,000 Consolidated Stores Corp.(a) 138,750 - -------------------------------------------------------------------------------------------- 3,000 Gap, Inc. (The) 118,125 - -------------------------------------------------------------------------------------------- 12,000 Intimate Brands, Inc.(a) 201,000 - -------------------------------------------------------------------------------------------- 1,050 Staples, Inc.(a) 27,956 - -------------------------------------------------------------------------------------------- 1,000 Tandy Corp. 49,375 - -------------------------------------------------------------------------------------------- 2,500 Viking Office Products Inc.(a) 111,250 - -------------------------------------------------------------------------------------------- 919,119 - -------------------------------------------------------------------------------------------- SCIENTIFIC INSTRUMENTS-0.43% 1,500 Thermo Electron Corp.(a) 69,000 - -------------------------------------------------------------------------------------------- 2,100 Varian Associates, Inc. 107,887 - -------------------------------------------------------------------------------------------- 176,887 - -------------------------------------------------------------------------------------------- SEMICONDUCTORS-4.57% 2,000 Analog Devices, Inc.(a) 72,250 - -------------------------------------------------------------------------------------------- 4,600 Applied Materials, Inc.(a) 230,575 - -------------------------------------------------------------------------------------------- 3,500 Atmel Corp.(a) 109,375 - -------------------------------------------------------------------------------------------- 2,400 Integrated Device Technology, Inc.(a) 45,600 - -------------------------------------------------------------------------------------------- 800 Intel Corp. 55,900 - -------------------------------------------------------------------------------------------- 4,000 KLA Instruments Corp.(a) 171,000 - -------------------------------------------------------------------------------------------- 4,000 LAM Research Corp.(a) 243,500 - -------------------------------------------------------------------------------------------- 2,500 LSI Logic Corp.(a) 117,813 - -------------------------------------------------------------------------------------------- 3,000 MEMC Electronic Materials, Inc.(a) 96,000 - --------------------------------------------------------------------------------------------
FS-25 213 FINANCIALS
MARKET SHARES VALUE Semiconductors-continued 3,000 Micron Technology Inc. $ 211,875 - -------------------------------------------------------------------------------------------- 1,400 Motorola, Inc. 91,875 - -------------------------------------------------------------------------------------------- 500 Novellus Systems, Inc.(a) 34,437 - -------------------------------------------------------------------------------------------- 200 Solectron Corp.(a) 8,050 - -------------------------------------------------------------------------------------------- 3,000 Texas Instruments Inc. 204,750 - -------------------------------------------------------------------------------------------- 2,700 Vishay Intertechnology, Inc.(a) 95,175 - -------------------------------------------------------------------------------------------- 3,500 VLSI Technology Inc.(a) 82,250 - -------------------------------------------------------------------------------------------- 1,870,425 - -------------------------------------------------------------------------------------------- SHOES & RELATED APPAREL-0.13% 1,200 Nine West Group, Inc.(a) 53,400 - -------------------------------------------------------------------------------------------- TELECOMMUNICATIONS-0.90% 3,000 AT&T Corp. 192,000 - -------------------------------------------------------------------------------------------- 3,700 MobileMedia Corp.(a) 97,125 - -------------------------------------------------------------------------------------------- 2,300 Tellabs, Inc.(a) 78,200 - -------------------------------------------------------------------------------------------- 367,325 - -------------------------------------------------------------------------------------------- TOBACCO-0.83% 4,000 Philip Morris Companies, Inc. 338,000 - -------------------------------------------------------------------------------------------- Total Domestic Common Stocks 12,042,545 - -------------------------------------------------------------------------------------------- DOMESTIC CONVERTIBLE PREFERRED STOCK-0.09% FINANCE (CONSUMER CREDIT)-0.09% 600 SunAmerica Inc.-$3.10 Conv. Pfd. 37,200 - -------------------------------------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-54.85% ARGENTINA-0.35% 6,300 Buenos Aires Embotelladora S.A.-ADR Class-B (Beverages-Soft Drinks) 144,113 - -------------------------------------------------------------------------------------------- AUSTRALIA-2.48% 43,668 Australia and New Zealand Banking Group Ltd. (Banking) 182,948 - -------------------------------------------------------------------------------------------- 8,750 Broken Hill Proprietary Co. Ltd. (Conglomerates) 118,506 - -------------------------------------------------------------------------------------------- 10,600 News Corp. Ltd. (The)-Preference Shares-ADR (Publishing) 193,450 - -------------------------------------------------------------------------------------------- 32,500 QBE Insurance Group Ltd. (Insurance-Multi-Line Property) 143,586 - -------------------------------------------------------------------------------------------- 106,000 QNI Ltd. (Gold & Silver Mining) 203,393 - -------------------------------------------------------------------------------------------- 27,200 Western Mining Corp. Holdings Ltd. (Metals-Miscellaneous) 174,455 - -------------------------------------------------------------------------------------------- 1,016,338 - -------------------------------------------------------------------------------------------- AUSTRIA-0.78% 1,800 OMV AG (Oil & Gas-Services) 155,431 - -------------------------------------------------------------------------------------------- 1,880 Oesterreichische Elektrizitaetswirtschafts AG (Verbundgesellschaft) (Electric Power) 114,871 - -------------------------------------------------------------------------------------------- 250 Wienerberger Baustoffindustrie AG (Building Materials) 50,245 - -------------------------------------------------------------------------------------------- 320,547 - -------------------------------------------------------------------------------------------- CANADA-1.02% 14,000 Bombardier Inc.-Class B (Conglomerates) 171,108 - -------------------------------------------------------------------------------------------- 6,200 Imasco Ltd. (Tobacco) 111,061 - -------------------------------------------------------------------------------------------- 3,800 Northern Telecom Ltd. (Telecommunications) 136,800 - -------------------------------------------------------------------------------------------- 418,969 - -------------------------------------------------------------------------------------------- CHILE-0.77% 4,400 Compania de Telefonos de Chile S.A.-ADR (Telephone) 316,800 - --------------------------------------------------------------------------------------------
FS-26 214 FINANCIALS
MARKET SHARES VALUE DENMARK-0.82% 1,800 Danisco A/S (Food/Processing) $ 82,028 - -------------------------------------------------------------------------------------------- 1,000 Novo-Nordisk A/S (Medical-Drugs) 127,196 - -------------------------------------------------------------------------------------------- 2,750 Unidanmark A/S (Banking-Money Center) 126,327 - -------------------------------------------------------------------------------------------- 335,551 - -------------------------------------------------------------------------------------------- FINLAND-0.59% 230 Nokia Corp.(a) (Telecommunications) 13,158 - -------------------------------------------------------------------------------------------- 1,700 Nokia Corp.-ADR(a) (Telecommunications) 94,775 - -------------------------------------------------------------------------------------------- 6,800 Repola Ltd. (Paper & Forest Products) 131,594 - -------------------------------------------------------------------------------------------- 239,527 - -------------------------------------------------------------------------------------------- FRANCE-6.42% 1,500 Accor S.A. (Hotels/Motels) 178,217 - -------------------------------------------------------------------------------------------- 220 Carrefour Supermarche (Retail-Food & Drug) 129,208 - -------------------------------------------------------------------------------------------- 970 Castorama Dubois (Building Materials) 157,299 - -------------------------------------------------------------------------------------------- 1,000 Christian Dior S.A. (Textiles) 98,158 - -------------------------------------------------------------------------------------------- 900 Docks de France, S.A. (Retail-Food & Drug) 136,930 - -------------------------------------------------------------------------------------------- 720 ECCO Travail Temporaire (Business Services) 111,605 - -------------------------------------------------------------------------------------------- 1,100 Essilor International-Compagnie Generale d'Optique (Medical-Instruments/Products) 203,575 - -------------------------------------------------------------------------------------------- 23,000 Euro Disneyland SCA(a) (Leisure & Recreation) 77,371 - -------------------------------------------------------------------------------------------- 1,300 Legrand (Electronic Components/Miscellaneous) 217,460 - -------------------------------------------------------------------------------------------- 960 LVMH Moet Hennessy Louis Vuitton (Beverages-Alcoholic) 191,014 - -------------------------------------------------------------------------------------------- 1,420 Pinault-Printemps-Redoute, S.A. (Retail-Stores) 307,806 - -------------------------------------------------------------------------------------------- 900 Promodes S.A. (Retail-Stores) 219,198 - -------------------------------------------------------------------------------------------- 500 Rexel S.A. (Electronic Components/Miscellaneous) 80,775 - -------------------------------------------------------------------------------------------- 1,060 Roussel Uclaf (Medical-Drugs) 173,845 - -------------------------------------------------------------------------------------------- 4,200 SGS-Thomson Microelectronics N.V.-New York Shares-ADR(a) (Semiconductors) 190,050 - -------------------------------------------------------------------------------------------- 440 Sidel S.A. (Machinery-Heavy) 152,782 - -------------------------------------------------------------------------------------------- 2,625,293 - -------------------------------------------------------------------------------------------- GERMANY-1.67% 250 Altana Industrie-Aktien und Anlagen A.G. (Chemicals) 145,372 - -------------------------------------------------------------------------------------------- 375 Gehe A.G. (Medical-Instruments/Products) 184,090 - -------------------------------------------------------------------------------------------- 500 Mannesmann A.G. (Machinery-Miscellaneous) 164,571 - -------------------------------------------------------------------------------------------- 4,600 Veba A.G. (Electric Power) 188,856 - -------------------------------------------------------------------------------------------- 682,889 - -------------------------------------------------------------------------------------------- HONG KONG-2.95% 30,000 Cheung Kong Holdings Ltd. (Real Estate) 169,170 - -------------------------------------------------------------------------------------------- 211,000 First Pacific Co. (Conglomerates) 242,856 - -------------------------------------------------------------------------------------------- 22,000 HSBC Holdings PLC (Banking) 320,111 - -------------------------------------------------------------------------------------------- 40,000 Hutchison Whampoa Ltd. (Conglomerates) 220,386 - -------------------------------------------------------------------------------------------- 56,000 New World Infrastructure(a) (Building Materials) 98,504 - -------------------------------------------------------------------------------------------- 19,600 Sun Hung Kai Properties Ltd. (Real Estate) 156,537 - -------------------------------------------------------------------------------------------- 1,207,564 - --------------------------------------------------------------------------------------------
FS-27 215 FINANCIALS
MARKET SHARES VALUE INDONESIA-1.42% 109,500 PT Astra International (Automobile/Trucks-Parts & Tires) $ 219,385 - -------------------------------------------------------------------------------------------- 29,000 PT Hanjaya Mandala Sampoerna (Tobacco) 268,164 - -------------------------------------------------------------------------------------------- 36,000 PT Semen Gresik (Building Materials) 93,527 - -------------------------------------------------------------------------------------------- 581,076 - -------------------------------------------------------------------------------------------- IRELAND-0.14% 1,400 Elan Corp. PLC-ADR(a) (Medical-Drugs) 56,175 - -------------------------------------------------------------------------------------------- ISRAEL-0.33% 3,400 Teva Pharmaceutical Industries Ltd.-ADR (Medical-Drugs) 133,450 - -------------------------------------------------------------------------------------------- ITALY-0.88% 1,200 Fila Holding S.p.A.-ADR (Shoes & Related Apparel) 51,750 - -------------------------------------------------------------------------------------------- 81,000 Telecom Italia S.p.A. (Telecommunications) 124,091 - -------------------------------------------------------------------------------------------- 110,100 Telecom Italia Mobile S.p.A.(a) (Telecommunications) 185,181 - -------------------------------------------------------------------------------------------- 361,022 - -------------------------------------------------------------------------------------------- JAPAN-11.16% 4,000 Advantest Corp. (Semiconductors) 226,795 - -------------------------------------------------------------------------------------------- 5,695 Alpine Electronics (Electronic Components/Miscellaneous) 79,061 - -------------------------------------------------------------------------------------------- 1,300 Autobacs Seven (Automobile/Trucks-Parts & Tires) 122,636 - -------------------------------------------------------------------------------------------- 6,000 Bridgestone Corp. (Automobile/Trucks-Parts & Tires) 83,288 - -------------------------------------------------------------------------------------------- 8,000 Canon, Inc. (Office Automation) 136,859 - -------------------------------------------------------------------------------------------- 7,000 Exedy Corp. (Automobile/Trucks-Parts & Tires) 108,803 - -------------------------------------------------------------------------------------------- 4,000 Fanuc Ltd. (Electronic Components/Miscellaneous) 173,224 - -------------------------------------------------------------------------------------------- 20,000 Fujitsu Ltd. (Computer MINI/PCS) 238,526 - -------------------------------------------------------------------------------------------- 22,000 Hitachi Ltd. (Electronic Components/Miscellaneous) 225,817 - -------------------------------------------------------------------------------------------- 7,000 Hoya Corp. (Electronic Components/Miscellaneous) 205,289 - -------------------------------------------------------------------------------------------- 12,000 Kajima Corp. (Engineering & Construction) 110,739 - -------------------------------------------------------------------------------------------- 3,000 Kyocera Corp. (Electronic Components/Miscellaneous) 245,760 - -------------------------------------------------------------------------------------------- 7,000 Mitsumi Electric Co. Ltd. (Electronic Components/Miscellaneous) 169,021 - -------------------------------------------------------------------------------------------- 17,000 NEC Corp. (Semiconductors) 224,351 - -------------------------------------------------------------------------------------------- 18,000 Nikon Corp. (Consumer Non-Durables) 256,904 - -------------------------------------------------------------------------------------------- 770 Nippon Television Network (Advertising/Broadcasting) 183,665 - -------------------------------------------------------------------------------------------- 80 NTT Data Communication Systems Corp. (Computer Software & Services) 200,205 - -------------------------------------------------------------------------------------------- 8,000 Omron Corp. (Electronic Components/Miscellaneous) 187,692 - -------------------------------------------------------------------------------------------- 24,000 Ricoh Co., Ltd. (Office Automation) 258,077 - -------------------------------------------------------------------------------------------- 4,000 Rohm Co., Ltd. (Semiconductors) 242,827 - -------------------------------------------------------------------------------------------- 3,300 SMC (Machinery-Miscellaneous) 231,947 - -------------------------------------------------------------------------------------------- 6,000 Tokyo Electron Ltd. (Electronic Components/Miscellaneous) 260,423 - -------------------------------------------------------------------------------------------- 28,000 Toshiba Corp. (Conglomerates) 202,825 - -------------------------------------------------------------------------------------------- 12,000 Yamaha Corp. (Electronic Components/Miscellaneous) 191,212 - -------------------------------------------------------------------------------------------- 4,565,946 - --------------------------------------------------------------------------------------------
FS-28 216 FINANCIALS
MARKET SHARES VALUE MALAYSIA-2.20% 48,000 Bandar Raya Developments Berhad (Real Estate) $ 71,782 - -------------------------------------------------------------------------------------------- 11,000 Edaran Otomobil Nasional Berhad (Automobile Manufacturers) 86,797 - -------------------------------------------------------------------------------------------- 72,000 Land & General Berhad (Paper & Forest Products) 167,178 - -------------------------------------------------------------------------------------------- 38,000 Malayan Banking Berhad (Banking) 306,572 - -------------------------------------------------------------------------------------------- 43,000 United Engineers (Building Materials) 267,375 - -------------------------------------------------------------------------------------------- 899,704 - -------------------------------------------------------------------------------------------- MEXICO-0.61% 19,000 Kimberly-Clark de Mexico, S.A. (Paper & Forest Products) 248,000 - -------------------------------------------------------------------------------------------- NETHERLANDS-2.89% 11,300 Elsevier N.V. (Publishing) 146,095 - -------------------------------------------------------------------------------------------- 1,210 Heineken N.V. (Beverages-Alcoholic) 214,729 - -------------------------------------------------------------------------------------------- 5,100 Koninklijke Ahold N.V. (Retail-Food & Drug) 193,291 - -------------------------------------------------------------------------------------------- 1,400 Philips Electronics N.V.-New York Shares-ADR (Electronic Components/Miscellaneous) 54,075 - -------------------------------------------------------------------------------------------- 1,550 Utigevuer Bezit N.V. (Publishing) 217,302 - -------------------------------------------------------------------------------------------- 5,700 Vendex International N.V. (Retail-Stores) 164,374 - -------------------------------------------------------------------------------------------- 2,100 Wolters Kluwer N.V. (Publishing) 191,127 - -------------------------------------------------------------------------------------------- 1,180,993 - -------------------------------------------------------------------------------------------- NEW ZEALAND-0.28% 27,800 Telecom Corp. of New Zealand Ltd. (Telecommunications) 115,428 - -------------------------------------------------------------------------------------------- NORWAY-1.25% 3,800 Nera A.S.-ADR(a) (Telecommunications) 134,900 - -------------------------------------------------------------------------------------------- 4,000 Norsk Hydro A.S. (Oil & Gas-Integrated) 159,306 - -------------------------------------------------------------------------------------------- 750 Orkla A.S. (Metals-Miscellaneous) 38,783 - -------------------------------------------------------------------------------------------- 35,000 UNI Storebrand AS(a) (Insurance-Multi-Line Property) 176,489 - -------------------------------------------------------------------------------------------- 509,478 - -------------------------------------------------------------------------------------------- PHILIPPINES-0.22% 629,000 Metro Pacific Corp. (Conglomerates) 90,686 - -------------------------------------------------------------------------------------------- PORTUGAL-0.39% 8,500 Portugal Telecom S.A.(a) (Computer Networking) 160,961 - -------------------------------------------------------------------------------------------- SINGAPORE-0.16% 7,400 United OverSeas Bank Ltd. (Banking) 64,935 - -------------------------------------------------------------------------------------------- SPAIN-1.25% 120 Acerinox, S.A. (Steel) 12,634 - -------------------------------------------------------------------------------------------- 1,850 Corporacion Mapfre Compania Internacional de Reaseguros, S.A. (Insurance-Multi-Line) 94,732 - -------------------------------------------------------------------------------------------- 3,300 Empresa Nacional de Electricidad, S.A. (Electric Power) 164,115 - -------------------------------------------------------------------------------------------- 1,010 Gas Natural SDG-E S.A. (Gas Distribution) 138,523 - -------------------------------------------------------------------------------------------- 3,000 Tabacalera S.A. (Tobacco) 100,774 - -------------------------------------------------------------------------------------------- 510,778 - --------------------------------------------------------------------------------------------
FS-29 217 FINANCIALS
MARKET SHARES VALUE SWEDEN-3.15% 1,550 Astra AB (Medical-Drugs) $ 56,953 - -------------------------------------------------------------------------------------------- 3,350 Astra AB-B Shares (Medical-Drugs) 121,073 - -------------------------------------------------------------------------------------------- 2,600 Autoliv AB (Automobile/Trucks-Parts & Tires) 149,173 - -------------------------------------------------------------------------------------------- 15,550 Pharmacia AB (Medical-Drugs) 540,923 - -------------------------------------------------------------------------------------------- 7,800 Sandvik AB (Machine Tools) 146,824 - -------------------------------------------------------------------------------------------- 7,000 Skandia Group Insurance Company Ltd. (Insurance-Multi-Line Property) 177,619 - -------------------------------------------------------------------------------------------- 4,400 Telefonaktiebolaget L. M. Ericsson-ADR (Telecommunications) 93,981 - -------------------------------------------------------------------------------------------- 1,286,546 - -------------------------------------------------------------------------------------------- SWITZERLAND-2.25% 175 BBC Brown Boveri Ltd. (Engineering & Construction) 203,008 - -------------------------------------------------------------------------------------------- 220 Ciba-Geigy Ltd. (Medical-Drugs) 190,487 - -------------------------------------------------------------------------------------------- 50 Roche Holding Ltd. (Conglomerates) 363,340 - -------------------------------------------------------------------------------------------- 200 Sandoz Ltd. (Medical-Drugs) 165,067 - -------------------------------------------------------------------------------------------- 921,902 - -------------------------------------------------------------------------------------------- THAILAND-0.44% 2,300 Bank of Ayudhya Public Company Ltd. (Banking) 13,253 - -------------------------------------------------------------------------------------------- 10,200 Land & House Company Ltd. PLC (Real Estate) 164,562 - -------------------------------------------------------------------------------------------- 177,815 - -------------------------------------------------------------------------------------------- UNITED KINGDOM-7.98% 24,300 Argos PLC (Retail-Stores) 196,320 - -------------------------------------------------------------------------------------------- 61,000 ASDA Group PLC (Retail-Food & Drug) 98,853 - -------------------------------------------------------------------------------------------- 9,300 BOC Group PLC (Chemicals-Specialty) 127,773 - -------------------------------------------------------------------------------------------- 14,000 British Petroleum Co. PLC (Oil & Gas-Services) 103,035 - -------------------------------------------------------------------------------------------- 117,200 Burton Group PLC (Retail-Stores) 186,686 - -------------------------------------------------------------------------------------------- 26,200 Compass Group PLC (Restaurants) 178,118 - -------------------------------------------------------------------------------------------- 30,000 Cookson Group PLC (Consumer Non-Durables) 138,972 - -------------------------------------------------------------------------------------------- 500 Danka Business Systems Inc.-ADR (Office Automation) 16,750 - -------------------------------------------------------------------------------------------- 39,000 Dixons Group PLC (Retail-Stores) 236,158 - -------------------------------------------------------------------------------------------- 9,600 Farnell Electronics PLC (Electronic Components/Miscellaneous) 100,933 - -------------------------------------------------------------------------------------------- 13,600 Granada Group PLC (Leisure & Recreation) 145,246 - -------------------------------------------------------------------------------------------- 67,200 Medeva PLC (Medical-Drugs) 289,518 - -------------------------------------------------------------------------------------------- 10,700 Provident Financial PLC (Finance-Consumer Credit) 130,092 - -------------------------------------------------------------------------------------------- 29,000 Rentokil Group PLC (Business Services) 144,427 - -------------------------------------------------------------------------------------------- 10,900 Smith (David S.) Holdings PLC (Paper & Forest Products) 99,263 - -------------------------------------------------------------------------------------------- 33,500 Standard Chartered PLC (Finance-Asset Management) 275,680 - -------------------------------------------------------------------------------------------- 30,700 Storehouse PLC (Retail-Stores) 145,613 - -------------------------------------------------------------------------------------------- 6,300 Thorn EMI PLC (Leisure & Recreation) 146,718 - -------------------------------------------------------------------------------------------- 71,100 Vickers PLC (Machinery-Miscellaneous) 282,155 - -------------------------------------------------------------------------------------------- 92,000 WPP Group PLC (Advertising/Broadcasting) 224,000 - -------------------------------------------------------------------------------------------- 3,266,310 - -------------------------------------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests 22,438,796 - --------------------------------------------------------------------------------------------
FS-30 218 FINANCIALS
PRINCIPAL MARKET AMOUNT VALUE CONVERTIBLE BONDS-0.99% $100,000 Danka Business Systems Inc., Conv. Yankee Bonds, 6.75%, 04/01/02 (Office Automation) $ 132,000 - -------------------------------------------------------------------------------------------- 230,000 MBL Intl Finance Bermuda, Conv. Yankee Bonds, 3.00%, 11/30/02 (Banking) 239,775 - -------------------------------------------------------------------------------------------- 50,000 Office Depot Inc., Conv. Notes, 4.00%, 11/01/08(b) (Retail-Stores) 32,750 - -------------------------------------------------------------------------------------------- Total Convertible Bonds 404,525 - -------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT-9.43%(c) 3,859,173 Daiwa Securities America Inc., 5.90%, 11/01/95(d) 3,859,173 - -------------------------------------------------------------------------------------------- TOTAL INVESTMENTS-94.80% 38,782,239 - -------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-5.20% 2,128,853 - -------------------------------------------------------------------------------------------- NET ASSETS-100.00% $40,911,092 ============================================================================================
Abbreviations: ADR-American Depository Receipt Conv.-Convertible Pfd-Preferred NOTES TO SCHEDULE OF INVESTMENTS: (a) Non-income producing security. (b) Zero coupon bond. The interest rate shown represents the rate of original issue discount. (c) Collateral on repurchase agreements, including the Fund's pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102 percent of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds managed by the investment advisor. (d) Joint repurchase agreement entered into 10/31/95 with a maturing value of $401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations, 8.375% due 08/15/08. See Notes to Financial Statements. FS-31 219 FINANCIALS STATEMENT OF ASSETS AND LIABILITIES October 31, 1995 ASSETS: Investments, at market value (cost $35,799,747) $ 38,782,239 - ---------------------------------------------------------------------------------------- Foreign currencies, at market value (cost $1,590,097) 1,593,973 - ---------------------------------------------------------------------------------------- Receivables for: Investments sold 576,917 - ---------------------------------------------------------------------------------------- Capital stock sold 1,083,535 - ---------------------------------------------------------------------------------------- Dividends and interest 33,849 - ---------------------------------------------------------------------------------------- Reimbursement from advisor 5,145 - ---------------------------------------------------------------------------------------- Investment for deferred compensation plan 2,753 - ---------------------------------------------------------------------------------------- Other assets 8,579 - ---------------------------------------------------------------------------------------- Total assets 42,086,990 - ---------------------------------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 1,065,207 - ---------------------------------------------------------------------------------------- Capital stock repurchased 15,817 - ---------------------------------------------------------------------------------------- Deferred compensation 2,753 - ---------------------------------------------------------------------------------------- Accrued advisory fees 27,138 - ---------------------------------------------------------------------------------------- Accrued administrative services fees 3,078 - ---------------------------------------------------------------------------------------- Accrued distribution fees 21,652 - ---------------------------------------------------------------------------------------- Accrued transfer agent fees 9,140 - ---------------------------------------------------------------------------------------- Accrued operating expenses 31,113 - ---------------------------------------------------------------------------------------- Total liabilities 1,175,898 - ---------------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 40,911,092 ======================================================================================== NET ASSETS: Class A $ 23,753,784 ======================================================================================== Class B $ 17,157,308 ======================================================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 1,927,871 ======================================================================================== Class B: Authorized 200,000,000 - ---------------------------------------------------------------------------------------- Outstanding 1,399,707 ======================================================================================== Class A: Net asset value and redemption price per share $12.32 ======================================================================================== Offering price per share: (Net asset value of $12.32 divided by 95.25%) $12.93 ======================================================================================== Class B: Net asset value and offering price per share $12.26 ========================================================================================
See Notes to Financial Statements. FS-32 220 FINANCIALS STATEMENT OF OPERATIONS For the year ended October 31, 1995 INVESTMENT INCOME: Dividends (net of $25,016 foreign withholding tax) $ 204,632 - ----------------------------------------------------------------------------------------- Interest 109,444 - ----------------------------------------------------------------------------------------- Total investment income 314,076 - ----------------------------------------------------------------------------------------- EXPENSES: Advisory fees 144,881 - ----------------------------------------------------------------------------------------- Administrative services fees 21,984 - ----------------------------------------------------------------------------------------- Directors' fees 5,509 - ----------------------------------------------------------------------------------------- Distribution fees -- Class A 50,259 - ----------------------------------------------------------------------------------------- Distribution fees -- Class B 69,931 - ----------------------------------------------------------------------------------------- Custodian fees 100,589 - ----------------------------------------------------------------------------------------- Transfer agent fees -- Class A 28,022 - ----------------------------------------------------------------------------------------- Transfer agent fees -- Class B 27,909 - ----------------------------------------------------------------------------------------- Filing fees 39,901 - ----------------------------------------------------------------------------------------- Other 46,768 - ----------------------------------------------------------------------------------------- Total expenses 535,753 - ----------------------------------------------------------------------------------------- Less expenses assumed by advisor (137,908) - ----------------------------------------------------------------------------------------- Net expenses 397,845 - ----------------------------------------------------------------------------------------- Net investment income (loss) (83,769) - ----------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain on sales of: Investment securities 921,548 - ----------------------------------------------------------------------------------------- Foreign currencies 23,847 - ----------------------------------------------------------------------------------------- 945,395 - ----------------------------------------------------------------------------------------- Net unrealized appreciation of: Investment securities 2,862,030 - ----------------------------------------------------------------------------------------- Foreign currencies 4,418 - ----------------------------------------------------------------------------------------- 2,866,448 - ----------------------------------------------------------------------------------------- Net gain on investment securities and foreign currencies 3,811,843 - ----------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $ 3,728,074 =========================================================================================
See Notes to Financial Statements. FS-33 221 FINANCIALS STATEMENT OF CHANGES IN NET ASSETS For the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994
1995 1994 OPERATIONS: Net investment income (loss) $ (83,769) $ (173) - ---------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies 945,395 (14,581) - ---------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 2,866,448 122,800 - ---------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 3,728,074 108,046 - ---------------------------------------------------------------------------------------------------------------- Share transactions-net: Class A 18,511,217 2,020,630 - ---------------------------------------------------------------------------------------------------------------- Class B 14,304,173 1,241,068 - ---------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income -- Class A (2,116) -- - ---------------------------------------------------------------------------------------------------------------- Net increase in net assets 36,541,348 3,369,744 - ---------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 4,369,744 1,000,000 - ---------------------------------------------------------------------------------------------------------------- End of period $ 40,911,092 $ 4,369,744 ================================================================================================================ NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $ 37,047,643 $ 4,261,698 - ---------------------------------------------------------------------------------------------------------------- Undistributed net investment income (loss) -- (173) - ---------------------------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies 874,201 (14,581) - ---------------------------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 2,989,248 122,800 - ---------------------------------------------------------------------------------------------------------------- $ 40,911,092 $ 4,369,744 ================================================================================================================
See Notes to Financial Statements. FS-34 222 FINANCIALS NOTES TO FINANCIAL STATEMENTS October 31, 1995 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Growth Fund (the "Fund") is an investment portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company consisting of four separate series portfolios: AIM Global Growth Fund, AIM Global Aggressive Growth Fund, AIM Global Income Fund and AIM International Equity Fund. The Fund currently offers two different classes of shares: the Class A shares and the Class B shares. Class A shares are sold with a front-end sales charge. Class B shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations-Except as provided in the next sentence, a security listed or traded on an exchange is valued at the last sales price on the exchange where the security is principally traded or, lacking any sales, at the mean between the closing bid and asked prices on the day of valuation. Exchange listed convertible bonds are valued at the mean between the closing bid and asked prices obtained from a broker-dealer. If a mean is not available, as is the case in some foreign markets, the closing bid will be used absent a last sales price. Securities traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) are valued at the mean between the closing bid and asked prices on valuation date. Securities reported on the NASDAQ National Market System are valued at the last sales price on the valuation date or absent a last sales price, at the mean of the closing bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors. Investments with maturities of 60 days or less are valued on the basis of amortized cost which approximates market value. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock Exchange 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 Board of Directors. B. 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. C. Foreign Currency Contracts-A forward 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 forward 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 forward 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. D. Securities Transactions, Investment Income and Distributions-Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on an accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. On October 31, FS-35 223 FINANCIALS 1995, undistributed net investment income (loss) was increased by $86,058, paid-in capital reduced by $29,445 and undistributed net realized gains reduced by $56,613 in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassifications discussed above. E. 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. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1 billion of the Fund's average daily net assets, plus 0.80% of the Fund's average daily net assets in excess of $1 billion. During the year ended October 31, 1995, AIM waived fees of $19,558 and assumed expenses of $72,900 and $45,450 for the Class A shares and Class B shares, respectively. Under the terms of the master investment advisory agreement, AIM will, if necessary, reduce its fee or make payments to the Fund to the extent necessary to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Fund's shares are qualified for sale. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1995, AIM was reimbursed $21,984 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency services to the Fund. During the year ended October 31, 1995, AFS was paid $33,579 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A shares and the Class B shares of the Fund. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and with respect to the Fund's Class B shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to the Class A Plan, pays AIM Distributors an annual rate of 0.50% of the average daily net assets attributable to the Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs. Of the total compensation payable, a service fee of 0.25% is paid to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of this amount, the Fund pays a service fee of 0.25% of the average daily net assets of the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. Any amounts not paid as a service fee under such 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. AIM Distributors may, from time to time, assign, transfer or pledge to one or more designees, its rights to all or a designated portion of (a) compensation received by AIM Distributors from the Fund pursuant to the Class B Plan (but not AIM Distributors' duties and obligations pursuant to the Class B Plan) and (b) any contingent deferred sales charges received by AIM Distributors related to the Class B shares. During the year ended October 31, 1995, the Class A shares and the Class B shares paid AIM Distributors $50,259 and $69,931, respectively, as compensation under the Plans. AIM Distributors received commissions of $82,337 from the sales of the Class A shares of the Fund during the year ended October 31, 1995. 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, 1995, AIM Distributors received commissions of $25,155 in contingent deferred sales charges imposed on redemptions of FS-36 224 FINANCIALS NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-(continued) Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1995, the Fund incurred legal fees of $3,693 for services rendered by the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-BANK BORROWINGS The Fund has a $300,000 committed line of credit with Chemical Bank of New York. Interest on borrowings under the line of credit is payable on maturity or prepayment date. During the period July 20, 1995 (effective date of Credit Agreement) through October 31, 1995, the Fund did not borrow under the line of credit agreement. The Fund is charged an administrative fee, payable quarterly, at the annual rate of $300. NOTE 5-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, 1995 was $39,648,940 and $12,056,101, respectively. The amount of unrealized appreciation (depreciation) of investment securities, on a tax basis, as of October 31, 1995 is as follows: Aggregate unrealized appreciation of investment securities $3,669,171 - ----------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (686,918) - ----------------------------------------------------------------------------------- Net unrealized appreciation of investment securities $2,982,253 ===================================================================================
Cost of investments for tax purposes is $35,799,986. NOTE 6-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 were as follows:
1995 1994 ------------------------ ---------------------- SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ---------- Sold: Class A 1,836,306 $20,814,602 211,509 $2,109,618 - -------------------------------------- --------- ----------- -------- ---------- Class B 1,403,515 15,741,389 131,203 1,303,950 - -------------------------------------- --------- ----------- -------- ---------- Issued as reinvestment of distributions: Class A 171 1,642 - - - -------------------------------------- --------- ----------- -------- ---------- Reacquired: Class A (210,976) (2,305,027) (9,139) (88,988) - -------------------------------------- --------- ----------- -------- ---------- Class B (128,718) (1,437,216) (6,293) (62,882) - -------------------------------------- --------- ----------- -------- ---------- 2,900,298 $32,815,390 327,280 $3,261,698 ====================================== ========= =========== ======== ==========
FS-37 225 FINANCIALS NOTE 7-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a Class A share and a Class B share outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994.
CLASS A CLASS B ---------------------- --------------------- 1995 1994 1995 1994 -------- ------- ------- ------- Net asset value, beginning of period $ 10.23 $ 10.00 $ 10.22 $ 10.00 - --------------------------------------------- -------- ------- ------- ------- Income from investment operations: Net investment income (loss) (0.02) - (0.04) - - --------------------------------------------- -------- ------- ------- ------- Net gains on securities (both realized and unrealized) 2.11 0.23 2.08 0.22 - --------------------------------------------- -------- ------- ------- ------- Total from investment operations 2.09 0.23 2.04 0.22 - --------------------------------------------- -------- ------- ------- ------- Less distributions: Dividends from net investment income (0.004) - - - - --------------------------------------------- -------- ------- ------- ------- Total distributions (0.004) - - - - --------------------------------------------- -------- ------- ------- ------- Net asset value, end of period $ 12.32 $ 10.23 $ 12.26 $ 10.22 - --------------------------------------------- -------- ------- ------- ------- Total return(a) 20.48% 2.30% 19.96% 2.20% - --------------------------------------------- -------- ------- ------- ------- Ratios/supplemental data: Net assets, end of period (000s omitted) $ 23,754 $ 3,093 $17,157 $ 1,277 ============================================= ======== ======= ======= ======= Ratio of expenses to average net assets 2.12%(b) 1.95%(c) 2.64%(d) 2.51%(c) ============================================= ======== ======= ======= ======= Ratio of net investment income (loss) to average net assets (0.28)%(b) 0.10%(c) (0.79)%(d) (0.47)%(c) ============================================= ======== ======= ======= ======= Portfolio turnover rate 79% 6% 79% 6% ============================================= ======== ======= ======= =======
(a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) Ratios are based on average net assets of $10,051,749. Ratios of expenses and net investment income (loss) to average net assets before fee waivers and expense reimbursements are 2.98% and (1.14)%, respectively. (c) Annualized. (d) Ratios are based on average net assets of $6,993,129. Ratios of expenses and net investment income (loss) to average net assets before fee waivers and expense reimbursements are 3.38% and (1.54)%, respectively. FS-38 226 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Global Income Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1995, and the related statement of operations for the year then ended, and the statement of changes in net assets and financial highlights for the year then ended and for the period September 15, 1994 (date operations commenced) through October 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Income Fund as of October 31, 1995, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period September 15, 1994 (date operations commenced) through October 31, 1994, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas December 8, 1995 FS-39 227 Financials SCHEDULE OF INVESTMENTS OCTOBER 31, 1995
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES-28.88% AUTOMOBILE/TRUCKS PARTS & TIRES-0.14% Harvard Industries Inc., Sr. Notes, 11.125%(b) (acquired 07/12/95; cost $20,000) 08/01/05 $ 20,000 $ 20,400 - ------------------------------------------------------------------------------------------------------ CABLE TELEVISION-1.56% Viacom Inc., Sr. Notes, 7.75% 06/01/05 100,000 102,282 - ------------------------------------------------------------------------------------------------------ Videotron Ltd., Sr. Disc. Notes, 11.125%(c) 07/01/04 100,000 67,750 - ------------------------------------------------------------------------------------------------------ Wireless One Inc., Units, 13.00%(d) 10/15/03 50,000 51,875 - ------------------------------------------------------------------------------------------------------ 221,907 - ------------------------------------------------------------------------------------------------------ CHEMICALS-0.65% Crain Industries, Sr. Sub. Notes,13.50%(b) (acquired 08/22/95; cost $40,000) 08/15/05 40,000 41,500 - ------------------------------------------------------------------------------------------------------ RBX Corp., Sr. Sub. Notes, 11.25%(b) (acquired 10/06/95-10/12/95; cost $50,325) 10/15/05 50,000 50,125 - ------------------------------------------------------------------------------------------------------ 91,625 - ------------------------------------------------------------------------------------------------------ CONSUMER NON-DURABLES-0.28% Hines Horticulture, Inc., Sr. Sub. Notes, 11.75%(b) (acquired 10/16/95-10/20/95; cost $40,475) 10/15/05 40,000 40,100 - ------------------------------------------------------------------------------------------------------ CONTAINERS-0.45% Ivex Packaging Corp., Sr. Sub. Notes, 12.50% 12/15/02 10,000 10,750 - ------------------------------------------------------------------------------------------------------ Owens-Illinois Inc., Sr. Sub. Notes, 10.50% 06/15/02 50,000 52,500 - ------------------------------------------------------------------------------------------------------ 63,250 - ------------------------------------------------------------------------------------------------------ FINANCE (CONSUMER CREDIT)-2.82% Associates Corp., Deb., 7.95% 02/15/10 100,000 109,582 - ------------------------------------------------------------------------------------------------------ GPA Delaware Inc., Deb., 8.75% 12/15/98 70,000 62,300 - ------------------------------------------------------------------------------------------------------ Loehmann's Holdings, Inc., Sr. Sub. Notes, 13.75% 02/15/99 80,000 76,800 - ------------------------------------------------------------------------------------------------------ Olympic Financial Ltd., Deb., 13.00% 05/01/00 140,000 152,600 - ------------------------------------------------------------------------------------------------------ 401,282 - ------------------------------------------------------------------------------------------------------ FOOD PROCESSING-0.47% American Rice Inc., Sr. Notes, 13.00% 07/31/02 70,000 66,150 - ------------------------------------------------------------------------------------------------------ FOREIGN GOVERNMENT-3.34% Province of Manitoba, Yankee Bonds, 7.75% 07/17/16 300,000 323,109 - ------------------------------------------------------------------------------------------------------ United Mexican States, Deb., 11.875%(b) (acquired 07/12/95; cost $150,000) 07/21/97 150,000 151,500 - ------------------------------------------------------------------------------------------------------ 474,609 - ------------------------------------------------------------------------------------------------------ GAMING-0.45% Aztar Corp., Sr. Sub. Notes, 11.00% 10/01/02 20,000 19,600 - ------------------------------------------------------------------------------------------------------ Showboat, Inc., Sr. Sub. Notes, 13.00% 08/01/09 40,000 44,000 - ------------------------------------------------------------------------------------------------------ 63,600 - ------------------------------------------------------------------------------------------------------ HOTELS/MOTELS-0.71% John Q. Hammons Hotels Inc., Gtd. First Mortgage Notes, 9.75%(b) (acquired 10/06/95; cost $100,000) 10/01/05 100,000 101,125 - ------------------------------------------------------------------------------------------------------
FS-40 228 Financials
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE INSURANCE (LIFE & HEALTH)-0.37% American Life Holdings Co., Sr. Sub. Notes, 11.25% 09/15/04 $ 50,000 $ 52,750 - ------------------------------------------------------------------------------------------------------ LEISURE & RECREATION-1.43% Icon Health & Fitness Inc., Sr. Sub. Notes, 13.00% 07/15/02 70,000 75,075 - ------------------------------------------------------------------------------------------------------ Stratosphere Corp., First Mortgage Notes, 14.25% 05/15/02 120,000 128,100 - ------------------------------------------------------------------------------------------------------ 203,175 - ------------------------------------------------------------------------------------------------------ MACHINERY (HEAVY)-0.73% Primeco Inc., Sr. Sub. Notes, 12.75% 03/01/05 100,000 103,000 - ------------------------------------------------------------------------------------------------------ MACHINERY (MISCELLANEOUS)-1.35% AM General Corp., Sr. Notes, 12.875%(b) (acquired 04/21/95; cost $49,734) 05/01/02 50,000 49,625 - ------------------------------------------------------------------------------------------------------ Interlake Corp., Sr. Notes, 12.00% 11/15/01 40,000 39,600 - ------------------------------------------------------------------------------------------------------ MVE Inc., Sr. Sec. Notes, 12.50% 02/15/02 100,000 102,750 - ------------------------------------------------------------------------------------------------------ 191,975 - ------------------------------------------------------------------------------------------------------ MEDICAL INSTRUMENTS/PRODUCTS-0.36% Graphic Controls Corp., Sr. Sub. Notes, 12.00%(b) (acquired 09/21/95; cost $50,000) 09/15/05 50,000 51,250 - ------------------------------------------------------------------------------------------------------ NATURAL GAS PIPELINE-1.78% Talisman Energy Inc., Yankee Deb., 7.125% 06/01/07 250,000 253,190 - ------------------------------------------------------------------------------------------------------ OIL & GAS-0.81% HS Resources Inc., Sr. Sub. Notes, 9.875% 12/01/03 20,000 19,625 - ------------------------------------------------------------------------------------------------------ Petroleum Heat & Power Co. Inc., Sub. Deb., 12.25% 02/01/05 50,000 55,125 - ------------------------------------------------------------------------------------------------------ United Meridian Corp., Sr. Sub. Notes, 10.375% 10/15/05 10,000 10,200 - ------------------------------------------------------------------------------------------------------ Wainoco Oil Corp., Sr. Sub. Notes, 12.00% 08/01/02 30,000 30,300 - ------------------------------------------------------------------------------------------------------ 115,250 - ------------------------------------------------------------------------------------------------------ OIL EQUIPMENT & SUPPLIES-0.14% Falcon Drilling Co. Inc., Sr. Notes, 9.75% 01/15/01 20,000 20,400 - ------------------------------------------------------------------------------------------------------ PAPER & FOREST PRODUCTS-0.55% Asia Pulp & Paper Co., Yankee Bonds, 11.75% 10/01/05 50,000 50,500 - ------------------------------------------------------------------------------------------------------ Pacific Lumber Co., Sr. Notes, 10.50% 03/01/03 30,000 28,200 - ------------------------------------------------------------------------------------------------------ 78,700 - ------------------------------------------------------------------------------------------------------ RAILROADS-1.27% Johnstown America Industries Inc., Sr. Sub. Notes, 11.75% 08/15/05 50,000 47,000 - ------------------------------------------------------------------------------------------------------ Transtar Holdings, L.P., Sr. Disc. Notes, 13.375%(c) 12/15/03 200,000 133,500 - ------------------------------------------------------------------------------------------------------ 180,500 - ------------------------------------------------------------------------------------------------------ RETAIL (FOOD & DRUG)-1.70% Grand Union Co., Sr. Notes, 12.00% 09/01/04 40,000 38,600 - ------------------------------------------------------------------------------------------------------ Great Atlantic & Pacific, Yankee Bonds, 7.78%(b) (acquired 10/18/95; cost $100,000) 11/01/00 100,000 99,813 - ------------------------------------------------------------------------------------------------------ Penn Traffic Co., Sr. Notes, 10.65% 11/01/04 70,000 64,750 - ------------------------------------------------------------------------------------------------------ Ralph's Grocery Co., Sr. Notes, 11.00% 06/15/05 40,000 38,800 - ------------------------------------------------------------------------------------------------------ 241,963 - ------------------------------------------------------------------------------------------------------
FS-41 229 Financials
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE RETAIL (STORES)-2.15% Fleming Companies Inc., Sr. Notes, 10.625% 12/15/01 $ 25,000 $ 26,188 - ------------------------------------------------------------------------------------------------------ Pamida Inc., Sr. Sub. Notes, 11.75% 03/15/03 50,000 40,500 - ------------------------------------------------------------------------------------------------------ Samsonite Corp., Sr. Sub. Notes, 11.125%(b) (acquired 07/07/95-10/16/95; cost $39,403) 07/15/05 40,000 38,400 - ------------------------------------------------------------------------------------------------------ Specialty Retailers, Inc., Sr. Sub. Notes, 11.00% 08/15/03 75,000 70,125 - ------------------------------------------------------------------------------------------------------ United Stationer Supply, Sr. Sub. Notes, 12.75% 05/01/05 120,000 130,500 - ------------------------------------------------------------------------------------------------------ 305,713 - ------------------------------------------------------------------------------------------------------ SCHOOLS-0.37% Herff Jones Inc., Sr. Sub Notes, 11.00%(b) (acquired 08/14/95-09/26/95; cost $50,550) 08/15/05 50,000 51,875 - ------------------------------------------------------------------------------------------------------ STEEL-0.79% GS Technologies Inc., Sr. Notes, 12.00% 09/01/04 75,000 75,188 - ------------------------------------------------------------------------------------------------------ Gulf States Steel Corp., First Mortgage Notes, 13.50% 04/15/03 40,000 36,800 - ------------------------------------------------------------------------------------------------------ 111,988 - ------------------------------------------------------------------------------------------------------ TELECOMMUNICATIONS-3.88% A+ Network Inc., Sr. Sub. Notes, 11.875% 11/01/05 50,000 50,063 - ------------------------------------------------------------------------------------------------------ CAI Wireless Systems Inc., Sr. Notes, 12.25% 09/15/02 50,000 53,500 - ------------------------------------------------------------------------------------------------------ Dictaphone Corp., Sr. Sub. Notes, 11.75% 08/01/05 20,000 19,500 - ------------------------------------------------------------------------------------------------------ Intermedia Communications, Sr. Notes, 13.50%(b)(e) (acquired 5/25/95; cost $150,000) 06/01/05 150,000 164,250 - ------------------------------------------------------------------------------------------------------ Peoples Telephone Co. Inc., Sr. Notes, 12.25% 07/15/02 50,000 47,750 - ------------------------------------------------------------------------------------------------------ Pronet Inc., Sr. Sub. Notes, 11.875% (acquired 06/12/95; cost $29,785) 06/15/05 30,000 32,100 - ------------------------------------------------------------------------------------------------------ TCI Communications Inc., Sr. Notes, 8.00% 08/01/05 150,000 155,076 - ------------------------------------------------------------------------------------------------------ Telewest PLC, Yankee Bonds, 11.00%(c) 10/01/07 50,000 29,188 - ------------------------------------------------------------------------------------------------------ 551,427 - ------------------------------------------------------------------------------------------------------ TEXTILES-0.33% Consoltex Group Inc., Sr. Sub. Notes, 11.00% 10/01/03 50,000 47,625 - ------------------------------------------------------------------------------------------------------ Total U.S. Dollar Denominated Non-Convertible Bonds & Notes 4,104,829 - ------------------------------------------------------------------------------------------------------ NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES(f)-11.71% CANADA-3.57% Bell Canada (Telecommunications) Deb., 13.875% 05/01/00 CAD 55,000 43,268 - ------------------------------------------------------------------------------------------------------ Deb., 10.875% 10/11/04 150,000 129,965 - ------------------------------------------------------------------------------------------------------ Canadian Oil Debco Inc. (Oil & Gas) Deb., 11.00% 10/31/00 45,000 37,760 - ------------------------------------------------------------------------------------------------------ Ford Motor Credit Co. (Finance-Consumer Credit) Mtn., 10.375% 09/17/96 125,000 96,190 - ------------------------------------------------------------------------------------------------------ IPL Energy Inc. (Oil Equipment & Supplies) Series A Deb., 9.67% 02/23/00 250,000 200,459 - ------------------------------------------------------------------------------------------------------ 507,642 - ------------------------------------------------------------------------------------------------------
FS-42 230 Financials
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE FRANCE-1.09% Credit Local de France (Finance-Consumer Credit) Sr. Unsub. Deb., 6.00% 11/15/01 FRF 250,000 $ 48,931 - ------------------------------------------------------------------------------------------------------ IBM International Finance N.V. (Computer Mainframes) Sr. Unsub. Deb., 10.00% 08/29/97 500,000 106,240 - ------------------------------------------------------------------------------------------------------ 155,171 - ------------------------------------------------------------------------------------------------------ GERMANY-3.47% Ford Credit Europe PLC (Finance-Consumer Credit) Deb., 6.00% 03/30/99 DEM 200,000 144,182 - ------------------------------------------------------------------------------------------------------ International Bank for Reconstruction & Development (Supranational Organization) Unsub. Global Bonds, 7.125% 04/12/05 475,000 348,337 - ------------------------------------------------------------------------------------------------------ 492,519 - ------------------------------------------------------------------------------------------------------ ITALY-0.32% KFW International Finance Inc. (Finance-Consumer Credit) Gtd. Notes, 11.625% 11/27/98 ITL 70,000,000 44,694 - ------------------------------------------------------------------------------------------------------ SWEDEN-0.69% Credit Foncier de France (Finance-Consumer Credit) Sr. Unsub. Deb., 6.50% 02/22/99 SEK 750,000 98,513 - ------------------------------------------------------------------------------------------------------ UNITED KINGDOM-2.57% European Investment Bank (Supranational Organization) Sr. Unsub. Deb., 6.00% 08/10/99 BPS 125,000 187,658 - ------------------------------------------------------------------------------------------------------ KFW International Finance Inc. (Finance-Consumer Credit) Gtd. Notes, 10.625% 09/03/01 100,000 177,391 - ------------------------------------------------------------------------------------------------------ 365,049 - ------------------------------------------------------------------------------------------------------ Total Non-U.S. Dollar Denominated Non-Convertible Bonds & Notes 1,663,588 - ------------------------------------------------------------------------------------------------------ NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES(f)-2.54% CANADA-1.57% Repap Enterprises, Inc. (Paper & Forest Products) Conv. Deb., 9.00% 06/30/98 CAD 300,000 222,794 - ------------------------------------------------------------------------------------------------------ FRANCE-0.36% Societe Generale (Banking) Conv. Deb., 3.50% 01/01/00 FRF 231,000 50,873 - ------------------------------------------------------------------------------------------------------ JAPAN-0.28% Glaxo Holdings PLC (Medical-Drugs) Conv. Deb., 4.30% 09/28/98 JPY 4,000,000 40,471 - ------------------------------------------------------------------------------------------------------ UNITED KINGDOM-0.33% ELF Enterprise Finance PLC (Finance-Consumer Credit) Gtd. Conv. Bonds, 8.75% 06/27/06 BPS 30,000 47,075 - ------------------------------------------------------------------------------------------------------ Total Non-U.S. Dollar Denominated Convertible Bonds & Notes 361,213 - ------------------------------------------------------------------------------------------------------
FS-43 231 Financials
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS & NOTES(f)-25.22% AUSTRALIA-10.70% Australian Government, Gtd. Deb., 9.00% 09/15/04 AUD 900,000 $ 703,074 - ------------------------------------------------------------------------------------------------------ Queensland Treasury Corp., Gtd. Notes, 8.875% 11/08/96 180,000 138,777 - ------------------------------------------------------------------------------------------------------ Gtd. Notes, 8.00% 07/14/99 420,000 317,556 - ------------------------------------------------------------------------------------------------------ Western Australia Treasury Corp., Gtd. Notes, 8.00% 07/15/03 500,000 361,552 - ------------------------------------------------------------------------------------------------------ 1,520,959 - ------------------------------------------------------------------------------------------------------ CANADA-1.24% Province of British Columbia, Deb., 9.00%(c) 06/21/04 CAD 150,000 57,462 - ------------------------------------------------------------------------------------------------------ New Brunswick (Province of), Deb., 8.94% 01/15/05 150,000 118,618 - ------------------------------------------------------------------------------------------------------ 176,080 - ------------------------------------------------------------------------------------------------------ DENMARK-5.00% Kingdom of Denmark, Deb., 8.00% 11/15/01 DKK 3,750,000 710,880 - ------------------------------------------------------------------------------------------------------ GERMANY-5.87% Bundesrepublik Deutschland Deb., 6.75% 07/15/04 DEM 750,000 542,546 - ------------------------------------------------------------------------------------------------------ Deb., 6.875% 05/12/05 400,000 291,645 - ------------------------------------------------------------------------------------------------------ 834,191 - ------------------------------------------------------------------------------------------------------ NEW ZEALAND-2.04% New Zealand Government Gtd. Deb., 9.00% 11/15/96 NZD 305,000 203,910 - ------------------------------------------------------------------------------------------------------ Gtd. Deb., 10.00% 07/15/97 125,000 85,959 - ------------------------------------------------------------------------------------------------------ 289,869 - ------------------------------------------------------------------------------------------------------ UNITED KINGDOM-0.37% Ontario Province, Sr. Unsub. Notes, 6.875% 09/15/00 BPS 35,000 52,292 - ------------------------------------------------------------------------------------------------------ Total Non-U.S. Dollar Denominated Government Bonds & Notes 3,584,271 - ------------------------------------------------------------------------------------------------------ SHARES WARRANTS-0.02% LEISURE & RECREATION-0.02% IHF Holdings-Wt., expiring 11/14/99(g) 70 2,100 - ------------------------------------------------------------------------------------------------------ STEEL-0.00% Gulf States Steel Corp.-Wt., expiring 04/15/03(g) 40 200 - ------------------------------------------------------------------------------------------------------ 2,300 - ------------------------------------------------------------------------------------------------------
FS-44 232 Financials
PRINCIPAL MARKET MATURITY AMOUNT(a) VALUE U.S. TREASURY SECURITIES-33.82% Notes, 7.50% 02/15/05 $ 750,000 $ 827,280 - ------------------------------------------------------------------------------------------------------ Notes, 6.50% 08/15/05 3,000,000 3,108,060 - ------------------------------------------------------------------------------------------------------ Bonds, 7.625% 02/15/25 750,000 870,885 - ------------------------------------------------------------------------------------------------------ Total U.S. Treasury Securities 4,806,225 - ------------------------------------------------------------------------------------------------------ REPURCHASE AGREEMENT(h)-7.06% Daiwa Securities America Inc., 5.90%(i) 11/01/95 1,003,663 1,003,663 - ------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS-109.25% 15,526,089 - ------------------------------------------------------------------------------------------------------ OTHER ASSETS LESS LIABILITIES-(9.25)% (1,314,883) - ------------------------------------------------------------------------------------------------------ NET ASSETS-100.00% $14,211,206 ======================================================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) Principal amount is in U.S. Dollars,except as indicated by note (f). (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 valuation of these securities has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of these securities at October 31, 1995 was $892,063 which represented 6.28% of the Fund's net assets. (c) Discounted bond at purchase. Interest rate represents coupon rate at which the bond will accrue at a specified future date. (d) Issued as a unit. This unit also includes 3 warrants to purchase one share of common stock at $11.55 per share per warrant. (e) Issued as a unit. This unit also includes one warrant to purchase 2.19 shares of common stock at $10.86 per share per warrant. (f) Foreign denominated security. Par value and coupon are denominated in currency of country indicated. (g) Non-income producing security acquired as part of a unit with or in exchange for other securities. (h) Collateral on repurchase agreements, including the Fund's pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds managed by the investment advisor. (i) Joint repurchase agreement entered into 10/31/95 with a maturing value of $401,494,641. Collateralized by $353,853,000 U.S. Treasury Notes, 8.375% due 08/15/08. ABBREVIATIONS: AUD Australian Dollar JPY Japanese Yen BPS British Pound Sterling Ltd. Limited CAD Canadian Dollar Mtn. Medium Term Notes Conv. Convertible NZD New Zealand Dollar Deb. Debentures Sec. Secured DEM German Deutschemark SEK Swedish Krona Disc. Discounted Sr. Senior DKK Danish Krone Sub. Subordinated FRF French Franc Unsub. Unsubordinated Gtd. Guaranteed Wt. Warrant ITL Italian Lire See Notes to Financial Statements. FS-45 233 Financials STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995 ASSETS: Investments, at market value (cost $15,090,239) $ 15,526,089 - -------------------------------------------------------------------------------------- Foreign currencies, at market value (cost $47) 48 - -------------------------------------------------------------------------------------- Receivables for: Capital stock sold 140,561 - -------------------------------------------------------------------------------------- Foreign currency contracts, at value 740,258 - -------------------------------------------------------------------------------------- Dividends and interest 301,156 - -------------------------------------------------------------------------------------- Reimbursement from advisor 4,000 - -------------------------------------------------------------------------------------- Other assets 9,179 - -------------------------------------------------------------------------------------- Total assets 16,721,291 - -------------------------------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 1,690,132 - -------------------------------------------------------------------------------------- Capital stock reacquired 30,566 - -------------------------------------------------------------------------------------- Foreign currency purchased 739,832 - -------------------------------------------------------------------------------------- Dividends payable 23,276 - -------------------------------------------------------------------------------------- Accrued administrative services fees 5,895 - -------------------------------------------------------------------------------------- Accrued distribution fees 7,371 - -------------------------------------------------------------------------------------- Accrued operating expenses 13,013 - -------------------------------------------------------------------------------------- Total liabilities 2,510,085 - -------------------------------------------------------------------------------------- Net assets applicable to shares outstanding $ 14,211,206 ====================================================================================== NET ASSETS: Class A $ 10,004,496 - -------------------------------------------------------------------------------------- Class B $ 4,206,710 ====================================================================================== CAPITAL STOCK, $.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - -------------------------------------------------------------------------------------- Outstanding 931,458 ====================================================================================== Class B Authorized 200,000,000 - -------------------------------------------------------------------------------------- Outstanding 392,214 ====================================================================================== Class A: Net asset value and redemption price per share $10.74 ====================================================================================== Offering price per share: (Net asset value of $10.74 divided by 95.25%) $11.28 ====================================================================================== Class B: Net asset value and offering price per share $10.73 ======================================================================================
See Notes to Financial Statements. FS-46 234 Financials STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1995 INVESTMENT INCOME: Interest $ 678,528 - ------------------------------------------------------------------------------------------- EXPENSES: Advisory fees 55,087 - ------------------------------------------------------------------------------------------- Administrative services fees 29,858 - ------------------------------------------------------------------------------------------- Directors' fees 5,464 - ------------------------------------------------------------------------------------------- Distribution fees - Class A 29,618 - ------------------------------------------------------------------------------------------- Distribution fees - Class B 19,459 - ------------------------------------------------------------------------------------------- Custodian fees 24,935 - ------------------------------------------------------------------------------------------- Transfer agent fees - Class A 9,251 - ------------------------------------------------------------------------------------------- Transfer agent fees - Class B 5,843 - ------------------------------------------------------------------------------------------- Professional fees 27,901 - ------------------------------------------------------------------------------------------- Filing fees 36,255 - ------------------------------------------------------------------------------------------- Other 5,350 - ------------------------------------------------------------------------------------------- Total expenses 249,021 - ------------------------------------------------------------------------------------------- Less expenses assumed by advisor (141,187) - ------------------------------------------------------------------------------------------- Net expenses 107,834 - ------------------------------------------------------------------------------------------- Net investment income 570,694 - ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain on sales of: Investment securities 184,463 - ------------------------------------------------------------------------------------------- Foreign currencies 79,519 - ------------------------------------------------------------------------------------------- 263,982 - ------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of: Investment securities 431,117 - ------------------------------------------------------------------------------------------- Foreign currencies (576) - ------------------------------------------------------------------------------------------- 430,541 - ------------------------------------------------------------------------------------------- Net gain on investment securities and foreign currencies 694,523 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $ 1,265,217 ===========================================================================================
See Notes to Financial Statements. FS-47 235 Financials STATEMENT OF CHANGES IN NET ASSETS For the Year Ended October 31, 1995 and the period September 15, 1994 (Date Operations Commenced) through October 31, 1994
1995 1994 OPERATIONS: Net investment income $ 570,694 $ 17,716 - ----------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on sales of investment securities and foreign currencies 263,982 (680) - ----------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and foreign currencies 430,541 4,707 - ----------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,265,217 21,743 - ----------------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income Class A (461,318) (15,447) - ----------------------------------------------------------------------------------------------------------------------------- Class B (139,421) (398) - ----------------------------------------------------------------------------------------------------------------------------- Share transactions-net: Class A 6,847,734 655,059 - ----------------------------------------------------------------------------------------------------------------------------- Class B 3,676,004 362,023 - ----------------------------------------------------------------------------------------------------------------------------- Net increase in net assets 11,188,216 1,022,980 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,022,990 2,000,010 - ----------------------------------------------------------------------------------------------------------------------------- End of period $ 14,211,206 $ 3,022,990 ============================================================================================================================= NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $ 13,511,536 $ 3,017,092 - ----------------------------------------------------------------------------------------------------------------------------- Undistributed net investment income 85,635 1,871 - ----------------------------------------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) on sales of investment securities and foreign currencies 178,787 (680) - ----------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 435,248 4,707 - ----------------------------------------------------------------------------------------------------------------------------- $ 14,211,206 $ 3,022,990 ==============================================================================================================================
See Notes to Financial Statements. FS-48 236 Financials NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Income Fund (the ''Fund'') is an investment portfolio of AIM International Funds, Inc. (the ''Company''). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the ''1940 Act''), as an open-end management investment company consisting of four separate series portfolios: AIM Global Income Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund, and AIM International Equity Fund. The Fund currently offers two different classes of shares: Class A shares and Class B shares. Class A shares are sold with a front-end sales charge. Class B shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class are voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations-Non-convertible bonds and notes 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 price, 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. Investment securities for which prices are not provided by the pricing service and which are listed or traded on an exchange are valued at the last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, at the mean between the closing bid and asked prices on that day unless the Board of Directors, or persons designated by the Board of Directors, determines that the over-the-counter quotations more closely reflect the current market value of the security. Securities traded in the over-the-counter market, except (i) securities priced by the pricing service, (ii) securities for which representative exchange prices are available, and (iii) securities reported in the NASDAQ National Market System, are valued at the mean between representative last bid and asked prices obtained from an electronic quotation reporting system, if such prices are available, or from established market makers. Each security reported in the NASDAQ National Market System is valued at the last sales price on the valuation date. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Fund's officers in accordance with methods which are specifically authorized by the Board of Directors. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. Generally, trading in foreign securities, as well as corporate bonds and U.S. Government securities, is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of such securities used in computing the net asset value of a Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the New York Stock Exchange. 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 New York Stock Exchange which will not be reflected in the computation of a Fund's net asset value. If events materially affecting the value of such securities and exchange rates occur during such period, then these securities and exchange rates will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. 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. C. 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 contracts at October 31, 1995 were as follows:
UNREALIZED CONTRACT TO APPRECIATION SETTLEMENT DATE DELIVER RECEIVE VALUE (DEPRECIATION) - --------------- ------------- ----------- --------- --------------- 11/03/95............................. DEM 300,000 $213,159 $ 218,818 $ 5,659 11/15/95............................. DEM 400,000 284,387 279,602 (4,785) 01/25/96............................. DEM 340,000 242,286 241,838 (448) ----------- --------- --------------- $739,832 $ 740,258 $ 426 =========== ========= ===============
FS-49 237 Financials D. Securities Transactions, Investment Income and Distributions-Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on an accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. On October 31, 1995, undistributed net investment income (loss) was increased by $113,809, undistributed net realized gains decreased by $84,515, and paid-in capital decreased by $29,294 in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassifications discussed above. E. 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. F. Expenses-Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to both classes, e.g. advisory fees, are allocated between them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.70% of the first $1 billion of the Fund's average daily net assets, plus 0.65% of the Fund's average daily net assets in excess of $1 billion. During the year ended October 31, 1995, AIM waived fees of $55,087 and assumed expenses of $64,100 and $22,000 for the Class A shares and Class B shares, respectively. Under the terms of the master investment advisory agreement, AIM will, if necessary, reduce its fee or make payments to the Fund to the extent necessary to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Fund's shares are qualified for sale. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1995, AIM was reimbursed $29,858 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to reimburse A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing transfer agency services to the Fund. During the year ended October 31, 1995, the Fund reimbursed AFS $9,321 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A shares and the Class B shares of the Fund. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and with respect to the Fund's Class B shares (the "Class B Plan") (collectively the "Plans"). The Fund, pursuant to the Class A Plan, will pay AIM Distributors an annual rate of 0.50% of the average daily net assets attributable to the Class A shares. The Class A Plan is designed to compensate AIM Distributors for certain promotional and other sales related costs and to implement a program which provides periodic payments to selected dealers and financial institutions, in amounts of up to 0.25% of the average net assets of the Class A shares attributable to the customers of such dealers or financial institutions, who furnish continuing personal shareholder services to their customers who purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to the Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class B shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own Class B shares of the Fund. Any amounts not paid as a service fee under such 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. AIM Distributors may, from time to time, assign, transfer or pledge to one or more designees, its rights to all or a designated portion of (a) compensation received by AIM Distributors from the Fund pursuant to the Class B Plan (but not AIM Distributors' duties and obligations pursuant to the Class B Plan) and (b) any contingent deferred sales charges received by AIM Distributors related to the Class B shares. During the year ended October 31, 1995, the Class A shares and the Class B shares paid AIM Distributors $29,618 and $19,459, respectively, as compensation under the Plans. AIM Distributors received commissions of $27,115 from the sales of the Class A shares of the Fund during the year ended October 31, 1995. 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, 1995, AIM Distributors received commissions of $3,877 in contingent deferred sales charges imposed on redemptions of Class B shares. Certain officers and directors of the Company are officers and directors of AIM, AFS, and AIM Distributors. During the year ended October 31, 1995, the Fund incurred legal fees of $2,160 for services rendered by the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-BANK BORROWINGS The Fund has a $100,000 committed line of credit with Chemical Bank of New York. Interest on borrowings under the line of credit is payable on maturity or prepayment date. During the period July 20, 1995 (effective date of Credit Agreement) through October 31, 1995, the Fund did not borrow under the FS-50 238 Financials line of credit agreement. The Fund is charged an administrative fee, payable quarterly, at the annual rate of $100. NOTE 5-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, 1995 was $20,756,948 and $9,361,656, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 1995 is as follows: Aggregate unrealized appreciation of investment securities $475,239 - ------------------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (39,389) - ------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities $435,850 ===========================================================================================
Investments have the same cost for tax and financial statement purposes. NOTE 6-CAPITAL STOCK Changes in the Fund's capital stock outstanding during the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 were as follows:
1995 1994 ----------------------- -------------------- SHARES AMOUNT SHARES AMOUNT -------- --------- ------ -------- Sold: Class A 760,598 $7,840,532 65,461 $655,027 - ---------------------------------------------------------------------------------------------- Class B 388,091 4,010,514 36,863 368,895 - ---------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 23,999 250,917 3 32 - ---------------------------------------------------------------------------------------------- Class B 11,879 124,099 2 25 - ---------------------------------------------------------------------------------------------- Reacquired: Class A (118,603) (1,243,715) -- -- - ---------------------------------------------------------------------------------------------- Class B (43,933) (458,609) (689) (6,897) - ---------------------------------------------------------------------------------------------- 1,022,031 $10,523,738 101,640 $1,017,082 ==============================================================================================
NOTE 7-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a Class A share and Class B share outstanding during the year ended October 31, 1995 and the period September 15, 1994 (dates operations commenced) through October 31, 1994.
CLASS A CLASS B ---------------------------- ---------------------------- 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Net asset value, beginning of period $10.02 $10.00 $10.01 $10.00 - --------------------------------------- ------------- ------------- ------------- ------------- Income from investment operations: Net investment income 0.79 0.08 0.74 0.07 - --------------------------------------- ------------- ------------- ------------- ------------- Net gains on securities (both realized and unrealized) 0.75 0.01 0.75 0.01 - --------------------------------------- ------------- ------------- ------------- ------------- Total from investment operations 1.54 0.09 1.49 0.08 - --------------------------------------- ------------- ------------- ------------- ------------- Less distributions: Dividends from investment income (0.82) (0.07) (0.77) (0.07) - --------------------------------------- ------------- ------------- ------------- ------------- Total distributions (0.82) (0.07) (0.77) (0.07) - --------------------------------------- ------------- ------------- ------------- ------------- Net asset value, end of period $10.74 $10.02 $10.73 $10.01 ======================================= ============= ============= ============= ============= Total return (a) 16.07% 0.93% 15.56% 0.79% ======================================= ============= ============= ============= ============= Ratios/supplemental data: Net assets, end of period (000s omitted) $10,004 $2,661 $4,207 $362 ======================================= ============= ============= ============= ============= Ratio of expenses to average net assets 1.25%(b) 1.25%(d) 1.74%(c) 1.73%(d) ======================================= ============= ============= ============= ============= Ratio of net investment income to average net assets 7.38%(b) 6.01%(d) 6.88%(c) 3.59%(d) ======================================= ============= ============= ============= ============= Portfolio turnover rate 128% 6% 128% 6% ======================================= ============= ============= ============= =============
(a) Does not deduct sales charges and for periods less than one year, total returns are not annualized. (b) Ratios are based on average net assets of $5,923,634. Ratios of expenses and net investment income to average net assets before fee waivers and expense reimbursements are 3.03% and 5.59%, respectively. (c) Ratios are based on average net assets of $1,945,925. Ratios of expenses and net investment income to average net assets before fee waivers and expense reimbursements are 3.57% and 5.05%, respectively. (d) Annualized. FS-51 239 PART C OTHER INFORMATION Item 24. (a) Financial Statements: (1) Class A shares of AIM Global Aggressive Growth Fund; AIM Global Growth Fund; and AIM Global Income Fund In Part A: Financial Highlights In Part B: (1) Reports of Independent Auditors (2) Schedules of Investments as of October 31, 1995 (3) Statements of Assets and Liabilities as of October 31, 1995 (4) Statements of Operations for the year ended October 31, 1995 (5) Statements of Changes in Net Assets for the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 (2) Class B shares of AIM Global Aggressive Growth Fund; AIM Global Growth Fund; and AIM Global Income Fund In Part A: Financial Highlights In Part B: (1) Reports of Independent Auditors (2) Schedules of Investments as of October 31, 1995 (3) Statements of Assets and Liabilities as of October 31, 1995 (4) Statements of Operations for the year ended October 31, 1995 (5) Statements of Changes in Net Assets for the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 (3) Class A shares of AIM International Equity Fund In Part A: Financial Highlights In Part B: (1) Report of Independent Auditors (2) Schedule of Investments as of October 31, 1995 (3) Statement of Assets and Liabilities as of October 31, 1995 (4) Statement of Operations for the year ended October 31, 1995 (5) Statement of Changes in Net Assets for the years ended October 31, 1995 and 1994 (4) Class B shares of AIM International Equity Fund In Part A: Financial Highlights In Part B: (1) Report of Independent Auditors (2) Schedule of Investments as of October 31, 1995 (3) Statement of Assets and Liabilities as of October 31, 1995 (4) Statement of Operations for the year ended October 31, 1995 C-1 240 (5) Statement of Changes in Net Assets for the year ended October 31, 1995 and the period September 15, 1994 (date operations commenced) through October 31, 1994 ______________________ (b) Exhibits Exhibit Number Description - ------- ------------ (1) (a) - Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. (b) - Articles of Amendment, dated May 21, 1992, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. (c) - Articles of Amendment, dated May 21, 1992, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. (d) - Articles Supplementary, dated June 29, 1994, to Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on August 17, 1994. (e) - Articles Supplementary, dated August 4, 1994, to Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on August 17, 1994. (f) - Articles of Amendment, dated November 14, 1994, are filed herewith electronically. (g) - Articles of Restatement, dated November 14, 1994, are filed herewith electronically. (2) (a) - By-Laws of Registrant were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and are filed herewith electronically. (b) - First Amendment, dated March 14, 1995, to By-Laws of Registrant is filed herewith electronically. (3) - Voting Trust Agreements - None. (4) (a) - Specimen Certificate for AIM International Equity Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. (b) - Specimen Certificates for Class A shares and Class B shares of AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund and AIM International Equity Fund were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and are filed herewith electronically. (5) (a) - Investment Advisory Agreement, dated as of November 8, 1991, between Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. (b) - Investment Advisory Agreement, dated as of October 18, 1993, between Registrant on behalf of its AIM International Equity Fund and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post- Effective Amendment No. 3 on February 24, 1994, and is filed herewith electronically. C-2 241 (c) - Master Investment Advisory Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and is filed herewith electronically. (6) (a) - (1) Distribution Agreement, dated December 11, 1991, between Registrant and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. - (2) Distribution Agreement, dated October 18, 1993, between Registrant and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. - (3) Master Distribution Agreement, dated September 10, 1994, between Registrant (on behalf of the portfolios' Class A shares) and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and is filed herewith electronically. - (4) Master Distribution Agreement, dated September 10, 1994, between the Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post- Effective Amendment No. 7 on February 23, 1995. - (5) Amended and Restated Master Distribution Agreement, dated May 2, 1995, between the Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995, and is hereby incorporated by reference. (b) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995, and is hereby incorporated by reference. c) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995, and is hereby incorporated by reference. (7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post- Effective Amendment No. 4 on June 29, 1994. (b) - Retirement Plan for Registrant's Non-Affiliated Directors effective as of March 8, 1994, as restated September 18, 1995, is filed herewith electronically. (c) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. (d) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors as approved December 5, 1995, is filed herewith electronically. (8) (a) - Custodian Agreement between Registrant and State Street Bank and Trust Company, dated as of November 8, 1991, was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and is filed herewith electronically. (b) - Amendment, dated July 1, 1994, to Custodian Agreement between Registrant and State Street Bank and Trust Company dated November 8, 1991 was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and is filed herewith electronically. C-3 242 (c) - Amendment No. 2, dated September 19, 1995, to the Custodian Contract, dated November 8, 1991, is filed herewith electronically. (d) - Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant is filed herewith electronically. (9) (a) - (1) Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (2) Amendment, dated May 15, 1992, to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (3) Form of Amendment No. 2 to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. - (4) Amendment No. 3, dated July 1, 1994, to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. - (5) Transfer Agency and Service Agreement, dated as of November 1, 1994, between the Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and is filed herewith electronically. - (6) Remote Access and Related Services Agreement, dated as December 23, 1994, between the Registrant and The Shareholder Services Group, Inc. was filed as an Exhibit to Post-Effective Amendment No. 7 on February 23, 1995, and is filed herewith electronically. - (7) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.) is filed herewith electronically. - (8) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.) is filed herewith electronically. (b) - (1) Administrative Services Agreement, dated December 10, 1991, between the Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. - (2) Administrative Services Agreement, dated as of October 18, 1993, between A I M Advisors, Inc. and Registrant, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994, and is filed herewith electronically. - (3) Master Administrative Services Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and is filed herewith electronically. C-4 243 - (4)(i) Administrative Services Agreement, dated as of October 18, 1993, between A I M Advisors, Inc. on behalf of Registrant's portfolios, and A I M Fund Services, Inc., was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. - (4)(ii) Amendment No. 1, dated May 11, 1994, to Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. - (4)(iii) Amendment No. 2, dated July 1, 1994, to Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. - (4)(iv) Amendment No. 3, dated September 16, 1994, to the Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. (c) - (1) Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2 on April 2, 1992, and is filed herewith electronically. - (2) Amendment No. 1, dated July 1, 1994, to Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and is filed herewith electronically. (d) - (1) Shareholder Sub-Accounting Services Agreement among the Registrant, First Data Investor Services Group (formerly The Shareholder Services Group, Inc.), Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc., was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993, and is filed herewith electronically. - (2) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated February 1, 1993, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. (10) - Opinion and Consent of Spengler Carlson Gubar Brodsky & Frischling was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and is hereby incorporated by reference. (11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith electronically. (b) - Consents of KPMG Peat Marwick LLP are filed herewith electronically. (12) - Financial Statements - None. (13) - Agreement Concerning Initial Capitalization of the Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and is filed herewith electronically. (14) (a) - (1) Form of Registrant's IRA Documents was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. C-5 244 - (2) Revised Form of Registrant's IRA Documents was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2 on August 16, 1993, and is hereby incorporated by reference. (b) - Revised Form of Registrant's Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2 on August 16, 1993, and is hereby incorporated by reference. (c) - Forms of Registrant's Money Purchase Pension and Profit Sharing Plan (and applicable Adoption Agreements) and Registrant's Profit Sharing/401(k) Trust were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and are hereby incorporated by reference. (d) - Form of Registrant's 403(b) Plan was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and is hereby incorporated by reference. (15) (a) - (1) Registrant's Distribution Plan was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (2) Distribution Plan, and related forms of agreements, on behalf of the Registrant's AIM International Equity Fund, dated September 27, 1993, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. - (3) Master Distribution Plan, and related forms of agreements, for Registrant's Class A shares were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. - (4) Master Distribution Plan, and related forms of agreements, for Registrant's Class B shares were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. - (5) Amended Master Distribution Plan, dated September 10, 1994, for Registrant's Class A shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995 and is hereby incorporated by reference. - (6) Amended Master Distribution Plan, dated September 10, 1994, for Registrant's Class B shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995. - (7) Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, and as amended and restated as of May 2, 1995, for Registrant's Class B shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995 and is hereby incorporated by reference. (b) - Form of Shareholder Service Agreement to be used in connection with Registrant's Master12b-1 Plan was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995 and is hereby incorporated by reference. (c) - Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995 and is hereby incorporated by reference. (e) - (1) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be used in connection with Registrant's Master 12b-1 Plan was electronically filed as an Exhibit to Post- Effective Amendment No. 8 on December 1, 1995 and is hereby incorporated by reference. C-6 245 (2) Form of Service Agreement for Certain Retirement Plans (for the Institutional Classes) to be used in connection with registrant's Master 12b-1 Plan is filed herewith electronically. (f) - Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to be used in connection with Registrant's 12b-1 Plan were electronically filed as an Exhibit to Post- Effective Amendment No. 8 on December 1, 1995 and are hereby incorporated by reference. (16) (a) - Schedule of Performance Quotations - Schedule of Performance Quotations on behalf of Registrant's AIM International Equity Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993, and is filed herewith electronically. (b) - Schedule of Performance Quotations - Schedule of Performance Quotations on behalf of Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994, and is filed herewith electronically. (18) - Rule 18f-3 Plan - None. (27) - Financial Data Schedule - filed herewith electronically. Item 25. Persons Controlled by or under Common Control with Registrant Furnish a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant and as to each such person indicate (1) if a company the state or other sovereign power under the laws of which it is organized, and (2) the percentage of voting securities owned or other basis of control by the person, if any, immediately controlling it. Not Applicable Item 26. Number of Holders of Securities State in substantially the tabular form indicated, as of a specified date within 90 days prior to the date of filing, the number of record holders of each class of securities of the Registrant.
Number of Record Holders as of February 1, 1996 ------------------------- Title of Class Class A Class B -------------- ------- ------- AIM International Equity Fund 52,096 9,434 AIM Global Aggressive Growth Fund 28,453 19,211 AIM Global Growth Fund 3,956 3,591 AIM Global Income Fund 768 670
Item 27. Indemnification State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified in any manner against any liability which may be incurred in such capacity, other than insurance provided by any director, officer, affiliated person or underwriter for their own protection. C-7 246 Pursuant to the Maryland General Corporation Law and the Registrant's Charter and By-Laws, the Registrant may indemnify any person who was or is a director, officer, employee or agent of the Registrant to the maximum extent permitted by the Maryland General Corporation Law. The specific terms of such indemnification are reflected in the Registrant's Charter and By-Laws, which are incorporated herein as part of this Registration Statement. No indemnification will be provided by the Registrant to any director or officer of the Registrant for any liability to Registrant or shareholders to which such director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy and will be governed by the final adjudication of such issue. Insurance coverage is provided under a joint Mutual Fund and Investment Advisory Professional Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $15,000,000 limit of liability. Item 28. Business and Other Connections of Investment Advisor Describe any other business, profession, vocation or employment of a substantial nature in which each investment advisor of the Registrant, and each director, officer or partner of any such investment advisor, is or has been, at any time during the last two fiscal years, engaged for his own account or in the capacity of director, officer, employee, partner or trustee. The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Management--Investment Advisor" of the Prospectus which comprises Part A of the Registration Statement, and to the caption "Management" of the Statement of Additional Information which comprises Part B of the Registration Statement, and to Item 29(b) of this Part C. Item 29. 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 Equity Funds, Inc. (Retail Classes) AIM Funds Group AIM Investment Securities Funds AIM Summit Fund, Inc. AIM Tax-Exempt Funds, Inc. AIM Variable Insurance Funds, Inc. C-8 247 (b) Name and Principal Position with Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ------------------ -------------------------- -------------------- Charles T. Bauer Chairman of the Chairman of the Board of Directors Board of Directors Michael J. Cemo President & Director None Gary T. Crum Director Senior Vice President Robert H. Graham Senior Vice President President & Director & Director W. Gary Littlepage Senior Vice President None & Director James L. Salners Senior Vice President & None Director John Caldwell Senior Vice President None Gordon J. Sprague Senior Vice President None Michael C. Vessels Senior Vice President None Lawrence E. Manierre First Vice President None James E. Stueve First Vice President None Kathleen J. Pflueger Secretary Assistant Secretary John J. Arthur Vice President & Senior Vice President Treasurer & Treasurer Ofelia M. Mayo Vice President, Assistant Assistant Secretary Secretary & General Counsel Charles R. Dewey Vice President None Sidney M. Dilgren Vice President None William H. Kleh Vice President None Carol F. Relihan Vice President Vice President & Secretary Frank V. Serebrin Vice President None - --------------- *11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 C-9 248 Name and Principal Position with Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ------------------ -------------------------- -------------------- B.J. Thompson Vice President None Robert D. Van Sant Vice President None David E. Hessel Assistant Vice President, None Assistant Treasurer & Controller Melville B. Cox Assistant Vice President Vice President Mary E. Gentempo Assistant Vice President None Jeffrey L. Horne Assistant Vice President None Kim T. Lankford Assistant vice President None David L. Kite Assistant General Counsel & Assistant Secretary Assistant Secretary Nancy L. Martin Assistant General Counsel & Assistant Secretary Assistant Secretary Samuel D. Sirko Assistant General Counsel & Assistant Secretary Assistant Secretary Stephen I. Winer Assistant Secretary Assistant Secretary (c) Not Applicable Item 30. Location of Accounts and Records With respect to each account, book or other document required to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder, furnish the name and address of each person maintaining physical possession of each such account, book or other document. A I M Advisors, Inc. 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, maintains physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739. Item 31. Management Services Furnish a summary of the substantive provisions of any management-related service contract not discussed in Part A of Part B of this Form (because the contract was not believed to be of interest to a - ---------- *11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 C-10 249 purchaser of securities of the Registrant) under which services are provided to the Registrant, indicating the parties to the contract, the total dollars paid and by whom, for the last three fiscal years. Not Applicable Item 32. Undertakings The Registrant undertakes to furnish each person to whom a prospectus is delivered a copy of the applicable Fund's latest annual report to shareholders, upon request and without charge. C-11 250 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 27th day of February, 1996. Registrant: AIM INTERNATIONAL FUNDS, INC. By: /s/ Robert H. Graham ------------------------------ Robert H. Graham, President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated: SIGNATURES TITLE DATE ---------- ----- ---- /s/ Charles T. Bauer Chairman & Director February 27, 1996 - -------------------------------- (Charles T. Bauer) /s/ Robert H. Graham Director & President February 27, 1996 - -------------------------------- (Principal Executive (Robert H. Graham) Officer) /s/ Bruce L. Crockett Director February 27, 1996 - -------------------------------- (Bruce L. Crockett) /s/ Owen Daly II Director February 27, 1996 - -------------------------------- (Owen Daly II) /s/ Carl Frischling Director February 27, 1996 - -------------------------------- (Carl Frischling) /s/ John F. Kroeger Director February 27, 1996 - -------------------------------- (John F. Kroeger) /s/ Lewis F. Pennock Director February 27, 1996 - -------------------------------- (Lewis F. Pennock) /s/ Ian W. Robinson Director February 27, 1996 - -------------------------------- (Ian W. Robinson) /s/ Louis S. Sklar Director February 27, 1996 - -------------------------------- (Louis S. Sklar) /s/ John J. Arthur Senior Vice President & February 27, 1996 - -------------------------------- Treasurer (Principal (John J. Arthur) Financial and Accounting Officer) 251 INDEX TO EXHIBITS
Exhibit Number Description - ------- ----------- 1(f) Articles of Amendment, dated November 14, 1994 1(g) Articles of Restatement, dated November 14, 1994 2(a) By-Laws of Registrant 2(b) First Amendment, dated March 14, 1995, to By-Laws of Registrant 4(b) Specimen Certificates for Class A shares and Class B shares of AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund and AIM International Equity Fund 5(b) Investment Advisory Agreement, dated as of October 18, 1993, between Registrant on behalf of its AIM International Equity Fund and A I M Advisors, Inc. 5(c) Master Investment Advisory Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund 6(a)(3) Master Distribution Agreement, dated September 10, 1994, between Registrant (on behalf of the portfolios' Class A shares) and A I M Distributors, Inc. 7(b) Retirement Plan for Registrants' Non-Affiliated Directors effective as of March 8, 1994, as restated September 18, 1995 7(d) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors as approved December 5, 1995 8(a) Custodian Agreement between Registrant and State Street Bank and Trust Company, dated as of November 8, 1991 8(b) Amendment, dated July 1, 1994, to Custodian Agreement between Registrant and State Street Bank and Trust Company dated November 8, 1991 8(c) Amendment No. 2, dated September 19, 1995, to the custodian Contract, dated November 8, 1991 8(d) Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant. 9(a)(5) Transfer Agency and Service Agreement, dated as of November 1, 1994, between the Registrant and A I M Fund Services, Inc.
252 9(a)(6) Remote Access and Related Services Agreement, dated as December 23, 1994, between the Registrant and The Shareholder Services Group, Inc. 9(a)(7) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.) 9(a)(8) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.) 9(b)(2) Administrative Services Agreement, dated as of October 18, 1993, between A I M Advisors, Inc. and Registrant 9(b)(3) Master Administrative Services Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund 9(c)(1) Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company 9(c)(2) Amendment No. 1, dated July 1, 1994, to Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company 9(d)(1) Shareholder Sub-Accounting Services Agreement among the Registrant, First Data Investor Services Group (formerly The Shareholder Services Group, Inc.), Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc. 11(a) Consent of Ballard Spahr Andrews & Ingersoll 11(b) Consents of KPMG Peat Marwick LLP 13 Agreement Concerning Initial Capitalization of the Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund 16(a) Schedule of Performance Quotations -- Schedule of Performance Quotations on behalf of Registrant's AIM International Equity Fund 16(b) Schedule of Performance Quotations -- Schedule of Performance Quotations on behalf of Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund 27 Financial Data Schedule EX-99.1.F 2 ARTICLES OF AMENDMENT DATED 11/14/94 1 EXHIBIT 1(f) AIM INTERNATIONAL FUNDS, INC. ARTICLES OF AMENDMENT AIM INTERNATIONAL FUNDS, INC., a Maryland corporation registered as an open-end investment company under the Investment Company Act of 1940 having its principal office in the State of Maryland in Baltimore City (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: In Article FIFTH, Section (1)(a) of the Corporation's charter (the "Charter"), the two hundred million (200,000,000) shares of AIM International Equity Fund shall be redesignated as the AIM International Equity Fund Class A Shares, the two hundred million (200,000,000) shares of AIM Global Aggressive Growth Fund shall be redesignated as the AIM Global Aggressive Growth Fund Class A Shares, the two hundred million (200,000,000) shares of AIM Global Growth Fund shall be redesignated as the AIM Global Growth Fund Class A Shares, and the two hundred million (200,000,000) shares of AIM Global Income Fund shall be redesignated as the AIM Global Income Fund Class A Shares. SECOND: The Board of Directors of the Corporation by unanimous written consent has duly adopted resolutions in which was set forth the foregoing amendment (the "Amendment") to the Charter. THIRD: This amendment is limited to a change expressly permitted by Section 2-605(a)(4) of the Maryland General Corporation Law to be made without action by stockholders, and the Corporation is registered as an open-end investment company under the Investment Company Act of 1940. 1 2 The undersigned Vice President acknowledges these Articles of Amendment to be the corporate act of the Corporation and states that to the best of his or her knowledge, information and belief, the matters and facts set forth in these Articles with respect to authorization and approval are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, AIM INTERNATIONAL FUNDS, INC. has caused these Articles of Amendment to be executed in its name and on its behalf by its Vice President and witnessed by its Assistant Secretary on November 14, 1994. AIM INTERNATIONAL FUNDS, INC. Witness: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN - ----------------------- -------------------- Assistant Secretary Vice President 2 EX-99.1.G 3 ARTICLES OF RESTATEMENT DATED 11/14/94 1 EXHIBIT 1(g) AIM INTERNATIONAL FUNDS, INC. ARTICLES OF RESTATEMENT THIS IS TO CERTIFY THAT: FIRST: AIM INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Corporation"), desires to restate its charter (the "Charter") as currently in effect. SECOND: The following provisions are all the provisions of the charter currently in effect: FIRST: Incorporator. The undersigned, Samuel D. Sirko, whose address is Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046, being at least eighteen years of age, does, under and by virtue of the general laws of the State of Maryland authorizing the formation of corporations, hereby act as incorporator with the intention of forming a corporation. SECOND: Name. The name of the corporation (hereinafter called the "Corporation") is AIM INTERNATIONAL FUNDS, INC. THIRD: Purpose. The purpose for which the Corporation is formed and the business or objects to be transacted, carried on and promoted by it, is to act as an open-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the "1940 Act"), and to exercise and generally to enjoy all of the powers, rights and privileges granted to, or conferred upon, corporations by the general laws of the State of Maryland now or hereafter in force. FOURTH: Principal Office and Resident Agent. The address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. The name of the resident agent of the Corporation in the State of Maryland is The Corporation Trust Incorporated, and the address of such resident agent is 32 South Street, Baltimore, Maryland 21202. FIFTH: Capitalization. (a) The total number of shares of common stock which the Corporation shall have the authority to issue is 2,000,000,000 shares with a par value of $.001 each. (i) Of the 2,000,000,000 shares authorized by paragraph (a) of this Article FIFTH, two hundred million (200,000,000) shares are classified as AIM International Equity Fund Class A Shares, two hundred million (200,000,000) shares are classified as AIM Global Aggressive Growth Fund Class A Shares, two hundred million (200,000,000) shares are classified as AIM Global Growth Fund Class A Shares, and two hundred million (200,000,000) shares are classified as AIM Global Income Fund Class A Shares (collectively, the "Class A Shares"). 1 2 (ii) Of the 2,000,000,000 shares authorized by paragraph (a) of this Article FIFTH, two hundred million (200,000,000) shares are classified as AIM International Equity Fund Class B Shares, two hundred million (200,000,000) shares are classified as AIM Global Aggressive Growth Fund Class B Shares, two hundred million (200,000,000) shares are classified as AIM Global Growth Fund Class B Shares, and two hundred million (200,000,000) shares are classified as AIM Global Income Fund Class B Shares (collectively, the "Class B Shares"). (iii) Of the 2,000,000,000 shares authorized by paragraph (a) of this Article FIFTH, the balance of shares not classified as Class A or Class B Shares are unclassified. Unissued shares of common stock (both classified and unclassified) may be classified and reclassified by the Board of Directors. (iv) All the shares of common stock of the Corporation, both classified and unclassified, collectively have an aggregate par value of $2,000,000. (b) Subject to the power of the Board of Directors to reclassify unissued shares, the shares of each class or series of stock of the Corporation shall have the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption: (i) All consideration received by the Corporation for the issuance or sale of shares of a particular class or series, together with all income, earnings, profits and proceeds thereof, shall irrevocably belong to such class or series for all purposes, subject only to the rights of creditors, and are herein referred to as "assets belonging to" such class. (ii) The assets belonging to such class or series shall be charged with the liabilities of the Corporation in respect of such class or series, and with such class' or series' respective share of the general liabilities of the Corporation, in the latter case in the proportion that the net asset value of such class or series bears to the net asset value of all classes or series. The determination of the Board of Directors shall be conclusive as to the allocation of liabilities, including accrued expenses and reserves, to a class or series. (iii) Dividends or distributions on shares of any class or series, whether payable in stock or cash, shall be paid only out of earnings, surplus or other assets belonging to such class or series. (iv) In the event of the liquidation or dissolution of the Corporation, stockholders of each class or series shall be entitled to receive, as a class or series, out of the assets of the Corporation available for distribution to stockholders, the assets belonging to such class or series; and the assets so distributable to the stockholders of such class or series shall be distributed among such stockholders in proportion to the number of shares of such class or series held by them and recorded on the books of the Corporation. (v) On each matter submitted to a vote of the stockholders, each holder of a share of stock shall be entitled to one vote for each such share of stock standing in such holder's name on the books of the Corporation, irrespective of the class or series thereof, and all shares shall be voted in the aggregate and not by class; provided, however, that to the extent 2 3 class voting is required by the 1940 Act or Maryland law, or otherwise directed by the Board of Directors, as to any such matter, shares shall be voted by individual class or series. No holder of shares of any class or series of stock shall be entitled to vote on any merger of another corporation with and into the Corporation if the consideration for such merger consists solely of the shares of another class or series of stock of the Corporation. (vi) Except as set forth below, the Class B Shares shall have the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption as set forth in ARTICLE FIFTH, paragraph (b) and shall be subject to all provisions of the Charter relating to stock of the Corporation generally. In addition, the Class B Shares shall have the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption: (1) Subject to the provisions of paragraph (3) below, all Class B Shares other than those purchased through the reinvestment of dividends and distributions shall automatically convert to Class A Shares eight (8) years after the end of the calendar month in which a shareholder's order to purchase such Class B Shares was accepted. (2) Subject to the provisions of paragraph (3) 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 preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of Class B Shares generally. (3) If an investment portfolio of the Corporation implements any amendment to a Rule 12b-1 Plan (or, if presented to shareholders, adopts or implements a non-Rule 12b-1 shareholders services plan) which the Board of Directors determines 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 Board of Directors 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 Board of Directors shall take such action as is necessary to: (a) create a new class ("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 (b) 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 Board of Directors 3 4 to implement the foregoing, and at the sole discretion of the Board of Directors, such action may include the conversion of all Class B Shares for a new class ("New Class B Shares"), identical in all 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 Board of Directors reasonably believes will not be subject to federal taxation. Except as provided above, all provisions of the Articles of Incorporation relating to stock of the Corporation shall apply to shares of and to the holders of shares of all classes or series of stock, whether now or hereafter classified. (c) To the extent that the Corporation has funds or property legally available therefor, each holder of shares of stock of the Corporation, upon proper written request (including signature guarantees, if required by the Board of Directors) to the Corporation accompanied, when stock certificates representing such shares are outstanding, by surrender of the appropriate stock certificate or certificates in proper form for transfer, or any such form as the Board of Directors may provide, shall be entitled to require the Corporation to redeem all or any number of the shares outstanding in the name of such holder on the books of the Corporation, at the net asset value of such shares. Notwithstanding the foregoing, the Board of Directors of the Corporation may suspend the right of the holders of the shares of stock of the Corporation to require the Corporation to redeem such shares or to receive payment for redeemed shares when permitted or required to do so by the 1940 Act or any rule or regulation of the Securities and Exchange Commission promulgated thereunder. The Corporation, without the vote or consent of the stockholders of the Corporation, may redeem all shares of stock in any stockholder's account in which the value of such shares is less than $500.00, or such other minimum amount as the Board of Directors may from time to time establish in its discretion; provided, that any such redemption is at a price determined in accordance with the current prospectus of the class or series of stock to be redeemed. (d) All persons who shall acquire stock or securities of the Corporation shall acquire the same subject to the provisions of these Articles of Incorporation. SIXTH: Directors. The initial number of directors of the Corporation shall be three (3), and the names of those who will serve as such until their successors are duly elected and qualified are as follows: Charles T. Bauer Lewis F. Pennock Louis S. Sklar The By-laws of the Corporation may from time to time fix the number of directors at a number other than three (3), and may authorize the Board of Directors, by the vote of a majority of the entire Board of Directors, to increase or decrease the number of directors initially set by these Articles of Incorporation or by the By-Laws (provided that in no case shall the number of directors be less than three (3) or the number of stockholders, whichever is less), and to fill vacancies created by any such increase in the number of directors. Unless otherwise provided by the By-Laws of the Corporation, the directors of the Corporation need not be stockholders thereof. 4 5 SEVENTH: Other Powers. In furtherance and not in limitation of the powers conferred by the laws of the State of Maryland, the following provisions are hereby adopted for the purpose of defining and regulating the powers of the Corporation and of the directors and stockholders: (a) The Board of Directors of the Corporation is hereby empowered to authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, and securities convertible into shares of its stock of any class or classes, whether now or hereafter authorized, in each case upon the terms and conditions and for such consideration as the Board of Directors shall from time to time determine. (b) No holder of shares of stock of the Corporation shall, as such holder, have any right to purchase or subscribe for any shares of stock of the Corporation, other than such rights, if any, as the Board of Directors, in its discretion, may from time to time determine. (c) The Board of Directors is hereby empowered to authorize the issuance from time to time of fractional shares of stock of this Corporation, whether now or hereafter authorized, and any fractional shares so issued shall entitle the holder thereof to exercise voting rights, receive dividends and participate in the distribution of assets of the Corporation in the event of liquidation or dissolution to the extent of the proportionate interest represented by such fractional shares. The Corporation shall not be obligated to issue stock certificates evidencing fractional shares. (d) Except to the extent otherwise prohibited by applicable law, the Corporation may enter into any management or investment advisory contract or underwriting contract or any other type of contract with, and may otherwise engage in any transaction or do business with, any person, firm or corporation or any subsidiary or other affiliate of any such person, firm or corporation, and may authorize such person, firm or corporation or such subsidiary or other affiliate to enter into any other contracts or arrangements with any other person, firm or corporation which relate to the Corporation or the conduct of its business, notwithstanding that any directors or officers of the Corporation are or may subsequently become partners, directors, officers, stockholders or employees of such person, firm or corporation or of such subsidiary or other affiliate or may have a material financial interest in any such contract, transaction or business; and except to the extent otherwise provided by applicable law, no such contract, transaction or business shall be invalidated or violable, or in any way affected thereby, nor shall any of such directors or officers of the Corporation be liable to the Corporation or to any stockholder or creditor thereof or to any other person for any loss incurred solely because of the entering into and performance of such contract or the engaging in such transaction or business or the existence of such material financial interest therein, provided that such relationship to such person, firm or corporation or such subsidiary or affiliate or such material financial interest was disclosed or otherwise known to the Board of Directors prior to the Corporation's entering into such contract or engaging in such transaction or business, and in the case of directors of the Corporation, that any requirements of the Maryland General Corporation Law have been satisfied. Provided further, that nothing herein shall protect any director or officer of the Corporation from liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. (e) The net asset value of a share of any class or series of stock of the Corporation shall be determined by or in accordance with the determination of the 5 6 Board of Directors, which is authorized to determine the methods to be used to value the assets of a class or series, the amount and allocation of liabilities of the Corporation to each class or series, and all other matters in connection therewith. (f) Any determination made in good faith by or pursuant to the direction of the Board of Directors as to the (i) amount of the assets, debts, obligations or liabilities of the Corporation, (ii) amount of any reserves or charges set up and the propriety thereof, (iii) time of or purpose for creating such reserves or charges, (iv) use, alteration or cancellation of any reserves or charges (whether or not any debt, obligation or liability for which such reserves or charges shall have been created, shall have been paid or discharged, or shall be then or thereafter required to be paid or discharged), (v) value of any security or other asset owned or held by the Corporation, (vi) number of shares of the Corporation outstanding, (vii) net investment income of the Corporation, or (viii) other matters relating to the issuance, sale, purchase and/or other acquisition or disposition of securities or shares of the Corporation or the amount or payment of dividends, shall be final and conclusive, and shall be binding upon the Corporation and all holders of its shares, past, present and future. Shares of the Corporation are issued and sold on the condition and understanding, evidenced by acceptance of certificates for such shares, that any and all determinations shall be binding as aforesaid. (g) The stockholders of the Corporation may remove any director of the Corporation prior to the expiration of such director's term of office, for cause, and not otherwise, by the affirmative vote of a majority of all votes entitled to be cast for the election of directors. (h) Notwithstanding any provision of law requiring any action to be taken or authorized by the affirmative vote of the holders of a designated proportion greater than a majority of the shares or votes entitled to be cast, such action shall be effective and valid if taken or authorized by the affirmative vote of the holders of a majority of the total number of shares entitled to vote thereon. NINTH: Limitation of Liability; Indemnification. (a) No director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages, except (i) to the extent that it is proved that such director or officer actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received, or (ii) to the extent that a judgment or other final adjudication adverse to such director or officer is entered in a proceeding based on a finding in the proceeding that such director's or officer's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. The foregoing shall not be construed to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its stockholders to which such director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such office. (b) The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by By-Law, resolution or agreement make further provision of indemnification of directors, officers, employees and agents of the Corporation to the fullest extent permitted by the Maryland General Corporation Law. 6 7 (c) References to Maryland General Corporation Law in this Article are to the law as amended from time to time. No further amendment to the Articles of Incorporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to such amendment. TENTH: Quorum. At any meeting of stockholders, thirty percent (30%) of the outstanding shares of stock entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum; provided, that if there is to be acted on at the meeting an action which requires the affirmative vote of "a majority of the outstanding voting securities" as such phrase is defined in the Investment Company Act of 1940, then a majority of the outstanding shares of stock entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum. If any matter is to be voted on by individual class or series, then a quorum shall be required as to each such class or series. ELEVENTH: Amendments. The Corporation reserves the right from time to time to amend, alter, change, add to, or repeal any provision contained in this Charter in the manner now or hereafter prescribed or permitted by statute, including any amendment which alters the contract rights, as expressly set forth in this Charter, of any outstanding stock, and all rights conferred on stockholders and others herein are granted subject to this reservation. THIRD: The restatement of the Charter of the Corporation as hereinabove set forth has been duly advised, authorized and adopted by the Board of Directors by unanimous written consent. FOURTH: The Charter is not amended by these Articles of Restatement. FIFTH: The current address of the principal office of the Corporation is as set forth in Article FOURTH of the foregoing restatement of the Charter. SIXTH: The name and address of the Corporation's current resident agent is as set forth in Article FOURTH of the foregoing restatement of the Charter. SEVENTH: There are nine Directors of the Corporation. The Directors currently in office are: Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson and Louis S. Sklar. 7 8 EIGHTH: The undersigned Vice President acknowledges these Articles of Restatement to be the corporate act of the Corporation and states that to the best of his or her knowledge, information and belief, the matters and facts set forth in these Articles with respect to authorization and approval are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, AIM INTERNATIONAL FUNDS, INC. has caused these Articles of Amendment to be executed in its name and on its behalf by its Vice President and witnessed by its Assistant Secretary on November 14, 1994. AIM INTERNATIONAL FUNDS, INC. Witness: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN - ------------------- --------------------- Assistant Secretary Vice President 8 EX-99.2.A 4 BY-LAWS OF REGISTRANT 1 EXHIBIT 2(a) AIM INTERNATIONAL FUNDS, INC. A MARYLAND CORPORATION BY-LAWS ARTICLE I STOCKHOLDERS Section 1. Time and Place of Meetings. Meetings of the stockholders of the Corporation need not be held except as required under the general laws of the State of Maryland, as the same may be amended from time to time. Meetings of the stockholders shall be held at places designated by the Board of Directors and set forth in the notice of the meeting. Section 2. Annual Meetings. If a meeting of the stockholders of the Corporation is required by the Investment Company Act of 1940, as amend, to take action with respect to the election of directors, then such matter shall be submitted to the stockholders at a special meeting called for such purpose, which shall be deemed the annual meeting of stockholders for that year. In years in which no such action by stockholders is so required, no annual meeting of stockholders need be held. Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the Chairman of the Board of Directors, if any, by the President or by a majority of the Board of Directors. In addition, such special meetings shall be called by the Secretary upon receipt of a request in writing, signed by stockholders entitled to cast at least 10% of all the votes entitled to be cast at the meeting, which states the purpose of the meeting and the matters proposed to be acted on at the meeting. Unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter which 1 2 is substantially the same as a matter voted on at a special meeting of the stockholders held during the preceding twelve (12) months. Section 4. Notice of Meeting of Stockholders. Written or printed notice of every meeting of stockholders, stating the time and place thereof (and the purpose of any special meeting), shall be given, not less than ten (10) days nor more than ninety (90) days before the date of the meeting, to each stockholder entitled to vote at the meeting and each other stockholder entitled to notice, by delivering such notice personally, or leaving such notice at each stockholder's residence or usual place of business, or by mailing such notice, postage prepaid, addressed to each stockholder at such stockholder's address as it appears upon the books of the Corporation. Each person who is entitled to notice of any meeting shall be deemed to have waived notice if present at the meeting in person or by proxy, or if such person signs a waiver of notice (either before or after the meeting) which is filed with the records of stockholders meetings. Section 5. Closing of Transfer Books, Record Dates. The Board of Directors may direct that the stock transfer books of the Corporation be closed for a stated period not exceeding twenty (20) days for the purpose of making any proper determination with respect to stockholders, including determining which stockholders are entitled to notice of and to vote at a meeting, receive a dividend or be allotted other rights. If such books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of providing for the closing of the stock transfer books, the Board of Directors may set a date, not more than ninety (90) days no less than ten (10) days preceding (a) the date of any meeting of stockholders, (b) any dividend payment date, or (c) any date for the allotment of rights, as a record date for the determination of the stockholders entitled to notice of and to vote at such meeting, or entitled to receive such dividends 2 3 or rights, as the case may be; and only stockholders of record on such date shall be entitled to notice of and to vote at such meeting, or to receive such dividends or rights, as the case may be. Section 6. Manner of Acting; Adjournment of Meetings. A majority of all votes cast at a meeting of stockholders at which a quorum is present shall be sufficient to approve any matter which properly comes before the meeting, unless otherwise provided by applicable law, the Articles of Incorporation or these By-Laws. If at any meeting of stockholders there shall be less than a quorum present, the stockholders present at such meeting may, without further notice, adjourn the meeting from time to time (but not more than 120 days after the original record date for such meeting) until a quorum is attained, but no business shall be transacted at any such adjourned meeting, except business which might been lawfully transacted had the meeting not been adjourned. Section 7. Voting and Inspectors. (a) At all meetings of stockholders, every stockholder of record entitled to vote may do so either in person or by written proxy signed by such stockholder or such stockholder's duly authorized attorney in fact. Unless a proxy provides otherwise, such proxy shall not be valid more than eleven (11) months after its date. (b) At any meeting of stockholders considering the election of directors, the Board of Directors prior to the convening of such meting may, or, if the Board has not so acted, the Chairman of the meeting may, appoint two (2) inspectors of election, who shall first subscribe an oath or affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall after the election certify the result of the vote taken. No candidate for election as a director shall be appointed to act as an inspector of election. (c) The chairman of the meeting may cause a vote by ballot to be taken with respect to any election or matter. 3 4 Section 8. Conduct of Stockholders Meetings. The meetings of the stockholders shall be presided over by the Chairman of the Board, or if the Chairman shall not be present or if there is no Chairman, by the President, or if the President shall not be present, by a Vice-President, or if no Vice-President is present, by a chairman elected for such purpose at the meeting. The Secretary of the Corporation, if present, shall act as Secretary of such meetings, or if the Secretary is not present, an Assistant Secretary of the Corporation shall so act, and if no Assistant Secretary is present, then the meeting shall elect a secretary for the meeting. Section 9. Validity of Proxies and Ballots. At every meeting of the stockholders, all proxies shall be received and maintained by and all ballots shall be received and canvassed by, the secretary of the meeting, who shall decide all questions concerning the qualification of voters, the validity of proxies, and the acceptance or rejection of votes, unless inspectors of election shall have been appointed, in which case the inspectors of election shall decide all such questions. ARTICLE II BOARD OF DIRECTORS Section 1. Number and Term of Office. The business and property of the Corporation shall be conducted and managed under the direction of a Board of Directors initially consisting of three (3) directors, which number may be increased or decreased as herein provided. Directors shall hold office until their respective successors have been duly elected and qualified. Directors need not be stockholders. Section 2. Increase or Decrease in Number of Directors. The Board of Directors, by the vote of a majority of the entire Board, may increase the number of directors to a number not exceeding fifteen (15), and may appoint directors to fill the vacancies created by any increase in the number of directors, and 4 5 such appointed directors shall hold office until their successors have been duly elected and qualify. The Board of Directors, by the vote of a majority of the entire Board, may decrease the number of directors to a number not less than three (3) or the number of stockholders, whichever is less, but any such decrease shall not affect the term of office of any director. Vacancies occurring other than by reason of any increase in the number of directors shall be filled as provided by the Maryland General Corporation Law. Section 3. Place of Meetings. The directors may hold their meetings and keep the books of the Corporation outside the State of Maryland, at any office or offices of the Corporation or at any other place as they may from time to time determine; and in the case of meetings, as shall be specified in the respective notices of such meetings. Section 4. Regular Meetings. Regular meetings of the Board of Directors shall be held at such time and on such notice, if any, as the directors may from time to time determine. Section 5. Special Meetings. Special meetings of the Board of Directors may be held from time to time upon call of the Chairman of the Board of Directors, if any, the President, or any two (2) or more of the directors, by oral, telegraphic or written notice duly given to each director not less than one (1) business day before such meeting or, if sent or mailed to each director, not less than three (3) business days before such meeting. Each director who is entitled to notice shall be deemed to have waived notice if such director is present at the meeting, or either before or after the meeting, such director signs a waiver of notice which is filed with the minutes of the meeting. Such notice or waiver of notice need not state the purpose or purposes of such meeting. Section 6. Quorum. One third (1/3) of the directors then in office (but in no event less than two (2) directors) shall constitute a quorum of the Board 5 6 of Directors for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those directors present may adjourn the meeting from time to time until a quorum shall have been attained. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by applicable law, the Articles of Incorporation or these By-Laws. Section 7. Telephonic Meetings. The members of the Board of Directors, or any committee of the Board of Directors, may participate in a meeting by means of a conference telephone call or similar communications equipment if all persons participating in such meeting can simultaneously hear each other, and participation in a meeting by these means constitutes presence in person at such meeting. Section 8. Executive Committee. The Board of Directors may appoint an Executive Committee consisting of two (2) or more directors. Between meetings of the Board of Directors, the Executive Committee, if any, shall have and may exercise any or all of the powers of the Board of Directors with respect to the management of the business and affairs of the Corporation, except (a) as otherwise provided by law and (b) the power to increase or decrease the size of, or fill vacancies on, the Board of Directors. The Executive Committee may determine its own rules of procedure, and may meet when and as the Executive Committee determines, or when directed by resolution of the Board of Directors. The presence of a majority of the Executive Committee shall constitute a quorum. The Board of Directors shall have the power at any time to change the members and powers of, to fill vacancies on, and to dissolve the Executive Committee. In the absence of any member of the Executive Committee, the members present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of such absent member. 6 7 Section 9. Other Committees. The Board of Directors may appoint other committees which shall in each case consist of such number of directors (not less than two (2)), which shall have and may exercise such powers as the Board may from time to time determine. A majority of all members of any such committee may determine its action, and the time and place of its meetings, unless the Board of Directors shall provide otherwise. The Board of Directors shall have the power at any time to change the members and powers of, to fill vacancies on, and to dissolve any such committee. In the absence of any member of such committee, the members present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of such absent member. Section 10. Informal Action by Directors. Except to the extent otherwise specifically prohibited by applicable law, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board or such committee, and such consent is filed with the minutes of proceedings of the Board or such committee. Section 11. Compensation of Directors. Directors shall be entitled to receive such compensation from the Corporation for their services as directors as the Board of Directors may from time to time determine. ARTICLE III OFFICERS Section 1. Executive Officers. The initial executive officers of the Corporation shall be elected by the Board of Directors as soon as practicable after the incorporation of the Corporation. The executive officers may include a Chairman of the Board, and shall include a President, one or more Vice Presidents (the number thereof to be determine by the Board of Directors), a Secretary and a Treasurer. The Chairman of the Board, if any, shall be selected from among the directors. The Board of Directors may also in its discretion 7 8 appoint Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers, agents and employees, who shall have such authority and perform such duties as the Board may determine. The Board of Directors may fill any vacancy which may occur in any office. Any two (2) offices, except those of President and Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument on behalf of the Corporation in more than one (1) capacity, if such instrument is required by law or by these By-Laws to be executed, acknowledged or verified by two (2) or more officers. Section 2. Term of Office. Unless otherwise specifically determined by the Board of Directors, the officers shall serve at the pleasure of the Board of Directors. If the Board of Directors in its judgment finds that the best interests of the Corporation will be served, the Board of Directors may remove any officer of the Corporation at any time with or without cause. Section 3. President. The President shall be the chief executive officer of the Corporation and, subject to the Board of Directors, shall generally control and manage the business and affairs of the Corporation. If there is no Chairman of the Board, or if the Chairman of the Board has been appointed but is absent, the President shall, if present, preside at all meetings of the stockholders and the Board of Directors. Section 4. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the stockholders and the Board of Directors, if the Chairman of the Board is present. The Chairman of the Board shall have such other powers and duties as shall be determined by the Board of Directors, and shall undertake such other assignments as may be requested by the President. Section 5. Other Officers. The Chairman of the Board or one or more Vice Presidents shall have and exercise such powers and duties of the President in the absence or inability to act of the President, as may be assigned to them, respectively, by the Board of Directors or, to the extent not so assigned, by the 8 9 President. In the absence or inability to act of the President, the powers and duties of the President not otherwise assigned by the Board of Directors or the President shall devolve upon the Chairman of the Board, or in the Chairman's absence, the Vice Presidents in the order of their election. Section 6. Secretary. The Secretary shall have custody of the seal of the Corporation, and shall keep the minutes of the meetings of the stockholders, Board of Directors and any committees thereof, and shall issue all notices of the Corporation. The Secretary shall have charge of the stock records and such other books and papers as the Board may direct, and shall perform such other duties as may be incidental to the office or which are assigned by the Board of Directors. The Secretary shall also keep or cause to be kept a stock book, which may be maintained by means of computer systems, containing the names, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number and class or series of any class of shares of stock held by them, respectively, and the dates when they became the record owners thereof, and such book shall be open for inspection as prescribed by the laws of the State of Maryland. Section 7. Treasurer. The Treasurer shall have the care and custody of the funds and securities of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks or other depositories, subject to withdrawal in such manner as these By-Laws or the Board of Directors may determine. The Treasurer shall, if required by the Board of Directors, give such bond for the faithful discharge of duties in such form as the Board of Directors may require. ARTICLE IV STOCK Section 1. Stock Certificates. Each stockholder of the Corporation shall be entitled to a certificate or certificates for the full number of shares of 9 10 each class or series of stock of the Corporation owned by such stockholder, in such form as the Board of Directors may from time to time determine. Section 2. Transfer of Shares. Shares of the Corporation shall be transferable on the books of the Corporation by the holder(s) thereof, in person or by such holder's duly authorized attorney or legal representative, upon surrender and cancellation of certificates, if any, for the same number of shares, duly endorsed or accompanied by proper instruments of assignment and transfer, with such proof of the authenticity of the signature(s) as the Corporation or its agents may reasonably require. In the case of shares not represented by certificates, the same or similar requirements may be imposed by the Board of Directors. Section 3. Stock Ledgers. The stock ledgers of the Corporation, containing the names and addresses of the stockholders and the number of shares held by them, respectively, shall be kept at the principal offices of the Corporation, or if the Corporation has appointed a transfer agent, at the offices of such transfer agent. Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors may determine the conditions upon which a new stock certificate of any class or series may be issued in place of a certificate which is alleged to have been lost, stolen or destroyed. The Board of Directors may in its discretion require the owner of such certificate to give bond, with sufficient surety to the Corporation and the transfer agent, if any, to indemnify the Corporation and such transfer agent against any and all losses or claims which may arise by reason of the issuance of a replacement certificate. 10 11 ARTICLE V CORPORATE SEAL The Board of Directors may provide for a suitable corporate seal, in such form and bearing such inscriptions as it may determine. In lieu of fixing the Corporation's seal to a document, it is sufficient to meet the requirements of any law, rule or regulation relating to a corporate seal to place the word "(seal)" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation. ARTICLE VI FISCAL YEAR The fiscal year of the Corporation shall be determined by the Board of Directors. ARTICLE VII INDEMNIFICATION AND ADVANCES FOR EXPENSES Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify its directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify its officers to the same extent as its directors and to such further extent as is consistent with law. The Corporation shall indemnify its directors and officers who while serving as directors or officers also serve at the request of the Corporation as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the fullest extent consistent with law. The indemnification and other rights provided for by this Article shall continue as to a person who has ceased to be a director or officer, and shall inure to the benefit of the heirs, executors and administrators of such a person. This Article shall not protect any such person against any liability to the Corporation or any stockholder thereof to which such person would otherwise 11 12 be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office ("disabling conduct"). Section 2. Advances. Any current or former director or officer of the Corporation seeking indemnification within the scope of this Article shall be entitled to advance from the Corporation for payment of the reasonable expenses incurred in connection with the matter as to which indemnification is sought, in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The person seeking indemnification shall provide to the Corporation a written affirmation of his or her good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met and a written undertaking to repay any such advance if it should ultimately be determined that the requisite standard of conduct has not been met. In addition, at least one of the following conditions must be satisfied: (a) the person seeking indemnification shall provide security in form and amount acceptable to the Corporation for the foregoing undertaking, (b) the Corporation shall be insured against losses arising by reason of the advance, or (c) a majority of a quorum of directors of the Corporation who are neither "interested persons," as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party directors"), or independent legal counsel in a written opinion, shall have determined, based on a review of facts readily available to the Corporation at the time the advance is proposed to be made, that there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. Section 3. Procedure. At the request of any person claiming indemnification under this Article, the Board of Directors shall determine, or cause to be determined, in a manner consistent with the Maryland General Corporation Law, whether the standards required by this Article have been met. Indemnification shall be made only following: (a) a final decision on the merits by a court or other body before whom the proceeding was brought that the person 12 13 to be indemnified was not liable by reason of disabling conduct, or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the person to be indemnified was not liable by reason of disabling conduct by, (i) the vote of a majority of a quorum of disinterested non-party directors, or (ii) an independent legal counsel in a written opinion. Section 4. Indemnification of Employees and Agents. Employees and agents who are not officers or directors of the Corporation may be indemnified, and reasonable expenses may be advanced to such employees or agents, as may be provided by action of the Board of Directors or by contract, subject to any limitations imposed by the Investment Company Act of 1940, as amended. Section 5. Other Rights. The Board of Directors may make further provision consistent with law for indemnification and advancement of expenses to directors, officers, employees and agents by resolution, agreement or otherwise. The indemnification provided for by this Article shall not be deemed exclusive of any other right, with respect to indemnification or otherwise, to which those seeking indemnification may be entitled under any insurance, other agreement, resolution of stockholders or disinterested directors, or otherwise. Section 6. Subsequent Changes to Law. References in this Article are to the Maryland General Corporation Law and to the Investment Company Act of 1940 as from time to time amended. No amendment of these By-Laws shall affect any right of any person under this Article based on any event, omission or proceeding occurring prior to such amendment. ARTICLE VIII AMENDMENT OF BY-LAWS These By-Laws may be altered, amended or repealed by the Board of Directors. 13 EX-99.2.B 5 FIRST AMENDMENT TO BY-LAWS OF REGISTRANT 1 EXHIBIT 2(b) AIM INTERNATIONAL FUNDS, INC. FIRST AMENDMENT, DATED MARCH 14, 1995, TO BY-LAWS Article I, Section 7(a) of the By-Laws of AIM International Funds, Inc. is hereby amended to read in full as follows: "At all meetings of the stockholders, every stockholder of record entitled to vote thereat shall be entitled to vote at such meeting either in person or by written proxy signed by the stockholder or by his duly authorized attorney in fact. A stockholder may duly authorize such attorney in fact through written, electronic, telephonic, computerized, facsimile, telecommunication, telex or oral communication or by any other form of communication. Unless a proxy provides otherwise, such proxy is not valid more than eleven months after its date." EX-99.4.B 6 SPECIMEN CERTIFICATES 1 EXHIBIT 4(b) No. Shares ---------- AIM INTERNATIONAL EQUITY FUND - CLASS A SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 10 2 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006117 2 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 3 No. Shares ---------- AIM INTERNATIONAL EQUITY FUND - CLASS B SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 50 8 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 1529 4 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 5 No. Shares ---------- AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS A SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 20 1 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006128 6 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 7 No. Shares ---------- AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS B SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 60 7 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006150 8 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 9 No. Shares ---------- AIM GLOBAL GROWTH FUND - CLASS A SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 30 0 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006121 10 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 11 No. Shares ---------- AIM GLOBAL GROWTH FUND - CLASS B SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 70 6 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006151 12 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 13 No. Shares ---------- AIM GLOBAL INCOME FUND - CLASS A SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 40 9 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006128 14 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. 15 No. Shares ---------- AIM GLOBAL INCOME FUND - CLASS B SHARES OF AIM INTERNATIONAL FUNDS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND SEE REVERSE SIDE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT: ********************* [VOID] * CUSIP 008882 80 5 * ********************* Is the holder of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $.001 PER SHARE Shares of Common Stock of the above named Portfolio and Class of AIM INTERNATIONAL FUNDS, INC. are transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated Countersigned: A I M FUND SERVICES, INC. /s/ ROBERT H. GRAHAM ) Transfer Agent President ) (Houston, Texas) [SEAL] ) FOR THE DIRECTORS /s/ CAROL F. RELIHAN ) Secretary ) By: ------------------------ Authorized Signature 006151 16 The Corporation will furnish to any stockholder upon request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption of the stock or each class which the Corporation is authorized to issue, differences in the relative rights and preferences between the shares of each series to the extent they have been set, and authority of the Board of Directors to set the relative rights and preferences of each series. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to application laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT- Custodian under Uniform Gifts ------------- --------------- (Cust) (Minor) to Minors Act -------------------------- (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer --------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ***************************************** unto * * ***************************************** -------------------------- Please print or type name and address including zip code of assignee. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- shares - ------------------------------------------------------------------------ of common stock represented by the within certificate, and hereby irrevocably constitute and appoint attorney - ---------------------------------------------------------------------- to transfer the said shares on the books of the within mentioned Corporation with full power of substitution in the premises. Dated ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature guaranteed: - ------------------------------------------------------------------------------- Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission, 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 New York Stock Exchange Medallion Signature Program, provided that in either event, the amount of transaction involved does not exceed the surety coverage amount indicated on the medallion. NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. EX-99.5.B 7 INVESTMENT ADVISORY AGREEMENT 1 EXHIBIT 5(b) AIM INTERNATIONAL FUNDS, INC. (AIM INTERNATIONAL EQUITY FUND SERIES) INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT is made as of the 18th day of October, 1993, by and between AIM International Funds, Inc., a Maryland corporation (the "Company"), and A I M Advisors, Inc., a Delaware corporation (the "Advisor"). RECITALS WHEREAS, the Company is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end diversified management investment company; and 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; and WHEREAS, the Company's Articles of Incorporation authorize the Board of Directors of the Company to classify or reclassify authorized but unissued shares of the Company and, as of the date of this Agreement, the Company's Board of Directors has authorized the issuance of one (1) series of shares representing interests in a single investment portfolio: AIM International Equity Fund (such portfolio and any other portfolios hereafter added to the Company being referred to collectively herein as the "Portfolios"); and WHEREAS, the Company and the Advisor desire to enter into an agreement to provide for management and investment advisory services to the Company's AIM International Equity Fund series (the "Fund") upon the terms and conditions hereinafter set forth; and WHEREAS, the Company and the Advisor further contemplate that certain duties of the Advisor will be delegated to Nationale-Nederlanden International Investment Advisors B.V. ("NNIA"), pursuant to a sub-advisory agreement; 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 hereto agree as follows: 1. Advisory Services. The Advisor shall act as investment advisor for the Fund and shall, in such capacity, supervise all aspects of the Fund's operations, including the investment and reinvestment of the cash, securities or other properties comprising the Fund's assets, subject at all times to the policies and control of the Company's Board of Directors. The Advisor shall give the Company and the Fund the benefit of its best judgment, efforts and facilities in rendering its services as investment advisor hereunder. 2. Investment Analysis and Implementation. In carrying out its duties under paragraph 1 hereof, the Advisor shall: (a) supervise all aspects of the operations of the Fund; (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 Fund, and whether concerning the individual issuers whose securities are included in the assets of the Fund or the activities in which such issuers engage, or with respect to securities which the Advisor considers desirable for inclusion in the Fund; (c) determine which issuers and securities shall be represented in the Fund's investment portfolio and regularly report thereon to the Company's Board of Directors; and (d) formulate and implement continuing programs for the purchases and sales of the securities of such issuers, and regularly report thereon to the Company's Board of Directors; and take, on behalf of the Company and the Fund, all actions which appear to the Company and the Fund 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 Fund. 3. Engagement of Sub-Advisor. Subject to the approval of the Board of Directors of the Company and the shareholders of the Fund, the Advisor may, pursuant to the Sub-Advisory Agreement, of even date herewith, by and among the Company, the Advisor and NNIA (the "Sub-Advisory Agreement"), engage NNIA as investment sub- -1- 2 advisor to the Fund. In such capacity NNIA shall provide the Advisor with such economic research and securities analyses as the Advisor may from time to time consider necessary or advisable in connection with the Advisor's performance of its duties hereunder. NNIA's duties under the Sub-Advisory Agreement shall consist of reviewing the Fund's assets and investments, consulting with the Advisor and making recommendations as to (a) which securities should be purchased, sold or exchanged by the Fund, (b) the appropriate portion of the Fund's assets to be invested in particular countries or geographic regions, and (c) foreign (non-United States) currency matters, the use of foreign exchange contracts, and the manner in which voting rights, rights to consent to corporate action and other rights pertaining to the Fund's investments should be exercised. Nevertheless, all final investment decisions for the Fund, and the ordering or directing of execution of securities transactions on behalf of the Fund, shall solely be the responsibility of the Advisor. 4. Control by Board of Directors. Any investment program undertaken by the Advisor pursuant to this Agreement, as well as any other activities undertaken by the Advisor on behalf of the Fund, shall at all time be subject to any directives of the Board of Directors of the Company. 5. Compliance with Applicable Requirements. In performing its duties hereunder, the Advisor shall at all times conform to: (a) all applicable provisions of the 1940 Act and the Advisers Act, and any rules and regulations adopted thereunder; (b) the provisions of the registration statement of the Company relating to the Fund, 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 Articles of Incorporation of the Company, as the same may be amended from time to time; (d) the provisions of the By-Laws of the Company, as the same may be amended from time to time; and (e) any other applicable provisions of state, federal or foreign law. 6. Broker-Dealer Relationships. The Advisor shall be responsible for all decisions to buy and sell securities for the Fund, broker-dealer selection, and negotiation of brokerage commission rates. The Advisor's primary consideration in effecting a security transaction shall be to obtain execution at the most favorable price. In selecting a broker-dealer to execute each particular transaction, the Advisor shall take the following into consideration: the best net price available; the reliability, integrity and financial condition of the broker-dealer; the size of and difficulty in executing the order; and the value of the expected contribution of the broker-dealer to the investment performance of the Fund on a continuing basis. Accordingly, the price to the Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered. Subject to such policies as the Board of Directors may from time to time determine, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Advisor an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Advisor or NNIA with respect to the Fund, other Portfolios of the Company, and 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 Fund to brokers and dealers who also provide research or statistical material, or other services to the Fund, the Advisor, or NNIA. Such allocation shall be in such amounts and proportions as the Advisor shall determine, and the Advisor shall report on said allocations regularly to the Board of Directors of the Company, indicating the brokers to whom such allocations have been made and the basis therefor. In making decisions regarding broker-dealer relationships, the Advisor may take into consideration the recommendations of NNIA, and may take into consideration any research services provided to NNIA by broker-dealers. 7. Compensation. The Company shall pay the Advisor, as compensation for services rendered hereunder, an annual fee, payable monthly, based upon the following average daily net assets of the Fund:
NET ASSETS RATE ---------- ---- First $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.95% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
-2- 3 The average daily net assets of the Fund shall be determined in the manner set forth in the Company's Articles of Incorporation and registration statement relating to the Fund, as amended from time to time. For so long as the Sub-Advisory Agreement is in effect, the Company acknowledges on behalf of the Fund that the Advisor will pay to NNIA, as compensation for acting as Sub-Advisor to the Fund, the fee(s) specified in the Sub-Advisory Agreement. 8. Additional Services. Upon the request of the Company's Board of Directors, the Advisor may perform (or arrange for the performance of) certain accounting, shareholder servicing or other administrative services on behalf of the Fund which are not required by this Agreement. Such services will be performed on behalf of the Fund, and the Advisor may receive from the Fund such reimbursement for costs or reasonable compensation for such services as may be agreed upon by the Advisor and the Company's Board of Directors, based on a finding by the Board of Directors that the provision of such services by the Advisor is in the best interests of the Fund and its shareholders. Payment or assumption by the Advisor of any Fund expense that the Advisor is not otherwise required to pay or assume under this Agreement shall not relieve the Advisor of any of its obligations to the Fund nor obligate the Advisor to pay or assume any similar Fund expense on any subsequent occasion. Such additional services may include, but are not limited to: (a) the services of a principal financial officer of the Company (including related office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Company and the Fund, including the review and calculation of daily net asset value and the preparation of tax returns; and the services (including related office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer; (b) the services of staff to respond to shareholder inquiries concerning the status of their accounts; providing assistance to shareholders in exchanges among the mutual funds managed or advised by the Advisor; changing account designations or changing addresses; assisting in the purchase or redemption of Fund shares; supervising the operations of the custodian, transfer agent(s) or dividend disbursing agent(s) for the Fund; or otherwise providing services to shareholders of the Fund; and (c) such other administrative services as may by furnished from time to time by the Advisor to the Company or the Fund at the request of the Company's Board of Directors. 9. Expenses of the Fund. All of the ordinary business expenses incurred in the operations of the Fund and the offering of its shares shall be borne by the Fund unless otherwise specifically provided in this Agreement. These expenses borne by the Fund include but are not limited to brokerage commissions, taxes, legal, accounting, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer agent and shareholder service agent costs, expenses of issue, sale, redemption and repurchase of Fund shares, expenses of registering and qualifying shares for sale, expenses relating to directors and shareholders meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Company on behalf of the Fund in connection with membership in investment company organizations and the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders. 10. Expense Limitation. If, for any fiscal year of the Company, the total of all ordinary business expenses of the Fund, including all investment advisory fees (and sub-advisory fees), but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses, such as litigation costs, would exceed the applicable expense limitations imposed by state securities regulations in any state in which the Fund's shares are qualified for sale, as such limitations may be raised or lowered from time to time, the aggregate of all such investment advisory fees shall be reduced by the amount of such excess. The amount of any such reduction to be borne by the Advisor shall be deducted from the monthly investment advisory fee otherwise payable to the Advisor during such fiscal year. If required pursuant to such state securities regulations, the Advisor will, not later than the last day of the first month of the next succeeding fiscal year, reimburse the Portfolios for any such annual operating expenses (after reduction of all investment advisory fees in excess of such limitation). For the purposes of this paragraph, the term "fiscal year" shall exclude the portion of the current fiscal year which shall have elapsed prior to the date hereof and shall include the portion of the then current fiscal year which shall have elapsed at the date of termination of this Agreement. The application of expense limitations shall be applied to each Portfolio of the Company separately, unless the laws or regulations of any state shall require that the expense limitations be imposed with respect to the Company as a whole. 11. Non-Exclusivity. The services of the Advisor to the Company and the Fund are not to be deemed exclusive, and the Advisor shall be free to render investment advisory and administrative or other services to others -3- 4 (including other investment companies) and to engage in other activities. It is understood and agreed that officers or directors of the Advisor may serve as officers or directors of the Company, and that officers or directors of the Company may serve as officers or directors of the Advisor to the extent permitted by law; and that officers and directors of the Advisor are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors or trustees of any other firm or trust, including other investment advisory companies. 12. Term and Approval. This Agreement shall become effective if approved by the shareholders of the Fund, and if so approved, this Agreement shall thereafter continue in force and effect until June 30, 1994, and may be continued from year to year thereafter, provided that the continuation of the Agreement is specifically approved at least annually: (a)(i) by the Company's Board of Directors or (ii) by the vote of "a majority of the outstanding voting securities" of the Fund (as defined under Section 2(a)(42) of the 1940 Act); and (b) by the affirmative vote of a majority of the directors of the Company who are not parties to this Agreement or "interested persons" (as defined under the 1940 Act) of a party to this Agreement (other than as Company directors), by votes cast in person at a meeting specifically called for such purpose. 13. Termination. This Agreement may be terminated as to the Fund at any time, without the payment of any penalty, by vote of the Company's Board of Directors or by vote of a majority of the Fund's outstanding voting securities, or by the Advisor, on sixty (60) days' written notice to the other party. The notice herein provided for may be waived by the party entitled to receipt thereof. This Agreement shall automatically terminate in the event of its "assignment" (as defined under Section 2(a)(4) of the Act). 14. Liability of Advisor and Indemnification. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Advisor or any of its officers, directors or employees, the Advisor shall not be subject to liability to the Company, the Fund or any shareholder of the Fund 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. 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 officer, director or employee of the Advisor, the Company hereby agrees to indemnify and hold the Advisor harmless from and against all claims, actions, suits, and proceedings at law or in equity, whether brought or asserted by a private party or a governmental agency, instrumentality or entity of any kind, relating to the sale, purchase, pledge of, advertisement of, or solicitation of sales or purchases of any security (whether of the Fund or otherwise) by the Company, its officers, directors, employees or agents in alleged violation of applicable federal, state or foreign laws, rules or regulations. 15. Notices. Any notices under this Agreement shall be in writing, addressed and delivered by hand, telecopied or mailed, postage prepaid, to the other party at such address as such other party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Company and Fund, and that of the Advisor, shall be Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046. 16. Questions of Interpretation. Questions 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 Courts of the United States, or in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission issued pursuant to said Acts. In addition, where the effect of a requirement of the 1940 Act or the Advisers Act reflected in any provision of the Agreement is revised by rule, regulation or order of the Securities and Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order. 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. 17. License Agreement. The Company shall be entitled to use the name "AIM International Equity Fund" to designate a series of its shares for only so long as A I M Advisors, Inc. serves as investment manager or advisor to the Fund. -4- 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their respective duly authorized officers on the day and year first written above. AIM INTERNATIONAL FUNDS, INC. (a Maryland corporation) on behalf of its AIM INTERNATIONAL EQUITY FUND SERIES Attest: /s/ NANCY L. MARTIN By: /s/ CHARLES T. BAUER - ------------------------- ------------------------------------- Assistant Secretary President A I M ADVISORS, INC. Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM - ------------------------- ------------------------------------- Assistant Secretary President -5- EX-99.5.C 8 MASTER INVESTMENT ADVISORY AGREEMENT 1 EXHIBIT 5(c) AIM INTERNATIONAL FUNDS, INC. MASTER INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT is made this 1st day of July, 1994, by and between AIM International Funds, Inc., a Maryland corporation (the "Company") and A I M Advisors, Inc., a Delaware corporation (the "Advisor"). RECITALS WHEREAS, the Company is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end, diversified management investment company, consisting of multiple series of investment portfolios; WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), as an investment advisor and engages in the business of acting as an investment advisor; WHEREAS, the Company's charter authorizes the Board of Directors of the Company to classify or reclassify authorized but unissued shares of the Company and, as of the date of this Agreement, the Company's Board of Directors has authorized the issuance of four series of shares representing interests in four investment portfolios: AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund; and WHEREAS, the Company and the Advisor desire to enter into an agreement to provide for investment advisory services to the Company's AIM Global Aggressive Growth Fund series, AIM Global Growth Fund series and AIM Global Income Fund series (such series and any other series hereafter added to the Company being referred to individually as a "Fund", or collectively herein as 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 whereof is hereby acknowledged, the parties hereto agree as follows: 1. Advisory Services. The Advisor shall act as investment advisor for each Fund and shall, in such capacity, supervise all aspects of the Funds' operations, including the investment and reinvestment of the cash, securities or other properties comprising the Funds, subject at all times to the policies and control of the Company's Board of Directors. The Advisor shall give the Company and the Funds the benefit of its best judgment, efforts and facilities in rendering its services as investment advisor. 2. Investment Analysis and Implementation. In carrying out its obligations under Section I hereof, the Advisor shall: (a) supervise all aspects of the operations of the Funds; -1- 2 (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 Funds or the activities in which such issuers engage, or with respect to securities which the Advisor considers desirable for inclusion in the Funds; (c) determine which issuers and securities shall be represented in the Funds and regularly report thereon to the Company's Board of Directors; and (d) formulate and implement continuing programs for the purchases and sales of the securities of such issuers and regularly report thereon to the Company's Board of Directors; and take, on behalf of the Company and the Funds, all actions which appear to the Company and the Funds necessary to carry into effect such purchase and sale programs and supervisory functions as aforesaid, including but not limited to the placing of orders for the purchase and sale of securities of the Funds. 3. Delegation of Responsibilities. Subject to the approval of the Board of Directors and the shareholders of the Funds, the Advisor may delegate to a Sub-Advisor certain of its duties enumerated in Section 2 hereof, provided that the Advisor shall continue to supervise the performance of any such Sub-Advisor. 4. Control by Board of Directors. Any investment program undertaken by the Advisor pursuant to this Agreement, as well as any other activities undertaken by the Advisor on behalf of the Funds, shall at all times be subject to any directives of the Board of Directors of the Company. 5. Compliance with Applicable Requirements. In carrying out its obligations under this Agreement, the Advisor shall at all times conform to: (a) all applicable provisions of the 1940 Act and the Advisers Act and any rules and regulations adopted thereunder; (b) the provisions of the registration statement of the Company, as the same may be amended from time to time, under the Securities Act of 1933 and the 1940 Act; (c) the provisions of the corporate charter of the Company, as the same may be amended from time to time; (d) the provisions of the by-laws of the Company, as the same may be amended from time to time; and (e) any other applicable provisions of state or federal law. 6. Broker-Dealer Relationships. The Advisor is responsible for decisions to buy and sell securities for the Funds, broker-dealer selection, and negotiation of brokerage commission -2- 3 rates. The Advisor's primary consideration in effecting a security transaction will be execution at the most favorable price. In selecting a broker-dealer to execute each particular transaction, the Advisor will take the following into consideration: the best net price available; the reliability, integrity and financial condition of the broker-dealer, the size of and difficulty in executing the order, and the value of the expected contribution of the broker-dealer to the investment performance of the Funds on a continuing basis. Accordingly, the price to the Funds in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered. Subject to such policies as the Board of Directors may from time to time determine, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Funds to pay a broker or dealer that provides brokerage and research services to the Advisor an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's overall responsibilities with respect to the Funds, and to other clients of the Advisor as to which the Advisor exercises investment discretion. The Advisor is further authorized to allocate the orders placed by it on behalf of the Funds to such brokers and dealers who also provide research or statistical material, or other services to the Funds, to the Advisor, or to any Sub-Advisor. Such allocation shall be in such amounts and proportions as the Advisor shall determine and the Advisor will report on said allocations regularly to the Board of Directors of the Company indicating the brokers to whom such allocations have been made and the basis therefor. In making decisions regarding broker-dealer relationships, the Advisor may take into consideration the recommendations of any Sub-Advisor appointed to provide investment research or advisory services in connection with the Funds, and may take into consideration any research services provided to such Sub-Advisor by broker-dealers. 7. Compensation. The Company shall pay the Advisor as compensation for services rendered hereunder an annual fee, payable monthly, as set forth in Appendix A to this Agreement. The Company acknowledges that the Advisor may from time to time pay a fee to any sub-advisor engaged pursuant to Section 3 of this Agreement, according to a fee schedule set forth in the applicable sub-advisory agreement. The average daily net asset value of the Funds shall be determined in the manner set forth in the corporate charter and registration statement of the Funds, as amended from time to time. 8. Additional Services. Upon the request of the Company's Board of Directors, the Advisor may perform (or arrange for the performance of) certain accounting, shareholder servicing or other administrative services on behalf of the Funds which are not required by this Agreement. Such services will be performed on behalf of the Funds and the Advisor may receive from the Funds such reimbursement for costs or reasonable compensation for such services as may be agreed upon between the Advisor and the Company's Board of Directors based on a finding by the Board of Directors that the provision of such services by the Advisor is in the best interests of the Funds and their shareholders. Payment or assumption by the Advisor of any Fund expense that the Advisor is not otherwise required to pay or assume under this Agreement shall not relieve the Advisor of any of its obligations to the Funds nor obligate the Advisor to pay or -3- 4 assume any similar Fund expense on any subsequent occasions. Such services may include, but are not limited to: (a) the services of a principal financial officer of the Company (including applicable office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Company and the Funds, including the review and calculation of daily net asset value and the preparation of tax returns; the services (including applicable office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer; (b) the services of staff to respond to shareholder inquiries concerning the status of their accounts; providing assistance to shareholders in exchanges among the mutual funds managed or advised by the Advisor; changing account designations or changing addresses; assisting in the purchase or redemption of shares; supervising the operations of the custodian, transfer agent(s) or dividend disbursing agent(s) for the Funds; or otherwise providing services to shareholders of the Funds; and (c) such other administrative services as may be furnished from time to time by the Advisor to the Company or the Funds at the request of the Company's Board of Directors. 9. Expenses of the Funds. All of the ordinary business expenses incurred in the operations of the Funds and the offering of their shares shall be borne by the Funds unless specifically provided otherwise in this Agreement. These expenses borne by the Funds include but are not limited to brokerage commissions, taxes, legal, auditing, or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to directors and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Company on behalf of the Funds in connection with membership in investment company organizations and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders. 10. Expense Limitation. If, for any fiscal year, the total of all ordinary business expenses of the Funds, including all investment advisory fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses, such as litigation, would exceed the applicable expense limitations imposed by state securities regulations in any state in which the Funds' shares are qualified for sale, as such limitations may be raised or lowered from time to time, the aggregate of all such investment advisory fees shall be reduced by the amount of such excess. The amount of any such reduction to be borne by the Advisor shall be deducted from the monthly investment advisory fee otherwise payable to the Advisor during such fiscal year. If required pursuant to such state securities regulations, the Advisor will, not later than the last day of the first month of the next succeeding fiscal year, reimburse the Funds for any such annual operating expenses (after reduction of all investment advisory fees in excess of such limitation). For the purposes of this paragraph, the term "fiscal year" shall exclude the portion of the current fiscal year which shall have elapsed prior to the date hereof and shall include the portion of the then current fiscal year which shall have elapsed at the date of termination of this Agreement. The application of expense limitations shall be applied to each Fund of the Company -4- 5 separately unless the laws or regulations of any state shall require that the expense limitations be imposed with respect to the Company as a whole. 11. Non-Exclusivity. The services of the Advisor to the Company and the Funds are not to be deemed to be exclusive, and the Advisor shall be free to render investment advisory and administrative or other services to others (including other investment companies) and to engage in other activities. It is understood and agreed that officers or directors of the Advisor may serve as officers or directors of the Company, and that officers or directors of the Company may serve as officers or directors of the Advisor to the extent permitted by law; and that the officers and directors of the Advisor are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors or trustees of any other firm or trust, including other investment advisory companies. 12. Term and Approval. This Agreement shall become effective if approved by the shareholders of the Funds, and if so approved, this Agreement shall thereafter continue in force and effect until June 30, 1996, and may be continued from year to year thereafter, provided that the continuation of the Agreement is specifically approved at least annually: (a) (i) by the Company's Board of Directors or (ii) by the vote of "a majority of the outstanding voting securities" of the Funds (as defined in Section 2(a)(42) of the 1940 Act); and (b) by the affirmative vote of a majority of the directors who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of a party to this Agreement (other than as Company directors), by votes cast in person at a meeting specifically called for such purpose. 13. Termination. This Agreement may be terminated as to the Funds at any time, without the payment of any penalty, by vote of the Company's Board of Directors or by vote of a majority of the Funds' outstanding voting securities, or by the Advisor, on sixty (60) days' written notice to the other party. The notice provided for herein may be waived by either party. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for purposes of this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act. 14. Liability of Advisor and Indemnification. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Advisor or any of its officers, directors or employees, the Advisor shall not be subject to liability to the Company or to the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 15. Notices. Any notices under this Agreement shall be in writing, addressed and delivered or mailed postage paid to the other party at such address as such other party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Company and that of the Advisor shall be 11 Greenway Plaza, Suite 1919, Houston, Texas, 77046. -5- 6 16. Questions of Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act or the Advisers Act shall be resolved by reference to such term or provision of the 1940 Act or the Advisers Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission issued pursuant to said 1940 Act. In addition, where the effect of a requirement of the Acts reflected in any provision of the Agreement is revised by rule, regulation or order of the Securities and Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order. 17. License Agreement. The Company shall be entitled to use the names "AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund" to designate its classes of shares only so long as A I M Advisors, Inc. serves as investment manager or advisor to the Funds. 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 International Funds, Inc. Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM - ------------------------ ----------------------- Assistant Secretary President (SEAL) A I M Advisors, Inc. Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM - ------------------------ ----------------------- Assistant Secretary President (SEAL) -6- 7 APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT OF AIM INTERNATIONAL FUNDS, INC. The Company shall pay the Advisor as full compensation for all services rendered and all facilities furnished hereunder, a management fee for each Fund by applying the following annual rates to the average daily net assets of each Fund for the calendar year, computed in the manner used for the determination of the offering price of shares of each Fund. AIM GLOBAL AGGRESSIVE GROWTH FUND
Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.90% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.85%
AIM GLOBAL GROWTH FUND
Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.85% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.80%
AIM GLOBAL INCOME FUND
Net Assets Annual Rate ---------- ----------- First $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.70% Over $1 billion . . . . . . . . . . . . . . . . . . . . . . 0.65%
-7- EX-99.6.A.3 9 MASTER DISTRIBUTION AGREEMENT 1 EXHIBIT 6(a)(3) MASTER DISTRIBUTION AGREEMENT BETWEEN AIM INTERNATIONAL FUNDS, INC. (CLASS A SHARES) AND A I M DISTRIBUTORS, INC. THIS AGREEMENT made as of the 10th day of September, 1994, by and between AIM INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Company"), with respect to the series of shares of its common stock set forth on Appendix A to this agreement (the "Portfolios") and the shares, other than the Class B shares, representing the Portfolios (hereinafter referred to as the "Class A Shares") and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor"). W I T N E S S E T H: In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows: FIRST: The Company on behalf of the Class A Shares hereby appoints the Distributor as its exclusive agent for the sale of the Class A Shares to the public through investment dealers in the United States and throughout the world. SECOND: The Company shall not sell any Class A Shares except through the Distributor and under the terms and conditions set forth in paragraph FOURTH below. Notwithstanding the provisions of the foregoing sentence, however: (A) the Company may issue Class A Shares to any other investment company or personal holding company, or to the shareholders thereof, in exchange for all or a majority of the shares or assets of any such company; and (B) the Company may issue Class A Shares at their net asset value in connection with certain classes of transactions or to certain categories of persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), provided that any such category is specified in the then current prospectus of the applicable Class A Shares. THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the Class A Shares and agrees that it will use its best efforts to sell such shares; provided, however, that: (A) the Distributor may, and when requested by the Company on behalf of the Class A Shares 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 -1- 2 (B) the Company may withdraw the offering of the Class A Shares (i) at any time with the consent of the Distributor, or (ii) without such consent when so required by the provisions of any statute or of any order, rule or regulation of any governmental body having jurisdiction. It is mutually understood and agreed that the Distributor does not undertake to sell any specific amount of the Class A Shares. The Company shall have the right to specify minimum amounts for initial and subsequent orders for the purchase of Class A 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, may reflect scheduled variations in, or the elimination of, sales charges on sales 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 uniformly to all offerees in the class specified. (B) The Portfolios shall allow directly to investment dealers 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 to investment dealers and the total sales charges included in the offering price shall be paid to the Distributor. (C) No provision of this Agreement shall be deemed to prohibit any payments by a Portfolio to the Distributor or by a Portfolio or the Distributor to investment dealers through whom the Class A Shares are sold 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. FIFTH: The Distributor shall act as agent of the Company on behalf of each Portfolio in connection with the sale and repurchase of Class A Shares. Except with respect to such sales and repurchases, the Distributor shall act as principal in all matters relating to the promotion of the sale of Class A Shares and shall enter into all of its own engagements, agreements and contracts as principal on its own account. The Distributor shall enter into Selected Dealer Agreements with investment dealers selected by the Distributor, authorizing such investment dealers to offer and sell Class A Shares to the public upon the terms and conditions set forth therein, which shall not be inconsistent with the provisions of this Agreement. Each Selected Dealer Agreement shall provide that the investment dealer shall act as a principal, and not as an agent, of the Company on behalf of the Portfolios. SIXTH: The Portfolios shall bear: (A) the expenses of qualification of Class A 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 -2- 3 (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 may be reimbursed for all or a portion of such expenses, or may receive reasonable compensation for distribution related services, to the extent permitted by a distribution plan adopted by the Company on behalf of the Portfolios pursuant to Rule 12b-1 under the 1940 Act. EIGHTH: The Distributor will accept orders for the purchase of Class A Shares only to the extent of purchase orders actually received and not in excess of such orders, and it will not avail itself of any opportunity of making a profit by expediting or withholding orders. It is mutually understood and agreed that the Company may reject purchase orders where, in the judgment of the Company, such rejection is in the best interest of the Company. NINTH: The Company, on behalf of the Portfolios, and the Distributor shall each comply with all applicable provisions of the 1940 Act, the Securities Act of 1933 and of all other federal and state laws, rules and regulations governing the issuance and sale of Class A Shares. 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 -3- 4 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 Articles of Incorporation, or to any applicable statute or regulation. TWELFTH: This Agreement shall become effective at the close of business on the date hereof, shall continue in force and effect until June 30, 1996, and shall continue in force and effect from year to year thereafter, provided, that such continuance is specifically approved at least annually (a)(i) by the Board of Directors of the Company or (ii) by the vote of a majority of the 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 directors who are not parties to this Agreement or "interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a meeting called for such purpose. THIRTEENTH: (A) This Agreement may be terminated at any time, without the payment of any penalty, by vote of the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of each 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 1919, Houston, Texas 77046. -4- 5 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written. AIM INTERNATIONAL FUNDS, INC. By: /s/ ROBERT H. GRAHAM ------------------------- President Attest: /s/ NANCY L. MARTIN - ------------------- Assistant Secretary A I M DISTRIBUTORS, INC. By: /s/ MICHAEL J. CEMO ------------------------- President Attest: /s/ NANCY L. MARTIN - ------------------- Assistant Secretary -5- 6 APPENDIX A TO MASTER DISTRIBUTION AGREEMENT OF AIM INTERNATIONAL FUNDS, INC. AIM Global Aggressive Growth Fund AIM Global Growth Fund AIM Global Income Fund AIM International Equity Fund -6- EX-99.7.B 10 RETIREMENT PLAN FOR REGISTRANTS' NON-AFFILIATED 1 EXHIBIT 7(b) AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Effective as of March 8, 1994 As Restated September 18, 1995 2 AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES TABLE OF CONTENTS Page ---- ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1 (a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1 (b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1 (c) Administrator . . . . . . . . . . . . . . . . . . . . 1 (d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1 (e) Board of Directors . . . . . . . . . . . . . . . . . 1 (f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2 (g) Compensation . . . . . . . . . . . . . . . . . . . . 2 (h) Deferred Retirement Date . . . . . . . . . . . . . . 2 (i) Director . . . . . . . . . . . . . . . . . . . . . . 2 (j) Disability . . . . . . . . . . . . . . . . . . . . . 2 (k) Effective Date . . . . . . . . . . . . . . . . . . . 2 (l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2 (m) Normal Retirement Date . . . . . . . . . . . . . . . 2 (n) Participant . . . . . . . . . . . . . . . . . . . . . 2 (o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2 (p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2 (q) Retirement . . . . . . . . . . . . . . . . . . . . . 2 (r) Retirement Benefit . . . . . . . . . . . . . . . . . 3 (s) Service . . . . . . . . . . . . . . . . . . . . . . . 3 (t) Year of Service . . . . . . . . . . . . . . . . . . . 3 1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3 1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4 2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4 2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4 2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4 2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4 -i- 3 Page ---- ARTICLE III BENEFITS UPON RETIREMENT AND OTHER TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4 3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4 3.2 Termination of Service Before Retirement . . . . . . . . . . . 5 3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5 3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5 ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5 4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5 4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5 4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6 5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6 5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6 ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7 6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7 6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7 6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8 6.4 Participation by Administrators . . . . . . . . . . . . . . . 8 6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8 6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8 6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9 6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9 6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9 6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9 6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9 6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9 ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10 7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10 8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10 8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11 8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11 8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11 8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11 8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12 8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12 8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12 8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12 -ii- 4 Page ---- ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12 9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12 9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13 9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13 9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13 9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13 -iii- 5 AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES PREAMBLE Effective as of March 8, 1994, the regulated investment companies managed, administered and/or distributed by AIM Advisors, Inc. or its affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the directors and trustees of each of the AIM Funds who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As the Plan does not benefit any employees of the AIM Funds, it is not intended to be classified as an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION ------------------------------------ 1.1 Definitions. ------------ Unless a different meaning is plainly implied by the context, the following terms as used in this Plan shall have the following meanings: (a) "Accrued Benefit" shall mean, as of any date prior to a Participant's Normal Retirement Date, his Retirement Benefit commencing on his Normal Retirement Date, but based upon his Compensation and Years of Service computed as of such date of determination. (b) "Actuary" shall mean the independent actuary selected by the Administrator. (c) "Administrator" shall mean the administrative committee provided for in Article VI. (d) "AIM Funds" shall mean the regulated investment companies managed, administered or distributed by A I M Advisors, Inc. or its affiliates. (e) "Board of Directors" shall mean the Board of Directors of each of the AIM Funds. 6 (f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. (g) "Compensation" shall mean, for any Director, the amount of the retainer paid or accrued by the AIM Funds for such Director during the twelve month period immediately preceding the Director's Retirement, including amounts deferred under a separate agreement between the AIM Funds and the Director. The amount of such retainer Compensation shall be as determined by the Administrator. (h) "Deferred Retirement Date" shall mean the first day of the month coincident with or next following the date on which a Participant terminated Service after his Normal Retirement Date. (i) "Director" shall mean an individual who is a director or trustee of one or more of the AIM Funds which have adopted the Plan but who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates. (j) "Disability" shall mean the inability of the Participant to participate in meetings of the Board of Directors, either in person or by telephone, for a period of at least nine (9) months. (k) "Effective Date" shall mean March 8, 1994. (l) "Fund" shall mean an AIM Fund which has adopted this Plan. (m) "Normal Retirement Date" shall mean, the date on which a Participant has both attained age 65 (or at least age 55 in the event of the Director's termination of Service by reason of death or Disability) and has completed at least five continuous and non-forfeited Years of Service (and thirty months of Service with one or more of the AIM Funds). (n) "Participant" shall mean a Director who has met all of the eligibility requirements of the Plan and who is currently included in the Plan as provided in Article II hereof. (o) "Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees" as described herein or as hereafter amended from time to time. (p) "Plan Year" shall mean the calendar year. (q) "Retirement" shall mean a Director's termination of his active Service with the AIM Funds on or after his Normal Retirement Date, due to his death, Disability, or voluntary or involuntary termination of his Service. (r) "Retirement Benefit" shall mean the benefit described under Section 3.1 hereof. -2- 7 (s) "Service" shall mean an individual's serving as a Director of one or more of the AIM Funds. Furthermore, any unbroken service provided by a Participant (i) to an AIM Fund immediately prior to its being managed or administered by A I M Advisors, Inc. (or any of its affiliates) or (ii) to a predecessor of an AIM Fund immediately prior to its being merged into such AIM Fund, will be taken into account in determining such Participant's Years of Service, subject to all restrictions and other forfeiture provisions contained herein. (t) "Year of Service" shall mean a twelve consecutive month period of Service. For all purposes in this Plan, if a Participant's Service terminates prior to his Retirement, he shall forfeit credit for all Years of Service completed prior to such termination unless (a) he again becomes a Director and (b) the number of Years of Service he accumulated prior to such termination exceeded the number of years in which he did not serve as a Director. 1.2 Plurals and Gender. Where appearing in the Plan, the masculine gender shall include the feminine and neuter genders, and the singular shall include the plural, and vice versa, unless the context clearly indicates a different meaning. 1.3 Directors/Trustees. Where appropriate, the term "director" shall refer to "trustee", "directorship" shall refer to "trusteeship" and "Board of Directors" shall refer to "Board of Trustees." 1.4 Headings. The headings and sub-headings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. 1.5 Severability. In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein. -3- 8 ARTICLE II PARTICIPATION ------------- 2.1 Commencement of Participation. ------------------------------ Each Director shall become a Participant hereunder on the date his directorship of one or more of the AIM Funds commences. 2.2 Termination of Participation. ----------------------------- After commencement or resumption of his participation, a Director shall remain a Participant until the earliest of the following dates: (a) His actual Retirement date; (b) His date of death; (c) The date on which he otherwise incurs a termination of Service; or (d) The effective date of the termination of the Plan. 2.3 Resumption of Participation. ---------------------------- Any Participant whose Service terminates and who thereafter again becomes a Director shall resume participation immediately upon again becoming a Director except that, as provided in Section 1.1(t) hereof, if his Service is terminated prior to his Normal Retirement Date, for all purposes of this Plan he shall forfeit credit for all Years of Service completed prior to such termination of his Service. 2.4 Determination of Eligibility. ----------------------------- The Administrator shall determine the eligibility of Directors in accordance with the provisions of this Article. ARTICLE III BENEFITS UPON ------------- RETIREMENT AND OTHER TERMINATION OF SERVICE ------------------------------------------- 3.1 Retirement. ----------- Upon Retirement a Participant shall be entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or next following his date of Retirement, payable in quarterly installments for a period of no more than -4- 9 ten (10) years (or, if less, the number of his Years of Service) equal to seventy-five percent (75%) of his Compensation. 3.2 Termination of Service Before Retirement. ----------------------------------------- In the event that a Participant's Service terminates by reason of death, Disability or removal by the Board for cause (as defined in Section 8.9) prior to his Normal Retirement Date, he shall not be entitled to receive any benefits hereunder. If a Participant's Service terminates for any other reason and he has accumulated at least five (5) continuous and non-forfeited Years of Service, he shall be entitled to receive his Accrued Benefit determined as of such date of termination. 3.3 Termination of Service by Reason of Death. ------------------------------------------ No benefits will be paid under this Plan with respect to a Participant after his death other than as provided in Article IV. 3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. -------------------------------------------------------------- With respect to each Participant, the benefits payable hereunder shall be based on the aggregate Compensation paid by the AIM Funds and on the Participant's non-forfeited Years of Service. Each Fund's share of the obligation to provide such benefits shall be determined by use of accounting methods adopted by the Administrator. ARTICLE IV DEATH BENEFITS -------------- 4.1 Death Prior to Commencement of Benefits. ---------------------------------------- In the event of a Participant's death subsequent to his Normal Retirement Date, but prior to the commencement of his Retirement Benefits under Article III hereof, the surviving spouse (if any) of such Participant shall be entitled to receive a quarterly survivor's benefit for a period of no more than ten (10) years (or, if less, the number of the Participant's Years of Service) beginning on the first day of the calendar quarter next following the date of the Participant's death equal to fifty percent (50%) of the amount of the quarterly installments of Retirement Benefits that would have been paid to the Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his date of death. 4.2 Death Subsequent to Commencement of Benefits. --------------------------------------------- In the event a Participant dies after the commencement of his Retirement Benefit under Article III, but prior to the cessation of the payment of such Retirement Benefits, the surviving spouse (if any) of such Participant shall be entitled to receive survivor's benefits equal to fifty percent (50%) of the amount of the annual Retirement Benefit payable to the Participant -5- 10 under Article III hereunder, paid at such times, and for such period, as such Retirement Benefit would have continued to have been paid to the Participant had he not died. 4.3 Death of Spouse. ---------------- (a) In the event a Participant is not survived by a spouse, no benefits will be paid hereunder upon the Participant's death. (b) If a deceased Participant's surviving spouse dies while receiving survivor's benefits hereunder, any installments not paid at the time of the surviving spouse's death shall be forfeited. ARTICLE V SUSPENSION OF BENEFITS, ETC. ---------------------------- 5.1 Suspension of Benefits Upon Resumption of Service. -------------------------------------------------- In the case of a Participant who, at a time when he is receiving Retirement Benefits under Article III of this Plan, resumes Service with any AIM Fund, such Retirement Benefits shall be suspended until his subsequent Retirement, termination of Service or death. Subject to the Years of Service limitations of Section 3.1 hereof, in the event of his Retirement or termination of Service following such a suspension, the quarterly amount of his remaining Retirement Benefits shall thereafter be adjusted, if appropriate, to reflect any additional Years of Service completed by, or a higher rate of Compensation received by, such Participant. 5.2 Payments Due Missing Persons. ----------------------------- The Administrator shall make a reasonable effort to locate all persons entitled to benefits (including Retirement Benefits and survivor's benefits for spouses) under the Plan; however, notwithstanding any provisions of this Plan to the contrary, if, after a period of 5 years from the date any of such benefits first become due, any such persons entitled to benefits have not been located, their rights under the Plan shall stand suspended. Before this provision becomes operative, the Administrator shall send a certified letter to all such persons (if any) at their last known address advising them that their benefits under the Plan shall be suspended. Any such suspended amounts shall be held by the AIM Funds for a period of 3 additional years (or a total of 8 years from the time the benefits first became payable) and thereafter such amounts shall be forfeited. -6- 11 ARTICLE VI ADMINISTRATOR ------------- 6.1 Appointment of Administrator. ----------------------------- This Plan shall be administered by the Nominating and Compensation Committees of the Boards of Directors of the AIM Funds. The members of such committees are not "interested persons" (within the meaning of Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM Funds. The term "Administrator" as used in this Plan shall refer to the members of such committees, either individually or collectively, as appropriate. 6.2 Powers and Duties of Administrator. ----------------------------------- Except as provided below, the Administrator shall have the following duties and responsibilities in connection with the administration of this Plan: (a) To promulgate and enforce such rules, regulations and procedures as shall be proper for the efficient administration of the Plan; (b) To determine all questions arising in the administration, interpretation and application of the Plan, including questions of eligibility and of the status and rights of Participants and any other persons hereunder; (c) To decide any dispute arising hereunder; provided, however, that no Administrator shall participate in any matter involving any questions relating solely to his own participation or benefits under this Plan; (d) To advise the Boards of Directors of the AIM Funds regarding the known future need for funds to be available for distribution; (e) To correct defects, supply omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan; (f) To compute the amount of benefits and other payments which shall be payable to any Participant or surviving spouse in accordance with the provisions of the Plan and to determine the person or persons to whom such benefits shall be paid; (g) To make recommendations to the Boards of Directors of the AIM Funds with respect to proposed amendments to the Plan; (h) To file all reports with government agencies, Participants and other parties as may be required by law, whether such reports are initially the obligation of the AIM Funds, or the Plan; -7- 12 (i) To engage the Actuary of the Plan and to cause the liabilities of the Plan to be evaluated by the Actuary; and (j) To have all such other powers as may be necessary to discharge its duties hereunder. 6.3 Action by Administrator. ------------------------ The Administrator may elect a Chairman and Secretary from among its members and may adopt rules for the conduct of its business. A majority of the members then serving shall constitute a quorum for the transacting of business. All resolutions or other action taken by the Administrator shall be by vote of a majority of those present at such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent signed by at least a majority of the members. All documents, instruments, orders, requests, directions, instructions and other papers shall be executed on behalf of the Administrator by either the Chairman or the Secretary of the Administrator, if any, or by any member or agent of the Administrator duly authorized to act on the Administrator's behalf. 6.4 Participation by Administrators. -------------------------------- No Administrator shall be precluded from becoming a Participant in the Plan if he would be otherwise eligible, but he shall not be entitled to vote or act upon matters or to sign any documents relating specifically to his own participation under the Plan, except when such matters or documents relate to benefits generally. If this disqualification results in the lack of a quorum, then the Boards of Directors, by majority vote of the members of a majority of such Boards of Directors (a "Majority Vote"), shall appoint a sufficient number of temporary Administrators, who shall serve for the sole purpose of determining such a question. 6.5 Agents and Expenses. -------------------- The Administrator may employ agents and provide for such clerical, legal, actuarial, accounting, medical, advisory or other services as it deems necessary to perform its duties under this Plan. The cost of such services and all other expenses incurred by the Administrator in connection with the administration of the Plan shall be allocated to each Fund pursuant to the method utilized under Section 3.4 hereof with respect to costs related to benefit accruals. For purposes of the preceding sentence, if an individual serves as a Director for more than one Fund, he shall be deemed to be a separate Director for each such Fund in determining the aggregate number of Directors of the AIM Funds. 6.6 Allocation of Duties. --------------------- The duties, powers and responsibilities reserved to the Administrator may be allocated among its members so long as such allocation is pursuant to written procedures adopted by the Administrator, in which case no Administrator shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts or omissions of any other Administrator. -8- 13 6.7 Delegation of Duties. --------------------- The Administrator may delegate any of its duties to employees of A I M Advisors, Inc. or any of its affiliates or to any other person or firm, provided that the Administrator shall prudently choose such agents and rely in good faith on their actions. 6.8 Administrator's Action Conclusive. ---------------------------------- Any action on matters within the discretion of the Administrator shall be final and conclusive. 6.9 Records and Reports. -------------------- The Administrator shall maintain adequate records of its actions and proceedings in administering this Plan and shall file all reports and take all other actions as it deems appropriate in order to comply with any federal or state law. 6.10 Information from the AIM Funds. ------------------------------- The AIM Funds shall promptly furnish all necessary information to the Administrator to permit it to perform its duties under this Plan. The Administrator shall be entitled to rely upon the accuracy and completeness of all information furnished to it by the AIM Funds, unless it knows or should have known that such information is erroneous. 6.11 Reservation of Rights by Boards of Directors. --------------------------------------------- When rights are reserved in this plan to the Boards of Directors, such rights shall be exercised only by Majority Vote of the Boards of Directors, except where the Boards of Directors, by unanimous written resolution, delegate any such rights to one or more persons or to the Administrator. Subject to the rights reserved to the Boards of Directors as set forth in this Plan, no member of the Boards of Directors shall have any duties or responsibilities under this Plan, except to the extent he shall be acting in the capacity of an Administrator. 6.12 Liability and Indemnification. ------------------------------ (a) The Administrator shall perform all duties required of it under this Plan in a prudent manner. The Administrator shall not be responsible in any way for any action or omission of the AIM Funds or their employees in the performance of their duties and obligations as set forth in this Plan. The Administrator also shall not be responsible for any act or omission of any of its agents provided that such agents were prudently chosen by the Administrator and that the Administrator relied in good faith upon the action of such agents. (b) Except for its own gross negligence, willful misconduct or willful breach of the terms of this Plan, the Administrator shall be indemnified and held harmless by the AIM Funds against any and all liability, loss, damages, cost and expense which may arise, occur by reason of, or be based upon, any matter connected with or related to this Plan or its -9- 14 administration (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending any litigation, commenced or threatened, or in settlement of any such claim). ARTICLE VII AMENDMENTS AND TERMINATION -------------------------- 7.1 Amendments. ----------- The Boards of Directors reserve the right at any time and from time to time, and retroactively if deemed necessary or appropriate by them, to amend in whole or in part by Majority Vote any or all of the provisions of this Plan, provided that: (a) No amendment shall make it possible for any part of a Participant's or former Participant's Retirement Benefit to be used for, or diverted to, purposes other than for the exclusive benefit of such Participant or surviving spouse, except to the extent otherwise provided in this Plan; (b) No amendment may reduce any Participant's or former Participant's Retirement Benefit as of the effective date of the amendment; Amendments may be made in the form of Board of Directors' resolutions or separate written document. 7.2 Termination. ------------ Except as provided below, the Boards of Directors reserve the right to terminate this Plan at any time by Majority Vote by giving to the Administrator notice in writing of such desire to terminate. The Plan shall terminate upon the date of receipt of such notice and the rights of all Participants to their Retirement Benefits (determined as of the date the Plan is terminated) shall become payable upon the effective date of the termination of the Plan in quarterly installments or in an actuarially equivalent lump sum as determined by the Administrator. ARTICLE VIII MISCELLANEOUS ------------- 8.1 Rights of Creditors. -------------------- (a) The Plan is unfunded. Neither the Participants nor any other persons shall have any interest in any fund or in any specific asset or assets of any of the AIM Funds by -10- 15 reason of any Accrued or Retirement Benefit hereunder, nor any rights to receive distribution of any Retirement Benefit except and as to the extent expressly provided hereunder. (b) The Accrued and Retirement Benefits of each Participant are unsecured and shall be subject to the claims of the general creditors of the AIM Funds. 8.2 Liability Limited. ------------------ Neither the AIM Funds, the Administrator, nor any agents, employees, officers, directors or shareholders of any of them, nor any other person shall have any liability or responsibility with respect to this Plan, except as expressly provided herein. 8.3 Incapacity. ----------- If the Administrator shall receive evidence satisfactory to it that a Participant or surviving spouse entitled to receive any benefit under the Plan is, at the time when such benefit becomes payable, physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of such Participant or surviving spouse and that no guardian, committee or other representative of the estate of such Participant or surviving spouse shall have been duly appointed, the Administrator may make payment of such benefit otherwise payable to such Participant or surviving spouse to such other person or institution, and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit. 8.4 Cooperation of Parties. ----------------------- All parties to this Plan and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Plan or any of its provisions. 8.5 Governing Law. -------------- All rights under the Plan shall be governed by and construed in accordance with rules of Federal law applicable to such plans and, to the extent not preempted, by the laws of the State of Texas without regard to principles of conflicts of law. No action shall be brought by or on behalf of any Participant for or with respect to benefits due under this Plan unless the person bringing such action has timely exhausted the Plan's claim review procedure. Any such action must be commenced within three years. This three-year period shall be computed from the earlier of (a) the date a final determination denying such benefit, in whole or in part, is issued under the Plan's claim review procedure or (b) the date such individual's cause of action first accrued. Any dispute, controversy or claim arising out of or in connection with this Plan (including the applicability of this arbitration provision) and not resolved pursuant to the Plan's claim review procedure shall be determined and settled by arbitration conducted by the American Arbitration Association ("AAA") in the County and State of the Funds' principal place of business and in accordance with the then existing rules, regulations, practices and procedures of the AAA. Any award in such arbitration shall be final, conclusive and binding upon the -11- 16 parties to the arbitration and may be enforced by either party in any court of competent jurisdiction. Each party to the arbitration will bear its own costs and fees (including attorney's fees). 8.6 Nonguarantee of Directorship. ----------------------------- Nothing contained in this Plan shall be construed as a guaranty or right of any Participant to be continued as a Director of one or more of the AIM Funds (or of a right of a Director to any specific level of Compensation) or as a limitation of the right of the AIM Funds to remove any of its directors. 8.7 Counsel. -------- The Administrator may consult with legal counsel, who may be counsel for one or more of the Boards of Directors of the AIM Funds and for the Administrator, with respect to the meaning or construction of this Plan, its obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel. 8.8 Spendthrift Provision. ---------------------- A Participant's interest in his Accrued Benefit or Retirement Benefit may not be transferred, alienated, assigned nor become subject to execution, garnishment or attachment, and any attempt to do so will render benefits hereunder immediately forfeitable. 8.9 Forfeiture for Cause. --------------------- Notwithstanding any other provision of this Plan to the contrary, any benefits to which a Participant (or his surviving spouse) may otherwise be entitled hereunder will be forfeited in the event the Administrator, in its sole discretion, determines that a Participant's termination of Service is due to such Participant's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Director. ARTICLE IX CLAIMS PROCEDURE ---------------- 9.1 Notice of Denial. ----------------- If a Participant is denied any Retirement Benefit (or a surviving spouse is denied a survivor's benefit) under this Plan, either in total or in an amount less than the full Retirement Benefit to which he would normally be entitled, the Administrator shall advise the Participant (or surviving spouse) in writing of the amount of his Retirement Benefit (or survivor's benefit), if any, and the specific reasons for the denial. The Administrator shall also furnish the Participant (or surviving spouse) at that time with a written notice containing: -12- 17 (a) A specific reference to pertinent Plan provisions. (b) A description of any additional material or information necessary for the Participant (or surviving spouse) to perfect his claim, if possible, and an explanation of why such material or information is needed. (c) An explanation of the Plan's claim review procedure. 9.2 Right to Reconsideration. ------------------------- Within 60 days of receipt of the information stated in Section 9.1 above, the Participant (or surviving spouse) shall, if he desires further review, file a written request for reconsideration with the Administrator. 9.3 Review of Documents. -------------------- So long as the Participant's (or surviving spouse's) request for review is pending (including the 60 day period in 9.2 above), the Participant (or surviving spouse) or his duly authorized representative may review pertinent Plan documents and may submit issues and comments in writing to the Administrator. 9.4 Decision by Administrator. -------------------------- A final and binding decision shall be made by the Administrator within 60 days of the filing by the Participant (or surviving spouse) of his request for reconsideration, provided, however, that if the Administrator, in its discretion, feels that a hearing with the Participant (or surviving spouse) or his representative present is necessary or desirable, this period shall be extended an additional 60 days. 9.5 Notice by Administrator. ------------------------ The Administrator's decision shall be conveyed to the Participant (or surviving spouse) in writing and shall include specific reasons for the provisions on which the decision is based. -13- EX-99.7.D 11 FORM OF DEFERRED COMPENSATION AGREEMENT 1 EXHIBIT 7(d) THE AIM GROUP OF FUNDS DEFERRED COMPENSATION PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES 2 DEFERRED COMPENSATION AGREEMENT SUMMARY Your Deferred Compensation Agreement (the "Agreement") allows you to defer some or all of your annual trustee's fees otherwise payable by the Funds. Deferred fees are deemed invested in certain mutual funds selected by you. The deferral is pre-tax, and the deferred amount and the credited gains, losses and income are not subject to tax until paid out to you. Your deferrals (and investment experience) are posted to a bookkeeping account maintained by the Funds in your name. In order for you to enjoy the tax deferral, the payments due under the Agreement will be paid from the Funds' general assets, and you are considered a general unsecured creditor of the Funds; you may not transfer your right to receive payments under the Agreement to any other person, nor may you pledge that right to secure any debt or other obligation; finally, an election to defer must be made in writing before the first day of the calendar year for which the fees are earned (the "Election Date") and elections can be changed only prospectively, effective for the next calendar year. An important change has been made to your Agreement to give you greater flexibility to select the time of payment of amounts that you defer: for amounts previously deferred and for future elections you now designate a specific Payment Date. PAYMENT DATE ELECTION Deferred fees (and the income, gains and losses credited during the deferral period) will be paid out in a single sum in cash within 30 days of the Payment Date elected for that deferral. (For payments in connection with your termination of service as a trustee, see below.) Deferrals must be for a minimum three year period (unless the your retirement date under the Retirement Plan is earlier). Thus, the Payment Date may be the first day of any calendar quarter that follows the third anniversary of the applicable Election Date or your retirement date. For your first Payment Date election that applies to previously deferred fees, the Election Date is considered to be January 1, 1996. Thus, fees previously deferred and fees payable for the calendar year beginning January 1, 1996 may be deferred to the first day of any calendar quarter in any year from 1999. EXTENDING A PAYMENT DATE One year prior to any Payment Date, you will have a one-time opportunity to extend that Date, provided that the additional period of deferral satisfies the requirements described above. 3 TERMINATION OF SERVICE Upon your death, your account under the Agreement will be paid out in a single sum in cash as soon as practicable. Payment will be made to your designated Beneficiary or Beneficiaries or to your estate if there is no surviving Beneficiary. Upon termination of your service as trustee for any reason other than death or your retirement (as defined in the Retirement Plan), your account will be paid to you as a single sum (or in installments if you had elected that method) in cash within three months following the end of the fiscal year in which you terminate, regardless of the Payment Dates you elected. 4 ARTICLE Page ------- ---- 1. Definitions of Terms and Construction 1 2. Period During Which Compensation Deferrals are Permitted 2 3. Compensation Deferrals 2 4. Distributions from Deferral Account 4 5. Amendments and Termination 5 6. Miscellaneous 5 DEFERRED COMPENSATION AGREEMENT ------------------------------- AGREEMENT, made on this __ day of _______, 19__, by and between the registered open-end investment companies listed on Appendix A hereto (the "Funds"), and ________________________________________________________________ (the "Director") residing at ___________________________________________________. WHEREAS, the Funds and the Director have entered into agreements pursuant to which the Director will serve as a director/trustee of the Funds; and WHEREAS, the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds and now desire to amend and restate such agreement. NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, the Funds and the Director hereby agree as follows: 1. DEFINITION OF TERMS AND CONSTRUCTION ------------------------------------ 1.1 Definitions. Unless a different meaning is plainly implied by the context, the following terms as used in this Agreement shall have the following meanings: (a) "Beneficiary" shall mean such person or persons designated pursuant to Section 4.3 hereof to receive benefits after the death of the Director. (b) "Boards of Directors" shall mean the respective Boards of Directors of the Funds. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. (d) "Compensation" shall mean the amount of directors' fees paid by each of the Funds to the Director during a Deferral Year prior to reduction for Compensation Deferrals made under this Agreement. (e) "Compensation Deferral" shall mean the amount or amounts of the Director's Compensation deferred under the provisions of Section 3 of this Agreement. -1- 6 (f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof and any other credits or debits thereto. (g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof. (h) "Retirement" shall have the same meaning as set forth under the Retirement Plan. (i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees." (j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts. 1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning. 1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees." 1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. 1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds. 2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED -------------------------------------------------------- 2.1 Commencement of Compensation Deferrals. The Director may elect, on a form provided by, and submitted to, the Presidents of the respective Funds, to commence Compensation Deferrals under Section 3 hereof for the period beginning on the later of (i) the date this Agreement is executed or (ii) the date such form is submitted to the Presidents of the Funds. 2.2 Termination of Deferrals. The Director shall not be eligible to make Compensation Deferrals after the earliest of the following dates: (a) The date on which he ceases to serve as a Director of all of the Funds; or (b) The effective date of the termination of this Agreement. -2- 7 3. COMPENSATION DEFERRALS ---------------------- 3.1 Compensation Deferral Elections. (a) On or prior to the first day of any Deferral Year, the Director may elect, on the form described in Section 2.1 hereof, to defer the receipt of all or a portion of his Compensation for such Deferral Year. Such writing shall set forth the amount of such Compensation Deferral (in whole percentage amounts). Such election shall continue in effect for all subsequent Deferral Years unless it is canceled or modified as provided below. (b) Compensation Deferrals shall be withheld from each payment of Compensation by the Funds to the Director based upon the percentage amount elected by the Director under Section 3.1(a) hereof. (c) The Director may cancel or modify the amount of his Compensation Deferrals on a prospective basis by submitting to the Presidents of the Funds a revised Compensation Deferral election form. Such change will be effective as of the first day of the Deferral Year following the date such revision is submitted to the Presidents of the Funds. 3.2 Valuation of Deferral Account. (a) Each Fund shall establish a bookkeeping Deferral Account to which will be credited an amount equal to the Director's Compensation Deferrals under this Agreement made with respect to Compensation earned from each such Fund. Compensation Deferrals shall be allocated to the Deferral Accounts on the first business day following the date such Compensation Deferrals are withheld from the Director's Compensation. As of the date of this Agreement, the Deferral Accounts also shall be credited with the amounts credited to the Director under each other outstanding elective deferred compensation agreement entered into by and between the Funds and the Director which is superseded by this Agreement pursuant to Section 6.11 hereof. The Deferral Accounts shall be debited to reflect any distributions from such Accounts. Such debits shall be allocated to the Deferral Accounts as of the date such distributions are made. (b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Deferral Accounts are invested in the manner set forth under Section 3.3, below) attributable to the period following the next preceding Valuation Date shall be credited to and/or deducted from the Director's Deferral Accounts. 3.3 Investment of Deferral Account Balances. (a) (1) The Director may select, from various options made available by the Funds, the investment media in which all or part of his Deferral Accounts shall be deemed to be invested. -3- 8 (2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation as of the end of each calendar quarter by giving written direction to the Presidents of the Funds at least thirty (30) days prior to the end of such calendar quarter. A timely change to a Director's investment designation shall become effective on the first day of the calendar quarter following receipt by the Presidents of the Funds. (3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds. (b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If - (1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or (2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections. The Fund shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount in the Deferral Accounts, as of a reasonably current date. -4- 9 4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS ------------------------------------ 4.1 Payment Date and Methods. (a) Designation of Date. Each deferral direction given pursuant to Section 3.1 shall include designation of the Payment Date for the value of the amount deferred. Such Payment Date shall be the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c). (b) Extension Date. One year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c). (c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the third anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement. (d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash. A Participant may elect, at the time a Payment Date is selected, to receive the amount which will become payable as of such Payment Date in generally equal quarterly installments over a period not to exceed ten (10) years. Except as may be elected pursuant to this paragraph, all amounts becoming payable under this Plan shall be paid in a single sum. (e) Irrevocability. Except as provided in paragraph 4.1(b), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows: (1) Upon the Director's death, payment shall be made in accordance with Section 4.2, (2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d), except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts, (3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and (4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or -5- 10 more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date. 4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in a lump sum as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts. 4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the Director's Beneficiary shall be the person or persons so designated by the Director in a written instrument submitted to the Presidents of the Funds. In the event the Director fails to properly designate a Beneficiary, his Beneficiary shall be the person or persons in the first of the following classes of successive preference Beneficiaries surviving at the death of the Director: the Director's (1) surviving spouse or (2) estate. 4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited. 5. AMENDMENTS AND TERMINATION -------------------------- 5.1 Amendments. (a) The Funds and the Director may, by a written instrument signed by, or on behalf of, such parties, amend this Agreement at any time and in any manner. -6- 11 (b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that: (1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and (2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment. 5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of the Plan, such Accounts shall continue to be maintained in accordance with the provisions of this Plan until the time they are paid out. 6. MISCELLANEOUS. -------------- 6.1 Rights of Creditors. (a) This Agreement is unfunded. Neither the Director nor any other persons shall have any interest in any specific asset or assets of the Funds by reason of any Deferral Accounts hereunder, nor any rights to receive distribution of his Deferral Accounts except and as to the extent expressly provided hereunder. The Funds shall not be required to purchase, hold or dispose of any investments pursuant to this Agreement; however, if in order to cover their obligations hereunder the Funds elect to purchase any investments the same shall continue for all purposes to be a part of the general assets and property of the Funds, subject to the claims of their general creditors and no person other than the Funds shall by virtue of the provisions of this Agreement have any interest in such assets other than an interest as a general creditor. (b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person. -7- 12 6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement. 6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person. 6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit. 6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions. 6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas. 6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds. 6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel. 6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, -8- 13 alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable. 6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds. 6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith. 6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives. 6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability. 6.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -9- 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. The Funds ________________________ By:_________________________ Witness Name: Title: ________________________ ____________________________ Witness Director -10- 15 APPENDIX A ---------- AIM EQUITY FUNDS, INC. AIMS FUNDS GROUP AIM INTERNATIONAL FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS AIM STRATEGIC INCOME FUND, INC. AIM SUMMIT FUND, INC. AIM TAX-EXEMPT FUNDS, INC. AIM VARIABLE INSURANCE FUNDS, INC. SHORT-TERM INVESTMENTS CO. SHORT-TERM INVESTMENTS TRUST TAX-FREE INVESTMENTS CO. 16 DEFERRED COMPENSATION AGREEMENT DEFERRAL ELECTION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, I hereby make the following elections: Deferral of Compensation ------------------------ Starting with Compensation to be paid to me with respect to services provided by me to the AIM Funds after the date this election Form is received by the AIM Funds, I hereby elect that ______ percent (_____%) of my Compensation (as defined under the Agreement) be reduced and that the Fund establish a bookkeeping account credited with amounts equal to the amount so reduced (the "Deferral Account"). The Deferral Account shall be further credited with income equivalents as provided under the Agreement. I understand that this election will remain in effect with respect to Compensation I earn in subsequent years unless I modify or revoke it. I further understand that such modification or revocation will be effective only prospectively and will apply commencing with the Compensation I earn in the calendar year that begins after the change is received by you. Payment Date ------------ I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least four years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement. Payment Method -------------- I hereby elect to receive the amounts credited to my Deferral Account in (check one) o a single payment in cash o annual installments for a period of ____ (select no more than 10 years) -12- 17 beginning within 30 days following the payment date selected above. I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account. I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof. Dated as of the day and year first above written. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -13- 18 DEFERRED COMPENSATION AGREEMENT INVESTMENT DIRECTION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation Agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, I hereby elect that my Deferral Account under the Agreement be considered to be invested as follows (in multiples of 10%): AIM WEINGARTEN FUND ____________% AIM CONSTELLATION FUND ____________% AIM HIGH YIELD FUND ____________% AIM INTERNATIONAL EQUITY FUND ____________% AIM AGGRESSIVE GROWTH EQUITY FUND __________% AIM LIMITED MATURITY TREASURY SHARES FUND __________% AIM VALUE FUND _____________% AIM MONEY MARKET FUND ___________% AIM BALANCED FUND ____________% AIM CHARTER FUND _____________% I acknowledge that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. Furthermore, I acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has reserved the right to disregard the elections made above to consider my Deferral Account to be deemed to be invested in a fund of its choosing. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ 19 DEFERRED COMPENSATION AGREEMENT BENEFICIARY DESIGNATION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation Agreement (the "Agreement") dated as of _____________ by and between the undersigned and the AIM Funds, I hereby make the following beneficiary designations: I. Primary Beneficiary ------------------- I hereby appoint the following as my Primary Beneficiary(ies) to receive at my death the amounts credited to my Deferral Account under the Agreement. In the event I am survived by more than one Primary Beneficiary, such Primary Beneficiaries shall share equally in such amounts unless I indicate otherwise on an attachment to this form: _________________________________________________________________ Name Relationship _________________________________________________________________ Address _________________________________________________________________ City State Zip 20 II. Secondary Beneficiary --------------------- In the event I am not survived by any Primary Beneficiary, I hereby appoint the following as Secondary Beneficiary(ies) to receive death benefits under the Agreement. In the event I am survived by more than one Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless I indicate otherwise on an attachment to this form: _________________________________________________________________ Name Relationship _________________________________________________________________ Address _________________________________________________________________ City State Zip I understand that I may revoke or amend the above designations at any time. I further understand that if I am not survived by a Primary or Secondary Beneficiary, my Beneficiary shall be as set forth under the Agreement. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -2- 21 INITIAL PAYMENT DATE ELECTION FORM FOR PREVIOUSLY DEFERRED COMPENSATION ------------------------------------ TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, pursuant to which I have previously elected to defer Compensation, I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least four years after the year this election is made) as the Payment Date for the amounts previously credited to my Deferral Account and amounts subsequently credited thereto. If my Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement. I understand that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -3- EX-99.8.A 12 CUSTODIAN AGREEMENT 1 EXHIBIT 8(a) CUSTODIAN CONTRACT Between AIM INTERNATIONAL FUNDS, INC. and STATE STREET BANK AND TRUST COMPANY 2 TABLE OF CONTENTS
Page ---- 1. Employment of Custodian and Property to be Held by It . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States . . . 3 2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.5 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 2.6 Collection of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.8 Liability for Payment in Advance of Receipt of Securities Purchased . . . . . . . . . . . . . . . . 14 2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.10 Deposit of Fund Assets in Securities Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.10A Fund Assets Held in the Custodian's Direct Paper System . . . . . . . . . . . . . . . . . . . . . . 18 2.11 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.12 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.14 Communications Relating to Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States . . . . . . . 23 3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.3 Foreign Securities Depositories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.4 Segregation of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.6 Access of Independent Accountants of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.8 Transaction in Foreign Custody Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.9 Liability of Foreign Sub-Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.12 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund . . . . . . . . . . . . . . . . . . . 31 5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 6. Actions Permitted without Express Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income . 34
3 9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 10. Opinion of Fund's Independent Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 11. Reports to Fund by Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 14. Effective Period, Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 16. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4 CUSTODIAN CONTRACT ------------------ This Contract between AIM International Funds, Inc., a corporation organized and existing under the laws of Maryland, having its principal place of business at Eleven Greenway Plaza, Suite 1919, Houston, Texas, 77046, hereinafter called the "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, the Fund is authorized to issue shares in separate series, with each such series representing interest in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in one series, the AIM International Equity Fund (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: 1. Employment of Custodian and Property to be Held by It ----------------------------------------------------- The 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 5 securities") and securities it desires to be held outside the United States ("foreign securities") consistent with the provisions of the Articles of Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of capital stock of the 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 of the Fund on behalf of the applicable Portfolio(s), 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 the Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designed in Schedule A hereto but only in accordance with the provisions of Article 3. 2 6 2. Duties of the Custodian with Respect to Property of the Fund ------------------------------------------------------------ Held By the Custodian in the United States - ------------------------------------------ 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 clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury, collectively referred to herein as "Securities System" 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 pursuant to Section 2.10A. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a 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 Property 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; 3 7 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 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; 4 8 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 5 9 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 6 10 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 Commissions Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission 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 ("Transfer Agent") for the Fund, for delivery to such Transfer Agent or to the holders of the shares in connection with distributions in kind, as may be described 7 11 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 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 Directors 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 corporate purpose, 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 the 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 8 12 be used in common with other registered investment companies having the same investment adviser 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 the Portfolio under the term of this Contract shall be in "street name" or other good delivery form. If however, the 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 the 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. Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the Banking Department 9 13 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 Investment Company Act of 1940 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 of Directors of the Fund. 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 the Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from the 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 10 14 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 Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data 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 11 15 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 Investment Company Act of 1940, as amended, 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 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 2.10A; (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 12 16 (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; 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; 13 17 5) For the payment of any dividends on Shares of the Portfolio declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 7) For in 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 of Directors 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 purpose, and naming the person or persons 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 the Fund on behalf of such Portfolio to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the 14 18 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 Investment Company Act of 1940, as amended, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from 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 Securities Systems. The Custodian may deposit and/or maintain securities owned by a Portfolio in a clearing agency registered with the Securities and Exchange Commission 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 "Securities System" in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: 1) The Custodian may keep securities of the Portfolio in a Securities System provided that such securities are represented in an account ("Account") of the Custodian in the 15 19 Securities System 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 Securities System shall identify by book-entry those securities belong to the Portfolio; 3) The Custodian shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the Securities System that such securities have been transferred to the 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 Securities System that payment for such securities has been transferred to the 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 Securities System of transfers of securities for the 16 20 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 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 Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the 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; 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 17 21 Portfolio resulting from use of the 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 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 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. 2.10 A 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 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 18 22 ("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 19 23 to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transaction in the Securities System for the account of the Portfolio; 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. 2.11 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund 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 Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with 20 24 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 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 Board of Directors 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 purposes. 2.12 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. 21 25 2.13 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. 2.14 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 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 the any tender offer, exchange offer or any other similar transaction, the 22 26 Portfolio shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 3. Duties of the Custodian with Respect to Property of the Fund ------------------------------------------------------------ Held Outside of the United States - --------------------------------- 3.1 Appointment of Foreign Sub-Custodians The Fund hereby authorized 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 of Directors, 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, the 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 Investment Company Act of 1940, and (b) cash and cash 23 27 equivalent in such amounts as the Custodian or the Fund may determine to be reasonably necessary to effect the Portfolio's foreign securities transactions. 3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon in writing by the Custodian and the Fund, assets of the Portfolios shall be maintained in foreign securities depositories only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof. Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof. 3.4 Segregation of Securities. The Custodian shall identify on its books as belonging to each applicable Portfolio of the Fund, the foreign securities of such Portfolios held by each foreign sub-custodian. Each agreement pursuant to which the Custodian employs a foreign banking institution shall require that such institution establish a custody account for the Custodian on behalf of the Fund for each applicable portfolio of the Fund and physically segregate in each account, securities and other assets of the Portfolios, and, in the event that such institution deposits the securities of one or more of the Portfolios in a foreign securities depository, that it shall identify on its books as belonging to the Custodian, as agent for each applicable Portfolio, the securities so deposited. 24 28 3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign banking institution shall be substantially in the form set forth in Exhibit 1 hereto and 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 the Fund, the Custodian will use its best efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign 25 29 sub-custodian insofar as such book 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 the 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 Portolio, the identity of the entity having physical possession of such securities. 3.8 Transaction in Foreign Custody Account (a) Except as otherwise provided in paragraph (b) 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 the 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 26 30 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 the 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 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 the Fund, it shall be entitled to be subrogated to the rights 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 27 31 the extent that the 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 (b) 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. 28 32 3.11 Reimbursement for Advances. If the 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 the Fund fail to repay the Custodian promptly after notice, 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 the 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 that furnished to the Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform the 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 the Fund or in the case of any foreign sub-custodian 29 33 not the subject of an exemptive order from the Securities and Exchange Commission 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 Investment Company Act of 1940 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. (b) Cash held for each Portfolio of the Fund in the United Kingdom shall be maintained in an interest bearing 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 the Fund 30 34 or the Custodian as custodian of the Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the 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 the Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which the Fund has provided such information. 4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund ---------------------------------------------------------------------- The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of the 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 the Fund. The Custodian will provide timely notification to the 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 Articles of Incorporation and any applicable votes of the Board of Directors of the Fund 31 35 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 their Shares. In connection with the redemption or repurchase of Shares of a Portfolio, 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 of the Fund, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the 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 the Fund and the Custodian. 5. Proper Instructions ------------------- Proper Instructions as used throughout this Contract means a writing signed or initialled by one or more person or persons as the Board of Directors shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. 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. The Fund shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by 32 36 the Board of Directors of the Fund accompanied by a detailed description of procedures approved by the Board of Directors, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Board of Directors and the Custodian are satisfied that such procedures afford adequate safeguards for the Portfolios' assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.11. 6. Actions Permitted without Express Authority ------------------------------------------- The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the 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 Board of Directors of the Fund. 33 37 7. Evidence of Authority --------------------- 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 Fund. The Custodian may receive and accept a certified copy of a vote of the Board of Directors of the 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 of Directors pursuant to the Articles of Incorporation 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. 8. Duties of Custodian with Respect to the Books of Account and ------------------------------------------------------------ Calculation of Net Asset Value and Net Income - --------------------------------------------- The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Directors of the Fund to keep the books of account of each Portfolio and/or compute the net asset value per share of the outstanding shares of each Portfolio or, if directed in writing to do so by the 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 Fund's currently effective prospectus related to such Portfolio and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Transfer Agent 34 38 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 Fund's current effective prospectus related to such Portfolio. 9. Records ------- 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 Fund under the Investment Company Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the 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 the Fund and employees and agents of the Securities and Exchange Commission. The Custodian, shall at the Fund's request, supply the Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 10. Opinion of Fund's Independent Accountant ---------------------------------------- The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form 35 39 N-1A, and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 11. Reports to Fund by Independent Public Accountants ------------------------------------------------- The Custodian shall provide the Fund, on behalf of each of the Portfolios at such times as the 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 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. 12. Compensation of Custodian ------------------------- The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon in writing from time to time between the Fund on behalf of each applicable Portfolio and the Custodian. 13. Responsibility of 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 36 40 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 future commission merchant acting pursuant to the terms of 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 the 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 the Fund) and all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall be liable for the acts or omissions of a foreign banking institution appointed pursuant to the provisions of Article 3 to the same extent as set forth in Article 1 hereof with respect to sub-custodians located in the United States (except as specifically provided in Article 3.10) 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, or caused by, the direction of or authorization by the Fund to maintain custody of any securities or cash of the Fund in a foreign country including, but not limited to, losses resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism. 37 41 If the 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, the 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 the 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 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 the 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. 38 42 14. Effective Period, Termination and Amendment ------------------------------------------- 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 by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, 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 Board of Directors of the Fund has approved the initial use of a particular Securities System by such Portfolio and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Directors has reviewed the use by such Portfolio of such Securities System, as required in each case by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the Custodian shall not with respect to a Portfolio act under Section 2.10A hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors of the Fund has approved the initial use of a particular Securities System by such Portfolio and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Directors has reviewed the use by such Portfolio of such Securities System, as required in each case by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the Custodian shall not with respect to a Portfolio act under Section 2.10A hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of the Direct Paper System by such Portfolio and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Directors has reviewed the use by such Portfolio of the Direct Paper System; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state 39 43 regulations, or any provision of the Articles of Incorporation, and further provided, that the Fund on behalf of one or more of the Portfolios may at any time by action of its Board of Directors (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. Upon termination of the Contract, the 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. 15. Successor Custodian ------------------- If a successor custodian for the Fund, of one or more of the Portfolios shall be appointed by the Board of Directors of the Fund, the Custodian shall, upon termination, 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 and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System. 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 Board of Directors of the Fund, deliver at the 40 44 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 Board of Directors 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 Investment Company Act of 1940, 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 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 owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board of Directors 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, 41 45 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. 16. Interpretive and Additional Provisions -------------------------------------- In connection with the operation of this Contract, the Custodian and the 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 both 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 Articles of Incorporation of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 17. Additional Funds ---------------- In the event that the Fund establishes one or more series of Shares in addition to AIM International Equity Fund 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. 42 46 18. Massachusetts Law to Apply -------------------------- This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 19. Prior Contracts --------------- This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund on behalf of each of the Portfolios and the Custodian relating to the custody of the Fund's assets. 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 8th day of November, 1991. ATTEST AIM INTERNATIONAL FUNDS, INC. /s/ SAMUEL D. SIRKO By /s/ CHARLES T. BAUER - ----------------------------- ---------------------------- Assistant Secretary President ATTEST STATE STREET BANK AND TRUST COMPANY /s/ Illegible By /s/ Illegible - ----------------------------- ---------------------------- Assistant Secretary Vice President 43 47 SCHEDULE A ---------- TO CUSTODIAN CONTRACT BETWEEN AIM INTERNATIONAL FUNDS, INC. AND STATE STREET BANK AND TRUST COMPANY The following foreign sub-custodians have been approved by the Board of Trustees of AIM International Funds, Inc. for use as sub-custodians for the securities and other assets of AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global Income Fund: Country Sub-Custodian ------- ------------- Argentina Citibank, N.A. Australia Westpac Banking Corporation Austria GiroCredit Bank Aktiengesellschaft der Sparkassen Bangladesh Standard Chartered Bank Belgium Generale Bank Brazil Citibank, N.A. Canada Canada Trustco Mortgage Company Chile Citibank, N.A. China The Hongkong and Shanghai Banking Corporation Limited Colombia Cititrust Colombia S.A. Sociedad Fiduciaria Cyprus Barclays Bank PLC Denmark Den Danske Bank Finland Kansallis-Osake-Pankki France Banque Paribas 1 48 Country Sub-Custodian ------- ------------- Germany Berliner Handels- und Frankfurter Bank Greece National Bank of Greece S.A. Hong Kong Standard Chartered Bank Hungary Citibank Budapest Rt. India The Hongkong and Shanghai Banking Corporation Limited Indonesia Standard Chartered Bank Ireland Bank of Ireland Israel Bank Hapoalim B.M. Italy Morgan Guaranty Trust Company Japan Sumitomo Trust & Banking Co., Ltd. Korea Bank of Seoul Malaysia Standard Chartered Bank Malaysia Berhard Mexico Citibank, N.A. Netherlands MeesPierson N.V. New Zealand ANZ Banking Group (New Zealand) Limited Norway Christiania Bank og Kreditkasse Pakistan Deutsche Bank AG Peru Citibank, N.A. Philippines Standard Chartered Bank Portugal Banco Comercial Portugues Singapore The Development Bank of Singapore Ltd. Spain Banco Santander, S.A. 2 49 Country Sub-Custodian ------- ------------- Sri Lanka The Hongkong and Shanghai Banking Corporation Limited Sweden Skandinaviska Enskilda Banken Switzerland Union Bank of Switzerland Taiwan Central Trust of China Thailand Standard Chartered Bank Turkey Citibank, N.A. United Kingdom State Street Bank and Trust Company Uruguay Citibank, N.A. Venezuela Citibank, N.A. Certified: - ------------------------- Samuel D. Sirko Assistant Secretary Date: January 20, 1995 3 EX-99.8.B 13 AMENDMENT TO CUSTODIAN AGREEMENT 1 EXHIBIT 8(b) AMENDMENT NO.1 TO CUSTODIAN CONTRACT Pursuant to paragraph 17 of the Custodian Contract dated November 8, 1991 between AIM International Funds, Inc. (the "Fund") and State Street Bank and Trust Company (the "Custodian"), the Fund hereby requests that the Custodian render services as custodian to the following additional portfolios: AIM Global Aggressive Growth Fund AIM Global Growth Fund AIM Global Income Fund Please indicate acceptance of this addition by signing and returning this Amendment to our offices at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046. Effective Date: July 1, 1994 AIM INTERNATIONAL FUNDS, INC. Attest: /s/ CAROL F. RELIHAN By: /s/ ROBERT H. GRAHAM --------------------- ---------------------- Assistant Secretary President STATE STREET BANK AND TRUST COMPANY Attest: /s/ A. CONNELLY By: /s/ N. GRADY ------------------- ----------------- Assistant Secretary Authorized Officer EX-99.8.C 14 AMENDMENT NO. 2 TO THE CUSTODIAN CONTRACT 1 EXHIBIT 8(c) AMENDMENT NO. 2 TO CUSTODIAN CONTRACT AMENDMENT No. 2 made as of this 19th day of September, 1995 to that certain Custodian Contract dated as of November 8, 1991, as amended (the "Custody Agreement") between State Street Bank and Trust Company, a Massachusetts trust company (the "Custodian") and AIM International Funds, Inc., a Maryland corporation (the "Fund"). WHEREAS, the Custodian and Fund have previously entered into a Custody Agreement; WHEREAS, the Fund and the Custodian desire to amend the Custody Agreement to provide for the implementation of Electronic Trade Delivery ("ETD"), the automated process of notifying the Custodian of trades for settlement processing; and WHEREAS, the Board of Directors of the Fund has approved the amendment of the Custody Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises set forth, the Fund and the Custodian agree to amend the Custody Agreement by replacing "Section 5. - Proper Instructions" in its entirety with the following: 5. Proper Instructions ------------------- Proper Instructions as used throughout this Contract includes the following: (a) a writing signed or initialled by one or more person or persons as the Board of Directors 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 the Board of Directors and the Custodian are satisfied that procedures relating to the use of such electro-mechanical and electronic devices afford adequate safeguards for the Portfolios' assets and have been followed. The Fund shall provide a Certificate of the Secretary or the Assistant Secretary as to the authorization for use of electro-mechanical or electronic devices by the Board of Directors of the Fund accompanied by a detailed description of procedures approved by the Fund's Board of Directors; (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. The 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 2.11, hereof, shall include instructions received by the Custodian in accordance with the provisions of any three-party agreement, to which the Fund and the Custodian are each a party, governing such account or accounts. IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the day and year first above writen. 2 ATTEST STATE STREET BANK AND TRUST COMPANY /s/ J. CHAINY By /s/ N. GRADY - -------------------------- -------------------------------- Assistant Secretary ATTEST AIM INTERNATIONAL FUNDS, INC. /s/ NANCY L. MARTIN By /s/ ROBERT H. GRAHAM - -------------------------- --------------------------------- Assistant Secretary 2 EX-99.8.D 15 SUBCUSTODIAN AGREEMENT WITH TEXAS COMMERCE BANK 1 EXHIBIT 8(d) SUBCUSTODIAN AGREEMENT WITH TEXAS COMMERCE BANK The undersigned custodian (the "Custodian") for the funds listed on Schedule A hereto (the "Funds"), each an open-end investment company registered under the Investment Company Act of 1940 (the "1940 Act"), hereby appoints Texas Commerce Bank National Association as subcustodian (the "Subcustodian") for each of the Funds and their respective series, if any, and the Subcustodian hereby accepts such appointment on the following terms and conditions as of the date set forth below and along with A I M Fund Services, Inc. ("AFS"), transfer agent for the Funds, agree as follows: 1. Qualification. The Custodian and the Subcustodian each represent to the other and to the Funds that it is qualified to act as custodian for a registered investment company under the 1940 Act, and the Custodian represents to the Subcustodian that it is the duly appointed, qualified and acting Custodian of the Funds, with all necessary power and authority to enter into this Agreement. 2. Subcustody. The Subcustodian shall maintain custodian accounts for the Funds ("Subscription Accounts"). Checks issued in payment for purchases of the Funds' shares ("Subscription Checks") shall be deposited by AFS with the Subcustodian and AFS shall instruct Subcustodian into which Subscription Account to deposit such checks. The Subcustodian shall debit AFS account no. 100366815 (the "Bounced Check Account") for the aggregate amount of all Subscription Checks returned to the Subcustodian for non-payment ("Return Items"), informing AFS daily of any returned Subscription Checks. In the event that the available funds in the Bounced Check Account are insufficient to cover the amount of the Return Items, Subcustodian shall promptly notify Transfer Agent in writing of the amount of such insufficiency. Upon receipt of such written notice, Transfer Agent agrees to remit to Subcustodian the full amount of such insufficiency. Each business day AFS shall provide instructions to the Subcustodian to wire transfer certain funds to Boston Safe Deposit & Trust Company and other entities that AFS may specify from time to time, which shall deposit the proceeds of such wire transfers from the Subcustodian into the Settlement Account at Boston Safe Deposit & Trust Company. The Subcustodian agrees that it will comply with the instructions of AFS so long as the instructions do not require the transfer of funds in an amount in excess of the aggregate of the ledger balances in the Subscription Accounts in question and the Subcustodian is not prohibited from making the transfer by applicable law or regulation. Boston Safe Deposit & Trust Company will net the Subscription Check proceeds with the redemption proceeds and the net amount will be wired to the Settlement Account at the Custodian. The Funds will compensate the Subcustodian for (i) service fees charged by the Subcustodian for processing Subscription Checks as set forth on Schedule 1 to this Agreement (these amounts will be paid monthly and computed based on overall account relationship), (ii) other miscellaneous fees as described in Schedule 1 and (iii) Return Items not paid by the Transfer Agent within five (5) days following a payment by Subcustodian pursuant to paragraph 2 hereof. -1- 2 3. Instructions; Other Communications. Any one officer or other authorized representative of AFS designated as hereinafter provided as an officer or other authorized representative of AFS authorized to give instructions to the Subcustodian with respect to the Funds' assets held in the Subscription Accounts (an "Authorized Officer"), shall be authorized to instruct the Subcustodian as to the deposit, withdrawal or any other action with respect to the Funds' assets from time to time by telephone, or in writing signed by such Authorized Officer and delivered by telecopy, tested telex, tested computer printout or such other reasonable methods as AFS and Subcustodian shall agree upon; provided, however, the Subcustodian is authorized to accept and act upon instructions from AFS, whether orally, by telephone or otherwise, which it reasonably believes to be given by an Authorized Officer. The Subcustodian may require that any instructions given orally or by telecommunications be promptly confirmed in writing. The Authorized Officers shall be as set forth on Schedule 2 attached hereto or as otherwise from time to time certified in writing by AFS to the Subcustodian signed by the President or any Vice President and any Assistant Vice President, Assistant Secretary or Assistant Treasurer of AFS. In addition to a written list of authorized officers, AFS will provide Subcustodian with additional information and signature cards as reasonably requested by Subcustodian relating to the Authorized Officers. The Subcustodian shall furnish to AFS (i) prompt telephonic and written notice of Return Items, (ii) monthly reports on activity in each of the Subscription Accounts mailed within five (5) days after the end of each calendar month and (iii) a daily statement of activity in each of the Subscription Accounts, which will be made available via the MicroLink balance reporting service. AFS will furnish a copy of the information provided by Subcustodian to (i) each Fund, and (ii) the Custodian (as to the Custodian, only items (ii) and (iii) above are required). 4. Fees. The service fees charged by the Subcustodian under the Agreement are as set forth in Schedule 1 attached hereto. Schedule 1 may be amended by the parties in writing provided written notice is furnished to the Funds thirty (30) days in advance of any increase in fees. 5. Liabilities. (i) The Subcustodian shall be indemnified and held harmless by AFS and the Funds and not be liable for any action taken or omitted to be taken by it in good faith or for any mistake of law or fact, or for anything Subcustodian may do or refrain from doing in connection with or as required by this Agreement, except for failure to exercise ordinary care or act in good faith. Except as otherwise set forth herein, the Subcustodian shall have no responsibility with respect to Fund assets. The Subcustodian shall, for the benefit of the Custodian, AFS and the Funds, use the same care with respect to the handling of the Funds' assets in the Subscription Accounts as it uses with respect to its own assets similarly held. The Subcustodian shall have no responsibility with respect to any monies or any wire transfer, checks or other instruments for the payment of money unless and until actually received or secured by wire transfer by the Subcustodian. IN NO EVENT WILL THE SUBCUSTODIAN BE LIABLE TO THE CUSTODIAN, AFS OR THE FUNDS FOR ANY INDIRECT DAMAGES, LOST PROFITS, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHICH ARISE OUT OF OR IN CONNECTION WITH THE SERVICES CONTEMPLATED HEREIN. (ii) The Subcustodian shall indemnify, defend and save harmless the Custodian, AFS and each Fund from and against all loss, liability, claims and demands incurred by the Custodian, AFS or the Funds and any related out-of-pocket expenses, arising directly from the Subcustodian's bad -2- 3 faith, willful malfeasance or negligence in connection with its obligations under this Agreement and the Investment Company Act of 1940, as amended. (iii) The Custodian agrees to indemnify and hold the Subcustodian harmless from and against any and all loss, liability, claims and demands incurred by Subcustodian in connection with the performance by the Subcustodian in good faith of any activity under this Agreement pursuant to instructions of the Custodian. (iv) It is understood and stipulated that neither the shareholders of any Fund nor the members of the Board of such Fund shall be personally liable hereunder. 6. Termination. Each party may terminate this Agreement at any time by not less than thirty (30) days prior written notice which shall specify the date of such termination; provided, however, that the Custodian may immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Subcustodian by the Federal Deposit Insurance Corporation or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of this Agreement, the Subcustodian shall promptly make delivery of all assets of the Funds held in the Subscription Accounts to the Custodian or any third party, qualified to act as a custodian pursuant to the rules and regulations of the Investment Company Act of 1940, as amended, specified by the Custodian in writing. If any Subscription Checks are subsequently returned unpaid, the Funds shall direct AFS to pay the Subcustodian the amount thereof on behalf of the Funds promptly upon demand. All indemnities provided pursuant to this Agreement shall survive the termination of this Agreement. 7. Communications. All communications required or permitted to be given under this Agreement shall be in writing (including telex, telegraph or telefax, facsimile or similar electronic transmittal device) and shall be deemed given (a) upon delivery in person to the persons indicated below, or (b) three days after deposit in the United States postal service, postage prepaid, registered or certified mail, return receipt requested, or (c) upon receipt by facsimile (provided that receipt of such facsimile is confirmed telephonically by the addressee) or (d) by overnight delivery service (with receipt of delivery) sent to the address shown below, or to such different address(es) as such party shall designate by written notice to the other parties hereto at least ten days in advance of the date on which such change of address shall be effective. All communications required or permitted to be given under this Agreement shall be addressed as follows: (i) to the Subcustodian: Texas Commerce Bank National Association P.O. Box 2558 Houston, Texas 77252-8084 Attn: Kathy Wallace (ii) to the Custodian: State Street Bank and Trust Company Mutual Fund Services Boston, Massachusetts 02105 Attn: AIM Funds -3- 4 (iii) to the Transfer Agent: A I M Fund Services, Inc. 11 Greenway Plaza Suite 1919 Houston, Texas 77046 Attn: Robert Frazer 8. Records. The books and records pertaining to the Subscription Accounts which are in the possession of the Subcustodian shall be preserved by the Subcustodian for six years, the first two years of which the books and records shall be maintained by the Subcustodian in an easily accessible place. The Subcustodian will not refuse any reasonable request for inspection and audit of its books and records concerning transactions and balances of the Subscription Accounts by an agent of any Fund, AFS or the Custodian. 9. Cooperation. The Subcustodian shall cooperate with each Fund and the Custodian and their respective independent public accountants in connection with annual and other audits of the books and records of the Custodian or the Funds and shall take all reasonable actions to assure that such information is made available to such accountants for the expression of their opinion. 10. Terms and Conditions of Deposit Accounts. The handling of the Subscription Accounts and the Bounced Check Account and all other accounts maintained with the Subcustodian in connection with or relating to this Agreement will be subject to the Subcustodian's Terms and Conditions of Deposit Accounts, and any and all rules or regulations now or hereafter promulgated by the Subcustodian which relate to such accounts, and the Uniform Commercial Code as adopted in the State of Texas (except in the event any of the same are contrary to the specific provisions hereof). In the event of any specific conflict between the provisions hereof and the provisions of any of the foregoing, the provisions of this Agreement shall control. 11. Miscellaneous. This Agreement shall be (i) governed by and construed in accordance with the laws of the State of Texas without regard to conflicts of law rules, (ii) may be executed in counterparts each of which shall be deemed an original but all of which shall constitute the same instrument, and (iii) may only be amended by the parties hereto in writing. 12. Signature Authority. Each of the undersigned represents and warrants that he/she has the requisite authority to execute this Agreement on behalf of the party for whom the undersigned signs; that all necessary action has been taken to authorize this Agreement; that this Agreement, upon execution and delivery, shall be a binding obligation of such party. -4- 5 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed this 9th day of September, 1994. TEXAS COMMERCE BANK NATIONAL ASSOCIATION (as Subcustodian) By: /s/ KATHY WALLACE ---------------------------------- Title: Financial Services Officer ------------------------------- STATE STREET BANK AND TRUST COMPANY (as Custodian) By: /s/ N. GRADY ---------------------------------- Title: Vice President ------------------------------- A I M FUND SERVICES, INC. (as Transfer Agent) By: /s/ Illegible ---------------------------------- Title: Senior Vice President ------------------------------- Each of the Funds hereby consents and agrees to the terms of the foregoing Subcustodian Agreement; provided, however, that the same shall not relieve the Custodian of any of its responsibilities to the Fund as set forth in the Custodian Agreements between the Funds and the Custodian. EACH OF THE FUNDS LISTED ON SCHEDULE A HERETO By: /s/ Illegible ---------------------------------- Title: Senior Vice President & Treasurer ------------------------------ -5- 6 SCHEDULE A AIM Equity Funds, Inc. AIM Funds Group AIM International Funds, Inc. AIM Investment Securities Funds AIM Tax-Exempt Funds, Inc. 7 Schedule 1 TCB-HOUSTON PRICES ARE GUARANTEED FOR 90 DAYS FROM: 6/09/94 PRO-FORMA ACCOUNT ANALYSIS STATEMENT AIM FUNDS SERVICES, INC. ANALYSIS PERIOD PAGE LEVEL ENDING NO. ACCOUNT DETAIL 04/30/94 1 OF 1 CHECK PROCESSING
EARNINGS RESERVE BALANCE AVERAGE DEMAND BALANCES THIS PERIOD CREDIT REQUIREMENT MULTIPLIER - ----------------------------------- -------- ----------- --------- LEDGER BALANCE $0.00 3.55% 10.00% 362.72 LESS UNCOLLECTED FUNDS $0.00 ----- COLLECTED BALANCE $0.00 LESS INTEREST BEARING BALANCE $0.00 ----- NET COLLECTED BALANCE $0.00 LESS RESERVE REQUIREMENT $0.00 ----- NET AVAILABLE BALANCE $0.00
WEIGHTED SERVICES RENDERED UNIT PRICE ACTIVITY TOTAL PRICE BALANCE EQUIVALENT ----------------- ---------- -------- ----------- ------------------ AUTOMATED CLEARING HOUSE Night Cycle CR/DE - One Day 0.0750 2,200 $ 165.00 $ 56,568.80 Day Cycle CR/DE - Two Day 0.0750 26,000 $ 1,950.00 $ 668,304.00 ACI Data Transmission 10.0000 1 $ 10.00 $ 3,427.20 Monthly Maintenance - TexID/Acct 50.0000 1 $ 30.00 $ 17,136.00 Return Items 2.5000 137 $ 342.50 $ 117,381.60 CUSTOMER ACCOUNTING Account Maintenance 20.0000 9 $ 180.00 $ 61,689.60 Return Items - Received 2.5000 246 $ 615.00 $ 210,772.80 Return Items - Receivers 1.5000 492 $ 738.00 $ 252,927.36 FDIC Assessment $.16/$1000 Ledger 469.3300 1 $ 469.33 $ 160,848.78 Customer Research - per copy 2.0000 1 $ 2.00 $ 685.44 ITEM PROCESSING Tier I/Local City 0.0300 560 $ 16.80 $ 5,757.70 Tier II/Local RCPC 0.0450 124 $ 5.58 $ 1,912.38 Tier III/Texas Fed Cities 0.0550 628 $ 34.54 $ 11,837.55 Tier IV/Other Texas 0.0600 1,118 $ 67.08 $ 22,989.66 Tier V/Other Transit 0.0600 34,050 $ 2,043.00 $ 700,176.96 NICROLINE APC Transactions 0.1000 2,200 $ 220.00 $ 75,398.40 APC Maintenance w/ Cash Manager 25.0000 1 $ 25.00 $ 8,568.00 Cash Manager Software Maintenance 35.0000 1 $ 35.00 $ 11,995.20 Bank Account - TCB 20.5500 9 $ 184.95 $ 65,386.06 Bank Account - Other Banks 28.3300 15 $ 424.95 $ 145,638.86 Previous Day Items 0.1500 26,039 $ 3,905.85 $1,338,612.91 TEX-COM TX Corp. DX TCB Accounts 25.5600 9 $ 230.04 $ 78,839.31 TX Corp. DX TCB Accts D8/CR Items 0.2000 3,039 $ 607.80 $ 208,305.22 WIRE TRANSFER Incoming transfer - Autopost 4.5000 660 $ 2,970.00 $1,017,878.40 Account Maintenance 5.0000 1 $ 5.00 $ 1,713.60 IDA Repetitive - Outgoing 6.0000 22 $ 132.00 $ 45,239.04 TOTALS BEFORE RESERVES $ 15,429.42 $5,287,970.82 SUMMARY ANALYSIS NET AVAILABLE BALANCE $0.00 LESS BALANCES REQUIRED TO SUPPORT SERVICES $5,250,970.82 ------------- BALANCES AVAILABLE FOR OTHER SERVICES ($5,287,970.82) COLLECTED BALANCE REQUIRED $5,875,523.14 OR FEES DUE FOR COLLECTED BALANCE DEFICIENCY $17,143.80
8 Average Demand Balances This Period - ----------------------------------- -- Ledger Balance -- The average gross balance that includes all collected and uncollected funds. It is the sum of each day's ending ledger inclusive of aggregate adjustments divided by the number of days in the reporting month. -- Less Funds in Process of Collection -- The average float incurred for the reporting month calculated by subtracting average collected balance from the average ledger balance. -- Collected Balance -- The sum of each day's ending collected balance inclusive of aggregate adjustments divided by the number of days in the reporting month. -- Less Interest Bearing Balance -- The average collected balance maintained in interest bearing accounts. -- Net Collected Balance -- Collected balance minus interest bearing balance. -- Less Reserve Requirement -- The amount of every dollar of collected balances that must be held in reserve. Net collected balance multiplied by the reserve requirement rate. -- Net Available Balance -- The balance available to apply towards compensation for services rendered. Net collected balance minus the reserve requirement. Earnings Credit -- This percent approximates the value of the alternative use of cash in short term investment. The rate is adjusted monthly to reflect market trends during the period. Reserve Requirement -- This percentage is determined by state or federal regulations. This percentage of every dollar of collected balances must be held in reserve by the bank. Balance Multiplier -- This shows the available balances required to compensate for $1.00 of service activity for one month. It is calculated by applying the earnings credit rate to $1.00 of services as follows: $1.00 Days in the Year ---------------- X ------------------- Earnings Credit Days in the Month Services Rendered -- The description of services provided during the reporting month. Weighted Unit Price -- Total price divided by total activity. Activity -- The total number of units rendered for each service. Total Price -- The unit price multiplied by the activity. Balance Equivalent -- The available balances required to compensate for services rendered. Total price multiplied by the balance multiplier. Summary Analysis -- Balance Available for Other Services -- this represents the difference between the net available balance and the balances required to support services rendered. -- Collected Balance Equivalent -- This represents the collected balances equivalent that is available to support additional services. The formula for calculation is: Balances Available For Other Services ------------------------------------- 1-Reserve Requirement -- Collected Balances Required -- This represents the collected balance required to compensate for a current month deficient available balance. The formula for calculation is: Balances Available For Other Services ------------------------------------- 1-Reserve Requirement -- Fees Due for Collected Balance Deficiency -- The amount due in fees for a collected balance deficiency. The formula for calculation is: Collected Balance Required -------------------------- Balance Multiplier 9 June 2, 1994 PRO-FORMA ACCOUNT ANALYSIS ADDENDA Page 1 AIM Fund Services, Inc. BANK/PRODUCT/ACTIVITY UNIT PRICE MINIMUM - --------------------- ---------- ------- TCB-Houston MICROLINK Cash Manager Software Setup $325.00 0.00 Automated Payments and Collections (APC) Software and Setup $225.00 0.00 ACH Transmission Setup $200.00 0.00 10 SCHEDULE 2 AUTHORIZED OFFICERS ------------------- Jack Caldwell President Ira Cohen Vice President Mary Corcoran Vice President Sidney M. Dilgren Vice President Robert A. Frazer Assistant Vice President Mary Gentempo Vice President Richard Snyder Senior Vice President AUTHORIZED REPRESENTATIVES -------------------------- Torri Evans Debi Folse Ann Marie Mahoney Tim McDonough Robert Thompson EX-99.9.A.5 16 TRANSFER AGENCY AND SERVICE AGREEMENT 1 EXHIBIT 9(a)(5) TRANSFER AGENCY AND SERVICE AGREEMENT BETWEEN AIM INTERNATIONAL FUNDS, INC. AND A I M FUND SERVICES, INC. 2 TABLE OF CONTENTS
PAGE ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 5 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 8 ADDITIONAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 9 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 10 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 11 TEXAS LAW TO APPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the 1st day of November, 1994, by and between AIM INTERNATIONAL FUNDS, INC., a Maryland corporation, having its principal office and place of business at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046 (the "Fund"), and A I M Fund Services, Inc., a Delaware corporation having its principal office and place of business at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046 (the "Transfer Agent"). WHEREAS, the Transfer Agent is registered as such with the Securities and Exchange Commission (the "SEC"); and WHEREAS, the Fund is authorized to issue shares in separate series and classes, with each such series representing interests in a separate portfolio of securities and other assets and each such class having different distribution arrangements; and WHEREAS, the Fund on behalf of each class of each of the portfolios thereof (the "Portfolios") desires to appoint the Transfer Agent as its transfer agent, and agent in connection with certain other activities, with respect to the Portfolios, and the Transfer Agent desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT 1.01 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as, its transfer agent for the authorized and issued shares of common stock of the Fund representing interests in each class of each of the respective Portfolios ("Shares"), dividend disbursing agent, and agent in connection with any accumulation or similar plans provided to shareholders of each of the Portfolios (the "Shareholders"), including without limitation any periodic investment plan or periodic withdrawal program, as provided in the currently effective prospectus and statement of additional information (the "Prospectus") of the Fund on behalf of the Portfolios. 1.02 The Transfer Agent agrees that it will perform the following services: (a) The Transfer Agent shall, in accordance with procedures established from time to time by agreement between the Fund on behalf of each of the Portfolios, as applicable, and the Transfer Agent: (i) receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Charter of the Fund (the "Custodian"); (ii) pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account; (iii) receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian; 1 4 (iv) at the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the Fund; (v) effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vi) prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the Shares; (vii) maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and (viii) record the issuance of Shares of the Fund and maintain pursuant to SEC Rule 17Ad-1O(e) a record of the total number of Shares which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Transfer Agent shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which function shall be the sole responsibility of the Fund. (b) In addition to the services set forth in the above paragraph (a), the Transfer Agent shall: (i) perform the customary services of a transfer agent, including but not limited to: maintaining all Shareholder accounts, mailing Shareholder reports and prospectuses to current Shareholders, preparing and mailing confirmation forms and statements of accounts to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information. (c) Procedures as to who shall provide certain of these services in Article 1 may be established from time to time by agreement between the Fund on behalf of each Portfolio and the Transfer Agent. The Transfer Agent may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf. ARTICLE 2 FEES AND EXPENSES 2.01 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 fees as set out in the initial fee schedule attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.02 below may be changed from time to time subject to mutual written agreement between the Fund and the Transfer Agent. 2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances incurred by the Transfer Agent for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by the 2 5 Transfer Agent at the request or with the consent of the Fund, will be reimbursed by the Fund on behalf of the applicable Shares. 2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees and reimbursable expenses following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to the Transfer Agent by the Fund at least seven (7) days prior to the mailing date of such materials. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT The Transfer Agent represents and warrants to the Fund that: 3.01 It is a corporation duly organized and existing and in good standing under the laws of the state of Delaware. 3.02 It is duly qualified to carry on its business in Delaware and in Texas. 3.03 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 3.04 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.05 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 3.06 It is registered as a Transfer Agent as required by the federal securities laws. 3.07 This Agreement is a legal, valid and binding obligation to it. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to the Transfer Agent that: 4.01 It is a business corporation duly organized and existing and in good standing under the laws of Maryland. 4.02 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 4.03 All corporate proceedings required by said Charter and By-Laws have been taken to authorize it to enter into and perform this Agreement. 4.04 It is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended. 3 6 4.05 A registration statement under the Securities Act of 1933, as amended on behalf of each of the Portfolios is currently effective and will remain effective, with respect to all Shares of the Fund being offered for sale. ARTICLE 5 INDEMNIFICATION 5.01 The Transfer Agent shall not be responsible for, and the Fund shall on behalf of the applicable Portfolio, indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) all actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct; (b) the Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder; (c) the reliance on or use by the Transfer Agent or its agents or subcontractors of information, records and documents or services which (i) are received or relied upon by the Transfer Agent or its agents or subcontractors and/or furnished to it or performed by on behalf of the Fund, and (ii) have been prepared, maintained and/or performed by the Fund or any other person or firm on behalf of the Fund; provided such actions are taken in good faith and without negligence or willful misconduct; (d) the reliance on, or the carrying out by the Transfer Agent or its agents or subcontractors of any instructions or requests of the Fund on behalf of the applicable Portfolio; provided such actions are taken in good faith and without negligence or willful misconduct; or (e) the offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. 5.02 The Transfer Agent shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by the Transfer Agent as result of the Transfer Agent's lack of good faith, negligence or willful misconduct. 5.03 At any time the Transfer Agent may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement, and the Transfer Agent and its agents or subcontractors shall not be liable to and shall be indemnified by the Fund on behalf of the applicable Portfolio for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Transfer Agent shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided to the Transfer Agent or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not 4 7 be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. 5.04 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 5.05 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 5.06 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT 6.01 The Fund shall, upon request, on behalf of each of the Portfolios promptly furnish to the Transfer Agent the following: (a) a certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement; and (b) a copy of the Charter and By-Laws of the Fund and all amendments thereto. 6.02 The Transfer Agent shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Transfer Agent agrees that all such records prepared or maintained by the Transfer Agent relating to the services to be performed by the Transfer Agent hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request. 6.03 The Transfer Agent and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 6.04 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Transfer Agent will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Transfer Agent reserves the right, 5 8 however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. ARTICLE 7 TERMINATION OF AGREEMENT 7.01 This Agreement may be terminated by either party upon sixty (60) days written notice to the other. 7.02 Should the Fund exercise its right to terminate this Agreement, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund on behalf of the applicable Portfolios. Additionally, the Transfer Agent reserves the right to charge for any other reasonable expenses associated with such termination and/or a charge equivalent to the average of three (3) months' fees. ARTICLE 8 ADDITIONAL FUNDS 8.01 In the event that the Fund establishes one or more series of Shares in addition to the Portfolios with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. ARTICLE 9 ASSIGNMENT 9.01 Except as provided in Section 9.03 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 9.02 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 9.03 The Transfer Agent may, without further consent on the part of the Fund, subcontract for the performance hereof with any entity which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that the Transfer Agent shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions. ARTICLE 10 AMENDMENT 10.01 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors of the Fund. ARTICLE 11 TEXAS LAW TO APPLY 11.01 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of Texas. 6 9 ARTICLE 12 MERGER OF AGREEMENT 12.01 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. ARTICLE 13 COUNTERPARTS 13.01 This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7 10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. AIM INTERNATIONAL FUNDS, INC. By: /s/ ROBERT H. GRAHAM ----------------------------------- President ATTEST: /s/ NANCY L. MARTIN - ----------------------------------- Assistant Secretary A I M FUND SERVICES, INC. By: /s/ JOHN CALDWELL ----------------------------------- President ATTEST: /s/ NANCY L. MARTIN - ----------------------------------- Assistant Secretary 8 11 FEE SCHEDULE 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 Annual/Semi-Annual Dividends $15.15 Class A Quarterly & Monthly Dividend 17.15 Class A Daily Accrual 19.65 Class B 19.65
2. The Transfer Agent shall provide the AIM Funds with an annualized credit to the monthly billings of (a) $1.50 for each open account in excess of 100,000 open AIM Funds Accounts up to and including 125,000 open AIM Funds Accounts; (b) $1.75 for each open account in excess of 125,000 open AIM Funds Accounts up to and including 150,000 open AIM Funds Accounts; (c) $2.00 for each open AIM Funds Account in excess of 150,000 open AIM Funds Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25 for each open AIM Funds Account in excess of 200,000 open AIM Funds Accounts up to and including 500,000 open AIM Funds Accounts; (e) $2.50 for each open AIM Funds Account in excess of 500,000 open AIM Funds Accounts up to and including 1,000,000 open AIM Funds Accounts; and (f) $3.00 for each open AIM Funds Account in excess of 1,000,000 open AIM Funds Accounts. 3. In addition, beginning on the anniversary date of the execution of the Remote Services Agreement with The Shareholder Services Group, Inc., and on each subsequent anniversary date, the per account fees shall each be increased by a percentage amount equal to the percentage increase in the then current Consumer Price Index (all urban consumers) or its successor index, though in no event shall such increase be greater than a 7% increase over the previous fees. 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 one half of 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. 9 12 5. OUT-OF-POCKET EXPENSES The Fund shall reimburse the Transfer Agent monthly for applicable out-of-pocket expenses, including, but not limited to the following items: - Microfiche/microfilm production & equipment - Magnetic media tapes and freight - Printing costs, including, without limitation, certificates, envelopes, checks, stationery, confirmations and statements - Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass through to the Fund - Due diligence mailings - Telephone and telecommunication costs, including all lease, maintenance and line costs - Ad hoc reports - Proxy solicitations, mailings and tabulations - Daily & Distribution advice mailings - Shipping, Certified and Overnight mail and insurance - Year-end form production and mailings - Terminals, communication lines, printers and other equipment and any expenses incurred in connection with such terminals and lines - Duplicating services - Courier services - Banking charges, including without limitation incoming and outgoing wire charges @ $8.00 per wire - Rendering fees as billed - Federal Reserve charges for check clearance - Record retention, retrieval and destruction costs, including, but not limited to exit fees charged by third party record keeping vendors - Third party audit reviews - All client specific Systems enhancements will be at the Funds' cost. - Certificate Insurance - Such other miscellaneous expenses reasonably incurred by the Transfer Agent in performing its duties and responsibilities under this Agreement - Checkwriting fee of $.75 per check redemption. The Fund agrees that postage and mailing expenses will be paid on the day of or prior to mailing. In addition, the Fund will promptly reimburse the Transfer Agent for any other unscheduled expenses incurred by the Transfer Agent whenever the Fund and the Transfer Agent mutually agree that such expenses are not otherwise properly borne by the Transfer Agent as part of its duties and obligations under the Agreement. 10 EX-99.9.A.6 17 REMOTE ACCESS AND RELATED SERVICES AGREEMENT 1 EXHIBIT 9(a)(6) REMOTE ACCESS ------------- AND --- RELATED SERVICES AGREEMENT -------------------------- AGREEMENT dated as December 23, 1994 between each registered investment company listed on the signature pages hereof, either for itself or, with respect to each such company that is a series investment company, on behalf of each of the series or class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal offices at One Exchange Place, Boston, Massachusetts 02109. W I T N E S S E T H ------------------- That for and in consideration of the mutual promises hereinafter set forth, the Fund and TSSG agree as follows: 1. Appointment of TSSG. The Fund appoints TSSG as servicing agent to provide and support remote terminal access through dedicated transmission lines to its computerized data processing record keeping system for Fund shareholder accounting more fully described on the attached Schedule A (the "TSSG System") installed on TSSG computer hardware and using TSSG software ("TSSG Facilities") to provide and support remote terminal access to the TSSG System and the TSSG Facilities for the maintenance of Fund shareholder records, processing of information and generation of information with respect thereto. TSSG hereby accepts such appointment for the compensation described below. 2. Oral and Written Instructions. "Written Instructions" shall mean a written communication signed by a person reasonably believed by TSSG to be a person named on the list of authorized persons as it may be amended by amendment provided by the Fund to TSSG from time to time ("Schedule B"). "Oral Instructions" shall mean instructions, other than Written Instructions, actually received by TSSG from a person reasonably believed by TSSG to be an Authorized Person listed on Schedule B. Written communication shall include manually executed originals and authorized electronic transmissions, including telefacsimile of a manually executed original or other process. 3. Compensation. (a) The Fund will compensate TSSG for the performance of its obligations hereunder in accordance with the Fee Schedule attached hereto as Schedule C. Such fees may be adjusted from time to time by attaching to or substituting for Schedule C a revised Fee Schedule, dated and signed by an authorized officer of each party hereto. 2 (b) In addition to the fees payable pursuant to Schedule C, the Fund will pay all out-of-pocket expenses incurred by TSSG in performing its duties hereunder. Out-of-pocket expenses shall include the items specified in the written schedule of out-of-pocket charges attached hereto as Schedule D. Upon written approval of the Fund, Schedule D may be modified by TSSG. The Fund agrees to approve all reasonable changes in Schedule D. Unscheduled out-of-pocket expenses shall be limited to those out-of-pocket expenses directly related to TSSG's performance of its obligations hereunder. (c) TSSG will provide an invoice as soon as practicable after the end of each calendar month detailed in accordance with Schedule C and Schedule D. The Fund will pay to TSSG the amount so billed within fifteen (15) days after the Fund's receipt of the invoice. 4. Duties of TSSG. (a) Subject to the provisions of this Agreement, the Fund hereby agrees to use or employ the TSSG System and the TSSG Facilities to maintain certain Fund shareholder records and generate output with respect to the Fund's shareholders, and subject to the provisions of this Agreement, TSSG will provide the use of the TSSG System and the TSSG Facilities to maintain Fund shareholder records and generate such output with respect to the Fund's shareholders. (b) TSSG agrees to provide to the Fund at its facility located at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046 or at such other location as may be mutually agreed upon in writing by TSSG and the Fund (the "Fund Facility") remote access to the use of information processing capabilities of the TSSG System as it may be modified from time to time by TSSG. 5. Changes and Modifications. (a) During the term of this Agreement, TSSG will make available for Fund use, without additional costs, all modifications and improvements to the TSSG System (excluding those modifications and improvements TSSG views as additional products and/or those developed exclusively for other TSSG clients) made in the ordinary course of business. In addition, TSSG will use its best efforts to make reasonable changes to the TSSG System requested by the Fund, subject to payment of additional fees as mutually agreed upon in writing and as reflected in Schedule C. (b) TSSG shall have the right, at any time, and from time to time, to alter and modify any systems, programs, procedures or facilities used or employed in performing its duties and obligations hereunder (a "System Modification"), provided that no 2 3 System Modification shall, without the consent of the Fund, materially adversely change or affect the operations and procedures of the Fund in using or employing the TSSG System or the TSSG Facilities hereunder. TSSG will use its best efforts to notify the Fund in writing at least five business days prior to implementing any System Modification which impacts or effects AFS' day to day operations, and in any event by 8 a.m. CST the following business day. (c) TSSG agrees to make any System Modifications necessary to meet federal, state or local government or self-regulatory organization requirements ("Regulatory Adherence Enhancements") in a timely fashion. TSSG agrees to advise the Fund promptly upon notification of any change in or receipt of any information or advice concerning any change in the requirements of any federal, state, local or self-regulatory organization which might require such System Modifications. The Fund shall obtain any additional software required to comply with such changes in federal, state, and local government or self regulatory organization requirements. Regulatory Adherence Enhancements shall be limited to technically and commercially practical System modifications which are within the scope of the functions, capabilities and any database of the TSSG System. TSSG will provide Regulatory Adherence Enhancements only after final specification, agreed upon by TSSG, the Fund and affected third parties, have been established and delivered to TSSG. (d) During the term of this Agreement TSSG shall expend no less than $1,000,000 (one million dollars) per calendar year for the enhancement and maintenance of TSSG's recordkeeping and associated system that are utilized by TSSG to provide services to the Fund under this Agreement (or a successor Remote Service Agreement). At least once each calendar year, TSSG shall provide the Fund with a schedule of the enhancements planned by the TSSG for the succeeding 12 month period. 6. Duties of the Fund. (a) The Fund will transmit all information and data required by TSSG hereunder to the TSSG Facilities in the format and form specified by TSSG, so that the output produced by the Fund shall be complete and accurate when it is generated by the TSSG System and the TSSG Facilities. The Fund shall be responsible and liable for the costs and expenses of regenerating any output if the Fund provides nonconforming or erroneous data or shall have failed to transmit any such data or information or verify any such data and information when it is generated by the TSSG System and the TSSG Facilities. (b) In the event the Fund shall erroneously transmit information or shall transmit incorrect information or data to the TSSG System or the TSSG Facilities, the Fund 3 4 shall correct such information and data and retransmit the same to the TSSG System or to the TSSG Facilities. Upon consent of the Fund, which shall not be unreasonably withheld, TSSG shall take the necessary steps at Fund expense to correct any files affected by the original incorrect transmission. (c) In the event the TSSG System malfunctions or a TSSG programming error (other than programming changes made pursuant to paragraph 5(a) above), causes an error or mistake in any of the output generated by the TSSG System under the terms of this Agreement, TSSG will, at its expense, correct and retransmit such output so long as the Fund has notified TSSG of such error or mistake within five (5) business days of its discovery and the data used to generate such output is available as set forth in Schedule E attached hereto. If such data is available as set forth in Schedule E, the Fund shall take reasonable necessary steps to manually correct any records due to a TSSG system malfunction or programming error that TSSG is unable to correct systematically and the parties shall mutually agree upon the allocation of expenses related to such manual processing. 7. System Access and Training. (a) TSSG shall provide the Fund on-line access as provided for and set forth in the attached Schedule F, and agrees to meet the performance standards set forth therein. Additional access to the TSSG System may be arranged by mutual agreement of the parties. (b) The Fund will reimburse TSSG for any reasonable costs and expenses incurred for training hereunder. All travel and other out-of-pocket expenses incurred by Fund personnel in connection with and during the training periods shall be borne by the Fund. 8. Indemnification. TSSG shall not be responsible for and the Fund shall indemnify and hold TSSG harmless from and against any and all claims, costs, expenses (including reasonable attorneys' fees), losses, damages, charges, payments and liabilities of any sort or kind which may be asserted against TSSG or for which TSSG may be held to be liable (a "Claim") arising out of or attributable to any of the following: (a) Any actions of TSSG required to be taken pursuant to this Agreement unless such Claim resulted from a negligent act or omission to act or bad faith by TSSG in the performance of its duties hereunder. (b) The Fund's failure to use and employ the TSSG System and the TSSG Facilities in accordance with the procedures set forth in any on-line documentation made 4 5 available to the Fund, the Fund's failure to utilize the control procedures set forth and described in the on-line user documentation, or the Fund's failure to verify promptly reports or output received through use of the TSSG System and the TSSG Facilities. (c) The Fund's errors and mistakes in the use of the TSSG System, TSSG Facilities and control procedures. (d) TSSG's reasonable reliance on, or reasonable use of information, data, records and documents received by TSSG from the Fund in the performance of TSSG's duties and obligations hereunder. (e) The reliance on, or the implementation of, any Written or Oral Instructions or any other instructions or requests of the Fund. (f) The Fund's refusal or failure to comply with the terms of this Agreement, or any Claim which arises out of the Fund's negligence or misconduct or the breach of any representation or warranty of the Fund made herein. (g) Unavailability of communications or utilities facilities or other equipment failures provided TSSG has maintained such equipment appropriately, Acts of God, acts of the public enemy, governmentally-mandated priorities in allocating its services, labor disputes, fires, floods, strikes, riots or war or other causes beyond its control. 9. Standard of Care. (a) TSSG shall at all times act in good faith and agrees to use its best efforts within commercially reasonable standards to insure the accuracy of all services performed under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees. (b) Notwithstanding the foregoing Section 9(a) or anything else contained in this Agreement to the contrary, TSSG's liability hereunder shall, in no event exceed four million dollars ($4,000,000.00). The parties agree to review the limitation of liability provision set forth in this Section 9(b) on an annual basis. 10. Instructions. TSSG may apply at any time to a person listed as an Authorized Person identified on Schedule B for instructions with respect to any matter arising in connection with this Agreement. TSSG may also consult with legal counsel for the Fund or, at 5 6 TSSG's expense, its own legal counsel with respect to actions to be taken hereunder. TSSG shall not be liable for, and shall be indemnified by the Fund against, any Claim arising from any action taken or omitted to be taken by TSSG in good faith in reliance upon such instruction from the Fund or upon the advice of such legal counsel. 11. Consequential Damages. In no event and under no circumstances shall either party under this Agreement be liable to the other party for consequential or indirect loss of profits, reputation or business or any other special damages under any provision of this Agreement or for any act or failure to act hereunder. 12. Covenants of TSSG. (a) TSSG shall maintain the appropriate computer files of all required information and data transmitted to the TSSG Facilities by the Fund, provided, however, that TSSG shall not be responsible or liable for any damage, alterations, modifications thereto or failure to maintain the same if the Fund made, or TSSG made at the Fund's request, such changes, alterations or modifications or if the Fund causes the failure. It is expressly understood that all such shareholder records transmitted by the Fund and maintained by TSSG remain the exclusive property of the Fund. (b) All information furnished by the Fund to TSSG is confidential and TSSG agrees that it shall not disclose such information to any third party except pursuant to Written or Oral Instructions received from the Fund or to the extent that TSSG is required by law to make such disclosure. 13. Covenants of the Fund. The Fund shall utilize and employ all reasonable control procedures available under the TSSG System of which the Fund may be advised. The Fund will promptly advise TSSG of any errors or mistakes in the data or information transmitted to the TSSG Facilities or in the records maintained by TSSG or output generated hereunder. The Fund will verify the accuracy of all output it receives consistent with industry custom and practice by utilizing proper auditing procedures. All information furnished to or obtained by the Fund pertaining to the TSSG Facilities, the TSSG System, or TSSG procedures, data bases and programs is confidential and proprietary to TSSG. The Fund shall not disclose such information to any third party except to the extent that the Fund is required by law to make such disclosures. 14. Term and Termination. (a) This Agreement shall become effective on the date first set forth above and shall continue in effect through December 31, 1997 ("Initial Term"). 6 7 (b) Unless it is the intention of either party for this Agreement to terminate upon the expiration of the Initial Term, within six (6) months prior to the end of the Initial Term but no later than such date, AIM and TSSG will negotiate diligently and in good faith and either (i) enter into an agreement extending the term of this Agreement; or (ii) enter into a new agreement for TSSG to provide remote services substantially similar to those contemplated hereunder. (c) Notwithstanding the foregoing, if a party hereto is guilty of a material failure to perform its duties and obligations hereunder (a "Defaulting Party") the other party (the "Non-Defaulting Party") may give written notice thereof to the Defaulting Party, and if such material breach shall not have been remedied within thirty (30) days after such written notice is given, then the Non-Defaulting Party may terminate this Agreement by giving thirty (30) days written notice of such termination to the Defaulting Party. If TSSG is the Non-Defaulting Party, its termination of this Agreement shall not constitute a waiver of any other rights or remedies of TSSG with respect to services performed prior to such termination or rights of TSSG to be reimbursed for out-of-pocket expenses. In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party. 15. Post-Termination Procedures. Upon termination for any reason by either party to this Agreement TSSG shall promptly, at the Fund's expense, provide immediate and full access to the Fund data files on magnetic tape in machine readable form and shall cooperate with the Fund in its efforts to transfer all such data files to another person chosen by the Fund. In addition, TSSG agrees to return, at the expense of the terminating party, all backup tapes and other storage media upon which Fund data is then stored. 16. Amendment. This Agreement may only be amended or modified by written agreement executed by both parties. 17. Assignment. This Agreement and any interest hereunder shall inure to the benefit of and be binding upon the Parties and their respective successors, legal representatives and permitted assigns including the successor entity in any merger or reorganization of the Funds. Except as otherwise expressly provided for in this Agreement, neither Party may assign or delegate this Agreement or any of its rights or obligations without the other Party's prior approval which shall not be unreasonably withheld. Upon prior notice to the Fund, TSSG may assign this Agreement to (i) any person in connection with the merger or consolidation of TSSG into such person, or the sale of all or substantially all of the assets of TSSG to such person or (ii) any direct or indirect subsidiary of First Data Corporation in connection with any corporate reorganization. Any attempt to assign, delegate or otherwise transfer this Agreement in violation of this Section will be voidable by the other party. 7 8 18. Subcontracting. TSSG may subcontract to agents the services required to be performed pursuant to this Agreement and the Schedules hereto, if any. The appointment of any such agent shall not relieve TSSG of its responsibilities hereunder. 19. Use of TSSG's Name. The Fund shall not use TSSG's name in any Prospectus, Statement of Additional Information, Shareholders's Report, sales literature or other material relating to the Fund without TSSG's prior written approval unless such use is required by law or merely refers in accurate terms to the services rendered hereunder. Any reference to TSSG shall include a statement to the effect that it is an indirect, wholly owned subsidiary of First Data Corporation. 20. Use of the Fund's Name. Except as provided herein, TSSG shall not use the name of the Fund, its Advisor or material relating to any of them on any documents or forms (other than internal documents) without the Fund's prior written approval unless such use is required by law or merely refers in accurate terms to the services rendered hereunder. 21. Security. (a) TSSG will provide the Fund with a User Identifier (also known as "User I.D.") and a User Password. TSSG will also assign the initial Operator Password to each of the Fund's employees who are authorized to access the TSSG System. The Operator Passwords may be changed at any time in the discretion of the Fund without any notice to or knowledge of TSSG by using procedures set forth in the user manual. (b) The Fund agrees that it is responsible for selection, use and protection of the confidentiality of passwords; however, TSSG may for security reasons at any time and from time to time, upon seven days written notice to the Fund (or immediately upon notice by telephone, confirmed in writing, in the event of an emergency), deny access to the TSSG System until one or more User I.D.s is changed by the Fund. (c) TSSG will provide the Fund with online procedures enabling the Fund to reset passwords, correct password violations and add/change/delete User I.D.s within existing security profiles. (d) TSSG will use its best efforts to ensure that the Fund's data files which are input into the TSSG System will remain confidential and protected from unauthorized access by third persons. Specifically, TSSG will adhere to its normal security procedures for protection of computer-stored files or programs from unauthorized access. It is agreed that such procedures will be subject to review by the Fund and audit by its independent accountants and that TSSG will take under advisement 8 9 recommendations of such independent accountants concerning changes to such procedures. (e) The Fund or duly authorized independent auditors will have the right upon 5 business days' notice under this Agreement to perform on-site audits of records and accounts directly pertaining to Fund shareholder accounts serviced by TSSG facilities in accordance with reasonable procedures and at reasonable frequencies. (f) The parties agree that all tapes, books, user manuals, instructions, records, information and data pertaining to the business of the other party, the TSSG System and the Fund clients services by the Fund which are exchanged or received pursuant to the negotiation of or carrying out of this Agreement shall remain confidential except to the extent required by applicable laws, and shall not be voluntarily disclosed to any other person and that all such tapes, books, reference manuals, instructions, records, information and data in the possession of each of the parties hereto shall be returned to the party from whom it was obtained upon the termination or expiration of this Agreement. (g) The Fund acknowledges that TSSG has proprietary rights in and to the TSSG System and any other TSSG programs, data basis, supporting documentation or procedures ("TSSG Protected Information") of which the Fund or its employees or agents become aware as a result of the Fund's access to the TSSG System or TSSG Facilities and that the TSSG Protected Information constitutes confidential material and trade secrets of TSSG. The Fund agrees to maintain the confidentiality of the TSSG Protected Information. The Fund acknowledges that any unauthorized use, misuse, disclosure or taking of TSSG Protected Information which is confidential or which is a trade secret, whether residing or existing internally or externally to a computer, computer system or computer network, or the knowing and unauthorized accessing or causing to be accessed of any computer, computer system or computer network, may be subject to civil liabilities and criminal penalties under applicable law. The Fund will advise all of its employees and agents who have access to any TSSG Protected Information or to any computer equipment capable of accessing TSSG Facilities of the foregoing. 22. Additional Funds. In the event that additional funds, within the same family as the Funds, are established ("Additional Funds") and such Additional Funds desire to avail themselves of the benefits of and become a party to this Agreement, the Additional Funds shall notify TSSG in writing, and if TSSG agrees in writing, such Additional Funds shall become a party to this Agreement. 9 10 23. Miscellaneous. (a) Notices. Any notice or other instrument authorized or required by this Agreement to be given in writing to the Fund or TSSG shall be sufficiently given if addressed to that party and received by it at its office set forth below or at such other place as it may from time to time designate in writing. To: AIM Family of Funds c/o John Caldwell, President AIM Fund Services, Inc. Eleven Greenway Plaza, Suite 1919 Houston, Texas 77046 Attention: William Kleh, Secretary with a copy to: Fund Legal Department at the same address Attention: Carol Relihan, VP and General Counsel To: The Shareholder Services Group, Inc. One Exchange Place Boston, Massachusetts 02109 Attention: Robert F. Radin, President with a copy to: General Counsel at the same address (b) Successors. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement may not be assigned without the written consent of the other party. (c) Governing Law. This Agreement shall be governed exclusively by and interpreted in accordance with the internal substantive laws of the Commonwealth of Massachusetts without reference to the choice of the law provisions thereof. (d) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 10 11 (e) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together will constitute only one instrument. (f) Captions. The captions of this Agreement 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. (g) Sole Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof. (h) Specific Performance. Each of the parties hereto agrees that the other party would be irreparably damaged by breaches of this Agreement relating to confidential or proprietary information and accordingly each agrees that each of them is entitled, without bond or other security, to an injunction or injunctions to prevent breaches of the provisions of this Agreement relating to such information. (i) It is understood and agreed that all services performed hereunder by TSSG shall be as an independent contractor and not as an employee, joint venturer, or partner of the Fund. This Agreement is between the Fund and TSSG, and there are no third party beneficiaries hereto. (j) Limitation of Shareholder Liability. Notice is hereby given that the Declaration of Trust of each Fund which is a Delaware business trust, is on file with the Secretary of State of Delaware, and this Agreement was executed on behalf of each such Trust by a duly authorized officer thereof acting as such and not individually. The obligations of this Agreement are not binding upon any of the Trustees, officers or Shareholders of any such Trust individually but are binding only upon the assets and property of the respective portfolio of each such Trust for the benefit of which the Trustees have caused this Agreement to be executed. 11 12 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written. AIM EQUITY FUNDS, INC. on behalf of the Retail Classes of its AIM Charter Fund, AIM Constellation Fund, AIM Weingarten Fund and AIM Aggressive Growth Fund Portfolios By: /s/ ROBERT H. GRAHAM ------------------ Title: President --------------- AIM FUNDS GROUP, on behalf of the Class A and Class B Shares of its AIM Balanced Fund, AIM Government Securities Fund, AIM Growth Fund, AIM High Yield Fund, AIM Income Fund, AIM Municipal Bond Fund, AIM Utilities Fund and AIM Value Fund portfolios and on behalf of the Class A, Class B and Class C Shares of its AIM Money Market Fund Portfolio By: /s/ ROBERT H. GRAHAM ------------------ Title: President --------------- AIM INTERNATIONAL FUNDS, INC., on behalf of the Class A and Class B shares of its AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund Portfolios By: /s/ ROBERT H. GRAHAM --------------------- Title: President ------------------ 12 13 AIM INVESTMENT SECURITIES FUNDS, on behalf of its AIM Adjustable Rate Government Fund portfolio and the AIM Limited Maturity Treasury Shares class of its Limited Maturity Treasury Portfolio By: /s/ ROBERT H. GRAHAM --------------------- Title: President ------------------ AIM TAX-EXEMPT FUNDS, INC., on behalf of its AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut portfolios and the AIM Tax-Free Intermediate Shares class of its Intermediate Portfolio By: /s/ ROBERT H. GRAHAM --------------------- Title: President ------------------ THE SHAREHOLDER SERVICES GROUP, INC. By: /s/ JACK PUTNER ---------------- Title: EVP - COO ------------- 13 14 SCHEDULE A SYSTEM FEATURES AND CAPABILITIES The FSR System consists of computer hardware, operating system software and application software which contains functions as defined below. The operating environment configuration consists of IBM-compatible mainframe computers running on an MVS operating system. The configuration includes controllers, direct access storage devices, tape drives, security access software and other operating system hardware and software that enable TSSG to meet the contractual commitments herein. The Transfer Agent Application includes Job Control Language (JCL), Catalog Procedures (PROCS) and program modules written primarily in COBOL. The FSR Transfer Agency System supports the following subsystems and third party systems: NSCC (National Securities Clearing Corporation) support: - FundSERV - Networking - Commissions - Exchanges - ACATS (Automated Customer Account Transfer System) - TNET Cost basis accounting UNISYS Interface Sales file download Price Waterhouse Blue Sky download File downloads to support DDA (Demand Deposit Account) Reconciliation 15 Year-End Statements and Tax Reporting: - 1099D - 1099R - 1042S - 5498 - 1099B Transmission send/receive functionality for broker/dealers and other third parties Electronic Funds Transfer processing to move in and out of funds using automated clearing house facilities KMS Microfilm Interface Third part interfaces with: Applied Mailing Systems for print/mail support Microdata for checkbook production Mellon and Texas Commerce for banking services Other third party software packages i.e. ACE/DISC 16 SCHEDULE B AIM FAMILY OF FUNDS - LIST OF AUTHORIZED PERSONS /s/ ROBERT H. GRAHAM ----------------------- Robert Graham President, A I M Management Group Inc. /s/ JOHN CALDWELL (JACK) ------------------------ Jack Caldwell President, A I M Fund Services, Inc. /s/ CAROL F. RELIHAN ----------------------- Carol Relihan Secretary and General Counsel, A I M Management Group Inc. /s/ NANCY MARTIN ----------------------- Nancy Martin Counsel, A I M Management Group Inc. 17 SCHEDULE C FEE SCHEDULE I. SHAREHOLDER ACCOUNT FEES. The fund shall pay the following fees ("Shareholder Account Fees"): For the period beginning on the date of this Agreement, and continuing through December 31, 1997, the Fund shall pay TSSG an annualized fee of $3.60 per shareholder account that is open during any monthly period ("Open Account Fee"). The Fund also shall pay TSSG an annualized fee of $1.80 per shareholder account that is closed during any monthly period ("Closed Account Fee") (The Open Account Fees and the Closed Account Fees hereafter collectively referred to as "Shareholder Account Fees"). The Shareholder Account Fees shall be billed by TSSG monthly in arrears on a prorated basis of 1/12 of the annualized fee for all such accounts. In addition, beginning on the one year anniversary date of this Agreement, and on each yearly anniversary date thereafter, the Shareholder Account fees may be increased by TSSG in an amount equal to the lesser of (i) the cumulative percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) U.S. City Average, All Items (unadjusted -- (1982-84 + 100), published by the U.S. Department of Labor, or (ii) seven percent (7%) of the Shareholder Account Fees charged by TSSG to the Fund for the preceding twelve (12) month period. II. FEES FOR DEDICATED PROGRAMMING SUPPORT TSSG and the Fund will jointly determine the level of dedicated system resources required to meet the Fund's enhancement priorities. At the Fund's expense, TSSG agrees to use reasonable efforts to make dedicated programming support available for all projects required by the Fund. The amount of the resources required and the projects to be worked on shall be determined jointly based upon joint periodic review of project requirements; however, the Fund will decide the priorities which will be assigned to each project and will determine what projects the dedicated resources are to work on. Such resources will be charged to the Fund at the rates set forth below. All enhancement, improvements, modifications or new features added to the TSSG System shall be, and shall remain, the confidential, exclusive property of, and proprietary to, TSSG. Request for software changes may be initiated by those representatives of the Fund identified in Exhibit 1 of this Schedule C. The Fund will use its best efforts to notify TSSG in writing of requests for software changes within 72 hours of an initial verbal request. TSSG reserves the right to stop work on a request for which written specifications have not been received. 1 18 a. SUPPORT TO BE PROVIDED TO THE FUND FREE OF CHARGE. TSSG will provide the following support at no additional cost to the fund: 1. Coding to correct deficiencies in the system, unless such deficiencies are included in item (II)(b)(9) below in which event the Fund will be charged for such services. A system deficiency is defined as a system process which does not operate according to the design of the computer application or system specifications. To correct system deficiencies, TSSG will, at its own expense, expend whatever resources are necessary to analyze the deficiency and apply an appropriate remedy, in the form of corrected application code as expeditiously as possible. An alternate process, in the form of a functional work around, may be a suitable substitute for the actual system fix, if the level of effort to develop the system fix is deemed to be impractical or the elapsed time to develop and apply the fix extends beyond the reasonable time needed. For deficiencies identified by the Fund, the use of a functional work around as an alternate process shall be mutually agreed upon by the parties. TSSG will evaluate all reported referrals, to validate deficiency status or reclassify as a system enhancement, based on the above definition. 2. Simple Maintenance determined to be core processing. 3. TSSG generated (i.e., internal) requests to extend system functionality and ensure industry competitiveness. 4. Enhancements required to comply with regulatory changes; provided, however, TSSG will only make such changes to the extent that they are technically and commercially practical and are within the scope of the software functions, capabilities and database. b. SUPPORT TO BE PROVIDED TO THE FUND, BUT WHICH WILL BE BILLED AS "DEDICATED PROGRAMING SUPPORT": The following activities are examples of "dedicated programming support" which will be billed to the Fund: 1. Customized form output (i.e., statements, confirmation statements, commission statements). 2. Customized reports. 3. Addition of new features (enhancements) requested by the Fund. 4. Addition of existing features not used by the Fund. 5. Addition of new funds to the fund group. 6. Customized year-end processing. 7. Conversions from other systems to FSR subsequent to initial funds being live. (continued on next page) 2 19 8. Clean-up/Recovery project resulting from Fund error or causes beyond the reasonable control of either party. 9. System "fixes" - coding to correct errors attributable to code developed, and currently maintained by the dedicated teams. 10. Customization of existing functions specific to the Fund. 11. Program documentation as requested by the Fund. Software Exclusivity. The Fund may choose to have exclusive use of enhancement software developed by its dedicated programming staff. Such exclusivity would extend for a period of nine (9) months from the date the enhancement is placed into the production libraries. Software exclusivity would be waived if the Fund accepts either of the following conditions: a). If prior to implementation, TSSG or other TSSG clients agree to share in the expense of the enhancements. b). At any time during the 9 months following implementation, TSSG or other TSSG clients agree to share the expense for the enhancements. Access and Capability. The Funds' dedicated programmers will have access and capability to update any part of the System. However, depending on the skill set of the programmers, as well as the scope of the requested enhancement, it may be in the best interest of both the Fund and TSSG to utilize non-dedicated programmers to address certain enhancements. In addition, because many programs are shared by multiple clients, some enhancements may require approval from those clients. These enhancements should be handled on an item by item basis. c. FEES FOR DEDICATED PERSONNEL WHICH WILL BE BILLED TO THE FUND. TSSG will bill the Fund monthly in arrears on a prorated basis of 1/12 of the following annualized charges for each person dedicated to the following positions: Manager $100,000 Programmer $ 90,000 Business System Analyst/Tester $ 85,000 Non-dedicated programmer-hourly charge $100 per hour
TSSG may adjust these salaries on the anniversary date of this agreement to reflect salary increases, provided that they do not exceed seven percent (7%) of the fees charged to the Fund for the identical positions during the immediately preceding twelve (12) month period. 3 20 SCHEDULE C EXHIBIT 1 AIM FAMILY OF FUNDS AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS /s/ JOHN CALDWELL ------------------------- John Caldwell /s/ RICHARD SNYDER --------------------- Richard Snyder /s/ JOSEPH CHARPENTIER ---------------------- Joseph Charpentier /s/ MARC VARGAS --------------------- Marc Vargas 4 21 SCHEDULED OUT-OF-POCKET EXPENSES The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses, including, but not limited to the following items: - Microfiche/microfilm production - Magnetic media tapes and freight - Telephone and telecommunication cost, including all lease, maintenance and line costs - NSCC transaction charges at $.15/per financial transaction - Shipping, Certified and Overnight mail and insurance - Year-End form production and mailings - Terminals, communication lines, printers and other equipment and any expenses incurred in connection with such terminals and lines - Duplicating services, as per-approved by the Fund - Courier services - Due Diligence Mailings - Rendering fees as billed - Overtime, as pre-approved by the Fund - Temporary staff, as pre-approved by the Fund - Travel and entertainment, as pre-approved by the Fund - Record retention, retrieval and destruction costs, including, but not limited to exit fees charged by third party record keeping vendors - Third party audit review - All conversion costs: including System start up costs, but excluding costs associated with conversations between TSSG systems. - Such other miscellaneous expenses reasonably incurred by TSSG in performing its duties and responsibilities under this Agreement. Such expenses incurred with consent of the Fund, not to be unreasonably withheld. - The costs associated with the Year-End Support Services set forth on the attached Exhibit 1 of this Schedule D. - The costs associated with the Broker Dealer Support Services set forth on the attached Exhibit 2 of this Schedule D. 22 EXHIBIT 1 OF SCHEDULE D Year-End Support Services: Flat rate of $.12/per shareholder account open as of December 31, 1994. The services listed below will be performed by TSSG for the Fund in support of reporting for tax year 1994 and compliance mailings for calendar year 1994. TSSG assumes responsibility for performing the services in compliance with current IRS rules and regulations. (a) Up-front year-end planning and communication of year-end related system modifications. (b) Production of IRS required tax forms and amended/corrected tax forms as requested by the Fund. (c) Production of IRS required 1099 magnetic tape filings. (d) Production of tax forms on microfiche. (e) Maintenance of year-end data files and the handling of transaction code updates to those files. (f) Submission of year-end jobs. (g) B-notice processing as follows: - receipt of B-notice listing from IRS or - AFS upload of data entry of all accounts to B-Notice subsystem - execution and generation of B-Notice defense reports - analysis of B-Notice Defense Reports to ensure accurate coding - coordination of mailings with vendor, including generation of vendor tapes - notification to Client Services of anticipated and actual mailing dates, including volume, sample letters and confirmation of the date backup withholding will be imposed if no response is received - systematic upload of W-9 responses as volumes warrant (h) Correction processing resulting from the monthly review of the year-end files - "balancing." (i) Production of cost basis information on 1099B forms. (j) All required state filings as requested by the Fund. (k) All IRS required mailings requested by the Fund: B-Notice, Safe Harbor, W-9, TEFRA election, IRS Penalty Notice, and TIN solicitation. 23 EXHIBIT 1 OF SCHEDULE D (cont'd) (1) C-Notice processing as follows: o receipt of C-Notice; imposition and release letters as received from Fund or IRS o performance of search function to identify all accounts associated with the notice o provide written instructions to Fund for proper account coding (m) Initialization of Fund File in support of balancing tax reporting data 24 EXHIBIT 2 OF SCHEDULE D Broker/Dealer Support: Annualized fee of $.03/per shareholder account open during any monthly period. (a) NSCC Testing (b) Back-up for NSCC redemption release (c) Research and Problem Resolution (d) Compliance and Support 25 SCHEDULE E DATA RETENTION AND RECOVERY STANDARDS Data files included in the System are backed up according to a defined retention schedule. This ensures availability of data for processing and application recovery as well as compliance with regulatory requirements. Critical files that are included in the retention process: Shareholder Master Shareholder History Fund File Dealer File Global File Certificate File Broker/Client Cross Reference File Additional Address File Maintenance History File Blue Sky Master Price File Rate File Order Clearance File These files are backed up as follows: daily and retained for six generations; weekly and retained for 5 generations. The Shareholder Master, Shareholder History and Fund Files are also backed up annually and retained for 7 generations. In addition, the Acceptance File containing post-processing daily activity, and the Daily File containing pre-processing transaction input, are backed up daily and retained for six generations. 26 SCHEDULE F SYSTEM AVAILABILITY STANDARDS These systems standards shall apply on business days. o On-line systems availability between 7:00 a.m. and 7:00 p.m. CST - 95% measured monthly. o Average response time (7:00 a.m. to 7:00 p.m. CST) of 3 seconds or less, in response to the system employed by A I M Fund Services, Inc. as of September 1. 1994 - 95% measured monthly. o Daily report bundles in queue for transmission no later than 7:00 a.m. CST each business day - 95% measured monthly each bundle measured separately. o Daily job PFSRXOED containing the Acceptance File download in queue for transmission no later than 4:00 a.m. CST each business day - 95% measured monthly. o Daily job PFSRXCAD containing the Cap Stock File download in queue for transmission no later than 6:30 a.m. CST each business day - 95% measured monthly. o Weekly job PFSXOHW containing the Dealer File download in queue for transmission no later than 9:00 a.m. CST each Saturday - 95% measured quarterly.
EX-99.9.A.7 18 AMENDMENT NO. 1 TO THE REMOTE ACCESS AGREEMENT 1 EXHIBIT 9(a)(7) AMENDMENT NUMBER 1 TO THE REMOTE ACCESS AND RELATED SERVICES AGREEMENT This Amendment Number 1 effective October 4, 1995 is made to the Remote Access and Related Services Agreement dated December 23, 1994 (the "Remote Agreement") by and between each registered investment company listed on the signature pages hereof, either for itself or, with respect to each such company that is a series investment company, on behalf of each of the series or class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal offices at One Exchange Place, Boston, Massachusetts 02109. WHEREAS, the Fund desires to incorporate any changes or deletions to those registered investment companies listed on the signature page of the Remote Agreement as set forth on the signature page hereof; WHEREAS, the Fund in connection with its access to the TSSG System, desires to access and use TSSG's proprietary software known as the Structured Query Language Application Programming Interface Product Release 5.0 (the "SQL/API Product"); and WHEREAS, TSSG desires to provide such access to the Fund solely in conjunction with the Fund's use of the TSSG System. In consideration of their mutual promises contained herein, the Fund and TSSG agree to modify the Remote Access and Related Services Agreement (the "Remote Agreement") as follows: 1. TSSG grants to the Fund a non-transferable and non-exclusive license to access and use TSSG's SQL/API Product, maintained on the TSSG System at the TSSG Facility, solely to process data with respect to the Fund's internal business. The Fund is authorized to use the SQL/API product only in connection with the Fund's remote use of the TSSG System. The Fund shall be prohibited from the further sale, lease, transfer, license or sub-license, assignment or marketing in any manner of the SQL/API Product, or any other proprietary software used in conjunction with the TSSG System. The Fund shall also be prohibited from the sale, lease, transfer, license, sub-license, assignment, or marketing in any manner of any software product developed in conjunction with the SQL/API Product. 2. It is acknowledged that the Fund acquires only the right to use the SQL/API Product while the Remote Agreement is in effect between the parties and such right and said license shall terminate upon termination of the Remote Agreement. The Fund acknowledges that it does not acquire any rights of ownership in the SQL/API Product. This Agreement and the license granted pursuant hereto may not be assigned, sublicensed or transferred. 2 3. The Fund shall not have the right to use the SQL/API Product other than in connection with the use of the TSSG System in compliance with the Remote Agreement. The Fund may use the SQL/API Product to access the TSSG System using only TSSG Proprietary Software or software developed internally by the Fund. 4. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AMENDMENT, TSSG MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE FUND OR ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OR ANY SERVICES PROVIDED UNDER THIS AGREEMENT. 5. Infringement Indemnity TSSG shall defend, at its expense, any action brought against the Fund to the extent that is based on a claim that the SQL/API Product infringes a United States copyright or duly issued patent, or misappropriates the trade secrets of a third party. TSSG shall indemnify and hold harmless the Fund against damages and costs (including penalties, interest and reasonable attorney's fees) finally awarded against the Fund directly attributable to such claim provided that the Fund gives TSSG prompt written notice of such claim, reasonable assistance and sole authority to defend or settle such claim. If the SQL/API Product becomes, or in TSSG's opinion is likely to become, the subject of such a claim then TSSG may, at its option: (a) procure for the Fund the right to use the SQL/API Product free of any liability for infringement or (b) replace or modify the SQL/API Product to make it noninfringing. If TSSG is unable or determines that it is commercially impracticable to undertake clause (a) or (b) of this Section 5, the Fund will cease to use the directly affected portion of the SQL/API Product, and if such SQL/API Product is in the Fund's control, the Fund shall return or destroy it, and (c) TSSG will grant to the Fund a pro-rata credit for the annual maintenance fee that the Fund paid computed by dividing such fee by the total number of months in the then current term of the license for the SQL/API Product and multiplying the result by the number of months left in the unexpired license term for the SQL/API Product. TSSG shall have no obligation under this Section 5 if the alleged infringement or violation is based upon the use of the SQL/API Product in combination with other equipment or other software not furnished by TSSG or if such claim arises from TSSG's compliance with the Fund's designs, specifications or instructions or from the Fund's modification of the SQL/API Product. THIS SECTION STATES THE ENTIRE LIABILITY OF TSSG CONCERNING PATENT, COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY RIGHTS INFRINGEMENT. 2 3 6. Notwithstanding anything in this Amendment to the contrary, the Fund's license to use the SQL/API Product will automatically terminate upon termination of the Remote Agreement. This Amendment will terminate automatically in the event of a breach of the sublicense. 7. TSSG shall take reasonable measures to enforce appropriate compliance with the foregoing restrictions up to and including the institution and diligent prosecution of proper legal proceedings. 8. The Fund will agree to compensate TSSG for all fees as referenced on the attached Schedule #1 to this Amendment, and such other schedules as may be agreed upon between the parties from time to time. The Agreement as modified 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 promise not expressly contained herein with respect to the subject matter hereof. 4 The parties to this Amendment have caused it to be executed by their duly authorized officers as of the date and year referenced above. AIM EQUITY FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS, on behalf of the Class A and B Shares of on behalf of its AIM Limited Maturity the Retail Classes of its AIM Charter Fund Treasury Shares and AIM Weingarten Fund, and on behalf of the Class A Shares of the Retail Classes of AIM Constellation Fund and AIM By: /s/ ROBERT H. GRAHAM Aggressive Growth Fund Portfolios ----------------------------------------------- Title: President By: /s/ ROBERT H. GRAHAM --------------------------------------------- ----------------------------------------------- Title: President AIM TAX-EXEMPT FUNDS, INC., --------------------------------------------- on behalf of its AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut Portfolios and the AIM Tax-Free Intermediate Shares of its AIM FUNDS GROUP, Intermediate Portfolio on behalf of the Class A and Class B Shares of its AIM Balanced Fund, AIM Intermediate Government Fund, AIM Growth By: /s/ ROBERT H. GRAHAM Fund, AIM High Yield Fund, AIM Income ----------------------------------------------- Fund, AIM Municipal Bond Fund, AIM Global Utilities Fund and AIM Value Fund Portfolios Title: President and on behalf of the Class A, Class B and Class C --------------------------------------------- Shares of its AIM Money Market Fund Portfolio By: /s/ ROBERT H. GRAHAM THE SHAREHOLDER SERVICES ----------------------------------------------- GROUP, INC. Title: President --------------------------------------------- By: /s/ JACK P. KUTNER ------------------------------------------------ AIM INTERNATIONAL FUNDS, INC., Title: EVP - COO of its AIM International Equity Fund, AIM Global --------------------------------------------- Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund Portfolios By: /s/ ROBERT H. GRAHAM ----------------------------------------------- Title: President ---------------------------------------------
4 5 SCHEDULE #1 TO AMENDMENT NUMBER 1 SQL/API FEES Listed below are TSSG's License Fees for the SQL/API Product o One Time License Fee $30,000 o Annual Maintenance Fee(1) billed $15,000 quarterly in advance beginning the first month of the Agreement o On-Going Development Cost(2) $ 125 per hour o Out of Pocket Expenses Per the existing Remote Agreement dated 12/23/94. The Fund and TSSG intend to implement initially Release 5.0 of the SQL/API Product on 150 Workstations. For additional workstations beyond the 150 licensed, the Fund shall pay TSSG the then-current license, usage and support fees for each additional Workstation __________________________________ (1) The increase in the maintenance fee after the first year will be equal to the lesser of (i) the previous year's 12 month average increase in the Consumer Price Index (CPI) or (ii) seven percent (7%) of the maintenance fee charged by TSSG for the preceding twelve month period. (2) Development work includes product installation, customization and enhancements requested by the Fund. EX-99.9.A.8 19 ADDENDUM NO. 2 TO THE REMOTE ACCESS AGREEMENT 1 EXHIBIT 9(a)(8) ADDENDUM NUMBER 2 TO THE REMOTE ACCESS AND RELATED SERVICES AGREEMENT This Amendment Number 2 effective October 12, 1995 is made to the Remote Access and Related Services Agreement dated December 23, 1994 (the "Remote Agreement") by and between each registered investment company listed on the signature pages hereof, either for itself or, with respect to each such company that is a series investment company, on behalf of each of the series or class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal offices at One Exchange Place, Boston, Massachusetts 02109. WHEREAS, the Fund desires to incorporate any changes or deletions to those registered investment companies listed on the signature page of the Remote Agreement as set forth on the signature page hereof; WHEREAS, the Fund desires to use an additional product to the TSSG System known as the Price Rate Capture System (the "PRAT Application"); and WHEREAS, TSSG desires to provide the PRAT Application to the Fund solely in conjunction with the Fund's use of the TSSG System; In consideration of their mutual promises contained herein, the Fund and TSSG agree to modify the Remote Access and Related Services Agreement (the "Remote Agreement") as follows: 1. Modify Schedule D to include the attached Exhibit 3 to Schedule D The Agreement as modified by this Addendum ("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 promise not expressly contained herein with respect to the subject matter hereof. The parties to this Addendum have caused it to be executed by their duly authorized officers as of the date and year referenced above.
AIM EQUITY FUNDS, INC. AIM FUNDS GROUP, on behalf of the Class A and B Shares of the Retail on behalf of the Class A and Class B Shares of its Classes of its AIM Charter Fund and AIM AIM Balanced Fund, AIM Intermediate Government Weingarten Fund, and on behalf of the Class A Fund, AIM Growth Fund, AIM High Yield Fund, Shares of the Retail Classes of AIM Constellation AIM Income Fund, AIM Municipal Bond Fund, Fund and AIM Aggressive Growth Fund Portfolios AIM Global Utilities Fund and AIM Value Fund Portfolios and on behalf of the Class A, Class B and BY:/s/ Robert H. Graham Class C Shares of its AIM Money Market Fund Portfolio -------------------------- Title: President By:/s/ Robert H. Graham ----------------------- -------------------------- Title: President ---------------------- AIM INTERNATIONAL FUNDS, INC. on behalf of the Class A and Class B Shares of its AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund Portfolios By:/s/ Robert H. Graham -------------------------- Title: President -----------------------
2 AIM INVESTMENT SECURITIES FUNDS, on behalf of its AIM Limited Maturity Treasury Shares By:/s/ Robert H. GRAHAM -------------------------- Title: President ----------------------- AIM TAX-EXEMPT FUNDS, INC., on behalf of its AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut Portfolios and the AIM Tax-Free Intermediate Shares of its Intermediate Portfolio By:/s/ Robert H. GRAHAM -------------------------- Title: President ----------------------- THE SHAREHOLDER SERVICES GROUP, INC. By:/s/ JACK PUTNER -------------------------- Title: COO - EVP ----------------------- 3 SCHEDULE D OUT-OF-POCKET EXPENSES The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses, including, but not limited to the following items: o Microfiche/microfilm production o Magnetic media tapes and freight o Telephone and telecommunication costs, including all lease, maintenance and line costs o NSCC transaction charges at $.15/per financial transaction o Shipping, Certified and Overnight mail and insurance o Year-End form production and mailings o Terminals, communication lines, printers and other equipment and any expenses incurred in connection with such terminals and lines o Duplicating services, as pre-approved by the Fund o Courier services o Due Diligence Mailings o Rendering fees as billed o Overtime, as pre-approved by the Fund o Temporary staff, as pre-approved by the Fund o Travel and entertainment, as pre-approved by the Fund o Record retention, retrieval and destruction costs, including, but not limited to exit fees charged by third party record keeping vendors o Third party audit review o All conversion costs: including System start up costs, but excluding costs associated with conversations between TSSG systems. o Such other miscellaneous expenses reasonably incurred by TSSG in performing its duties and responsibilities under this Agreement. Such expenses incurred with consent of the Fund, not to be unreasonably withheld. o The costs associated with the Year-End Support Services set forth on the attached Exhibit 1 of this Schedule D. o The costs associated with the Broker Dealer Support Services set forth on the attached Exhibit 2 of this Schedule D. o The costs associated with the Price Rate Transmission Services set forth on the attached Exhibit 3 of this Schedule D. 4 EXHIBIT 3 TO SCHEDULE D Price Rate Capture System Services (PRAT) - ----------------------------------------- The PRAT Application will accept prices and dividend rates from the Fund Accounting Department of A I M Advisors, Inc. electronically and post them to the TSSG Pricing System. The PRAT Application will run interconnected via Local Area Network hardware and software. The fees for the PRAT Service shall be as follows: o One Time Set Up Fee $5,000. o Annual Fee* $7,500. *The annual fee provides system and personnel resources required to support a maximum average of 50 transmissions per month. A charge of $30.00 per transmission will be assessed for all transmissions incurred in excess of the average 2 per day per month. EX-99.9.B.2 20 ADMINISTRATIVE SERVICES AGREEMENT 1 EXHIBIT 9(b)(2) ADMINISTRATIVE SERVICES AGREEMENT This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made this 18th day of October, 1993 by and between A I M ADVISORS, INC., a Delaware corporation (the "Administrator"), and AIM INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Company"), with respect to its AIM International Equity Fund series (the "Shares"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company is an open-end investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Shares are separate series of common stock representing interests in separate investment portfolios of the Company; and WHEREAS, the Company, on behalf of the Shares, has retained the Administrator to provide investment advisory services pursuant to an Investment Advisory Agreement which provides that the Administrator may perform (or arrange for the performance of) accounting, shareholder servicing and other administrative services as well as investment advisory services to the Shares, and that the Administrator may receive reasonable compensation or may be reimbursed for its costs in providing such additional services, upon the request of the Board of Directors and upon a finding by the Board of Directors that the provision of such services is in the best interest of the Shares and their shareholders; and WHEREAS, the Board of Directors has found that the provision of such administrative services is in the best interest of the Shares and their shareholders, and has requested that the Administrator perform such services; NOW, THEREFORE, the parties hereby agree as follows: 1. The Administrator hereby agrees to provide, or arrange for the provision of, any or all of the following services by the Administrator or its affiliates: (a) the services of a principal financial officer of the Company (including related office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Company and the Shares, including the review of daily net asset value calculations and the preparation of tax returns; and the services (including related office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer; (b) the services of staff to respond to shareholder inquiries concerning the status of their accounts; providing assistance to shareholders in exchanges among the mutual funds managed or advised by the Administrator; changing account designations or changing addresses; assisting in the purchase or redemption of shares of the Shares; supervising the operations of the -1- 2 custodian, transfer agent(s) or dividend agent(s) for the Shares; or otherwise providing services to shareholders of the Shares; and (c) such other administrative services as may be furnished from time to time by the Administrator to the Company or the Shares at the request of the Company's Board of Directors. 2. The services provided hereunder shall at all times be subject to the direction and supervision of the Company's Board of Directors. 3. As full compensation for the services performed and the facilities furnished by or at the direction of the Administrator, the Shares shall reimburse the Administrator for expenses incurred by them or their affiliates in accordance with the methodologies established from time to time by the Company's Board of Directors. Such amounts shall be paid to the Administrator on a quarterly basis. 4. The Administrator shall not be liable for any error of judgment or for any loss suffered by the Company or the Shares in connection with any matter to which this Agreement relates, except a loss resulting from the Administrator's willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement. 5. The Company and the Administrator each hereby represent and warrant, but only as to themselves, that each has all requisite authority to enter into, execute, deliver and perform its obligations under this Agreement and that this Agreement is legal, valid and binding, and enforceable in accordance with its terms. 6. Nothing in this Agreement shall limit or restrict the rights of any director, officer or employee of the Administrator who may also be a director, officer or employee of the Company to engage in any other business or to devote his time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, nor limit or restrict the right of the Administrator to engage in any other business or to render services of any kind to any other corporation, firm, individual or association. 7. This Agreement shall continue in effect for a period of one (1) year from the date hereof, and shall continue in effect from year to year thereafter; provided that such continuance is specifically approved at least annually: (a) (i) by the Company's Board of Directors or (ii) by the vote of a majority of the outstanding voting securities of the Company (as defined in Section 2(a)(42) of the 1940 Act); and (b) by the affirmative vote of a majority of the Company's directors who are not parties to this Agreement or interested persons of a party to this Agreement, by votes cast in person at a meeting specifically called for such purpose. -2- 3 This Agreement shall terminate automatically in the event of its assignment (as defined in Section 2(a) (4) of the 1940 Act) or, with respect to one or more Shares in the event of termination of the Investment Advisory Agreement relating to such Portfolio(s) between the Company and the Administrator. 8. This Agreement may be amended or modified with respect to one or more Shares, but only by a written instrument signed by both the Company and the Administrator. 9. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to the General Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to the General Counsel. 10. This Agreement contains the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. A I M ADVISORS, INC. Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM --------------------------------------- --------------------------------------- Assistant Secretary President (SEAL) AIM INTERNATIONAL FUNDS, INC. on behalf of its AIM INTERNATIONAL EQUITY FUND Attest: /s/ NANCY L. MARTIN By: /s/ CHARLES T. BAUER --------------------------------------- --------------------------------------- Assistant Secretary President (SEAL)
-3- EX-99.9.B.3 21 MASTER ADMINISTRATIVE SERVICES AGREEMENT 1 EXHIBIT 9(b)(3) MASTER ADMINISTRATIVE SERVICES AGREEMENT This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made this 1st day of July, 1994 by and between A I M ADVISORS, INC., a Delaware corporation (the "Administrator"), and AIM INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Company"), with respect to the separate series set forth from time to time in Appendix A to this Agreement (the "Portfolios"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company is an open-end investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Portfolios are separate series of common stock representing interests in separate investment portfolios of the Company; and WHEREAS, the Company, on behalf of the Portfolios, has retained the Administrator to provide investment advisory services pursuant to a Master Investment Advisory Agreement which provides that the Administrator may perform (or arrange for the performance of) accounting, shareholder servicing and other administrative services as well as investment advisory services to the Portfolios, and that the Administrator may receive reasonable compensation or may be reimbursed for its costs in providing such additional services, upon the request of the Board of Directors and upon a finding by the Board of Directors that the provision of such services is in the best interest of the Portfolios and their shareholders; and WHEREAS, the Board of Directors has found that the provision of such administrative services is in the best interest of the Portfolios and their shareholders, and has requested that the Administrator perform such services; NOW, THEREFORE, the parties hereby agree as follows: 1. The Administrator hereby agrees to provide, or arrange for the provision of, any or all of the following services by the Administrator or its affiliates: (a) the services of a principal financial officer of the Company (including related office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Company and the Portfolios, including the review of daily net asset value calculations and the preparation of tax returns; and the services (including related office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer; (b) the services of staff to respond to shareholder inquiries concerning the status of their accounts; providing assistance to shareholders in exchanges among the mutual funds managed or advised by the Administrator; changing account designations or changing addresses; assisting in the purchase or redemption of the Portfolios shares; supervising the operations of the custodian(s), transfer -1- 2 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 Company or the Portfolios at the request of the Company's Board of Directors. 2. The services provided hereunder shall at all times be subject to the direction and supervision of the Company's Board of Directors. 3. As full compensation for the services performed and the facilities furnished by or at the direction of the Administrator, the Portfolios shall reimburse the Administrator for expenses incurred by them or their affiliates in accordance with the methodologies established from time to time by the Company's Board of Directors. Such amounts shall be paid to the Administrator on a quarterly basis. 4. The Administrator shall not be liable for any error of judgment or for any loss suffered by the Company or the Portfolios in connection with any matter to which this Agreement relates, except a loss resulting from the Administrator's willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement. 5. The Company and the Administrator each hereby represent and warrant, but only as to themselves, that each has all requisite authority to enter into, execute, deliver and perform its obligations under this Agreement and that this Agreement is legal, valid and binding, and enforceable in accordance with its terms. 6. Nothing in this Agreement shall limit or restrict the rights of any director, officer or employee of the Administrator who may also be a director, officer or employee of the Company to engage in any other business or to devote his time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, nor limit or restrict the right of the Administrator to engage in any other business or to render services of any kind to any other corporation, firm, individual or association. 7. This Agreement shall continue in effect until June 30, 1996, and shall continue in effect from year to year thereafter; provided that such continuance is specifically approved at least annually: (a) (i) by the Company's Board of Directors or (ii) by the vote of a majority of the outstanding voting securities of the Company (as defined in Section 2(a)(42) of the 1940 Act); and (b) by the affirmative vote of a majority of the Company's directors who are not parties to this Agreement or interested persons of a party to this Agreement, by votes cast in person at a meeting specifically called for such purpose. This Agreement shall terminate automatically in the event of its assignment (as defined in Section 2(a)(4) of the 1940 Act) or, with respect to one or more Portfolios in the event of -2- 3 termination of the Master Investment Advisory Agreement relating to such Portfolio(s) between the Company and the Administrator. 8. This Agreement may be amended or modified, but only by a written instrument signed by both the Company and the Administrator. 9. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to the General Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to the General Counsel. 10. This Agreement contains the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. A I M ADVISORS, INC. Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM -------------------- -------------------- Assistant Secretary President (SEAL) AIM INTERNATIONAL FUNDS, INC. Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM -------------------- -------------------- Assistant Secretary President (SEAL) -3- 4 AIM INTERNATIONAL FUNDS, INC. APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT July 1, 1994 AIM Global Aggressive Growth Fund AIM Global Growth Fund AIM Global Income Fund -4- EX-99.9.C.1 22 ACCOUNTING SERVICES AGREEMENT 1 EXHIBIT 9(c)(1) ACCOUNTING SERVICES AGREEMENT ----------------------------- AGREEMENT made between AIM INTERNATIONAL FUNDS, INC. a corporation organized and existing under the laws of Maryland having its principal place of business at 11 Greenway Plaza, Suite 1919, Houston, Texas (the "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 ("State Street"). WHEREAS, the Fund desires to retain State Street to perform certain accounting and recordkeeping duties on behalf of the Fund's AIM International Equity Fund Series (the "Portfolio"); and WHEREAS, State Street is willing to perform such services on the terms provided herein. NOW, THEREFORE, the parties agree as follows: Section 1. Duties of State Street. ----------------------- 1.1 Books of Account. ----------------- State Street shall maintain the books of account of the Portfolio and shall perform the following duties in the manner prescribed by the Portfolio's currently effective prospectus, statement of additional information or other governing document certified copies of which have been supplied to State Street (a "governing document"): - Record general ledger entries. - Calculate daily expenses. - Calculate daily income. - Reconcile daily activity to the trial balance. - Calculate net asset value. - Prepare account balances. The Fund on behalf of the Portfolio shall provide timely prior notice to State Street of any modification in the manner in which such calculations are to be preformed as prescribed in any revision to the Portfolio's governing documents. State Street shall not be responsible for any revisions to calculations unless such revisions are communicated in writing to State Street. -1- 2 1.2 Records. -------- State Street shall create and maintain all records relating to its activities and obligations under this Agreement in such a manner as will meet the obligations of the Fund under the Investment Company Act of 1940, specifically Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of State Street be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. Subject to Section 3 below, State Street shall preserve for the period required by law the records required to be maintained thereunder. Section 2. A. Duties of the Fund. ------------------- The Fund on behalf of the Portfolio shall provide, or shall cause a third party to provide, timely notice to State Street of certain data necessary to State Street's performance of its obligations described in Section 1 above. The data required to be provided pursuant to this section are set forth in Schedule A hereof, which schedule may be separately amended or supplemented by the parties from time to time. State Street is authorized and instructed to rely upon the information it receives from the Fund or, at the direction of the Fund, any third party. State Street shall have no responsibility to review, confirm or otherwise assume any duty with respect to the accuracy or completeness of any data supplied to it by or on behalf of the Fund. B. Proper Instructions. -------------------- The Fund on behalf of the Portfolio shall communicate to State Street by means of Proper Instructions. Proper Instructions shall mean (i) a writing signed or initialed by the Fund's Chief Financial Officer, Treasurer or Assistant Treasurer, or by one or more persons as the Fund's Board of Directors shall have from time to time authorized or (ii) communication effected directly between the Fund or its third-party agent and State Street by electro- mechanical or electronic devices, provided that the Fund and State Street have approved such procedures. State Street may rely upon any Proper Instruction reasonably believed by it to be genuine and to have been properly issued by or on behalf of the Fund. Oral instruction shall be considered Proper Instructions if State Street reasonably believes them to have been given by a person authorized to give such instructions. The Fund shall cause all oral instructions to be confirmed in accordance with clauses -2- 3 (i) or (ii) above, as appropriate. The Fund shall give timely Proper Instructions to State Street in regard to matters affecting accounting practices and State Street's performance of its obligations pursuant to this Agreement. Section 3. Successor Agent. ---------------- If a successor agent for the Portfolio shall be appointed by the Fund, State Street shall upon termination hereof deliver to such successor agent at the office of State Street all properties of the Portfolio held by it hereunder. If no such successor agent shall be appointed, State Street shall at its office upon receipt of Proper Instructions deliver such properties in accordance with such instructions. In the event that no written order designating a successor agent or Proper Instructions shall have been delivered to State Street on or before the date when such termination shall become effective, then State Street shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act of 1940, 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 $2,000,000 all properties held by State Street under this Agreement. Thereafter, such bank or trust company shall be the successor of State Street under this Agreement. Section 4. Warranties. ----------- If the Fund on behalf of the Portfolio promptly notifies State Street that any of its accounting services are erroneous in any material respect, State Street shall endeavor as quickly as practicable to correct such error. Organizations from which State Street may obtain certain data included in the accounting services are solely responsible for the contents of such data and the Fund agrees to make no claim against State Street arising out of the contents of such third-party data including, but not limited to, the accuracy thereof. State Street makes no warranties with respect to the calculations and data processing it provides the Fund and/or any third party agent of the Fund insofar as such calculations and data processing relate to the qualification of the Fund and/or the Portfolio as a regulated investment company under state or federal securities and tax laws, or any requirements or obligations thereunder. -3- 4 Section 5. Limitation of Liability. ------------------------ State Street shall use reasonable care in the performance of its obligations hereunder and shall not be liable to the Fund or any third-party for any loss or damage claimed to have resulted from the use of the accounting services except for the direct loss or damage resulting from the negligence State Street. STATE STREET SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) IN ANY WAY DUE TO THE FUND'S USE OF THE ACCOUNTING SERVICES OR THE PERFORMANCE OF OR FAILURE TO PERFORM STATE STREET'S OBLIGATIONS UNDER THIS AGREEMENT. This disclaimer applies without limitation to claims regardless of the form of action, whether in contract, tort (including negligence), strict liability, or otherwise and regardless of whether such damages are foreseeable. Further, in no event shall State street be liable for any claims that arise more than one (1) year prior to the institution of suit therefor or any claim arising from causes beyond State Street's control. Section 6. Force Majeure. -------------- State Street shall have no liability for cessation of services hereunder or any damages resulting therefrom to the Fund as a result of work stoppage, power or other mechanical failure, natural disaster, governmental action, communication disruption or other impossibility of performance. Section 7. Exclusive Remedy. ----------------- In consideration of the fees charged hereunder, the Fund's exclusive remedy regardless of the basis of the claim asserted by it against State Street shall not exceed six (6) times the average monthly fees billed to the Fund hereunder and computed by averaging the monthly billing for each of the twelve (12) months preceding the month in which the damage or injury is alleged to have occurred, but if this Agreement has not been in effect for twelve months preceding such date, then by averaging the monthly billings for each of the preceding months that this Agreement has been in effect. -4- 5 Section 8. Indemnification. ---------------- The Fund agrees to indemnify and hold State Street free and harmless from any expense, loss, damage or claim, including reasonable attorney's fees, suffered by State Street and caused by or resulting from the acts or omissions of the fund or any third party approved by the Fund and whose services State Street must rely upon in performing accounting services hereunder. Section 9. General. -------- 9.1 Term of Agreement. This Agreement is effective the date hereof and shall remain in full force and effect until terminated as hereinafter provided. Either party may, in its discretion, terminate this Agreement for any reason by giving the other party at least thirty (930) days prior written notice of termination. In addition, either party may terminate this Agreement for failure of the other party to comply with any of its terms and conditions by giving the other party written notice of termination. 9.2 Fees. The Fund agrees to pay State Street such reasonable compensation for its services and expenses as is agreed upon from time to time. Payments for services shall be due 30 days net. The Fund shall reimburse State Street for all costs and expenses, including reasonable attorney's fees, incurred by State Street to collect any charges due under this Agreement. 9.3 Notices. All notices shall be in writing and deemed given when delivered in person, by facsimile, by overnight delivery through a commercial courier service, or by registered or certified mail, return receipt requested. Notices shall be addressed to each party at its address set forth below, or such other address as the recipient may have specified by earlier notice to the sender. If to State Street: 1776 Heritage Drive North Quincy, Massachusetts 02171 Attention: Nancy E. Grady Telephone: (617) 985-6188 Telefax: (617) 985-6149 -5- 6 If to the Fund: AIM International Funds, Inc. 11 Greenway Plaa, Suite 1919 Houston, Texas 77046 Attention: President Telephone: (713) 626-1919 Telefax: (713) 993-9890 9.4 Assignment; Successors. This Agreement shall not be assigned by either party without the prior written consent of the other party, except that either party may assign to a successor of all or a substantial portion of its business, or to a party controlling, controlled by, or under common control with such party. 9.5 Entire Agreement. This Agreement (including all schedules and attachments hereto) constitutes the entire Agreement between the parties with respect to its subject matter; all prior Agreements, representations, statements, negotiations and undertakings with respect to such subject matter are terminated and superseded hereby. 9.6 Amendments. No amendment to this Agreement shall be effective unless it is in writing and signed by a duly authorized representative of each party. The term "Agreement", as used herein, includes all schedules and attachments hereto and any future written amendments, modifications, or supplements made in accordance herewith. 9.7 Headings Not Controlling. Headings used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement. 9.8 Survival. After expiration or termination of this Agreement, all provisions relating to payment shall survive until completion of required payments. In addition to those provisions which specifically provide for survival beyond expiration or termination, all provisions regarding indemnification, warranty, liability and limits thereon shall survive, unless and until the expiration of any time period specified elsewhere in this Agreement with respect to the provision in question. -6- 7 9.9 Severability. In the event any provision of this Agreement is held illegal, void or unenforceable, the balance shall remain in effect. 9.10 Governing Law, Jurisdiction. This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts and shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. The parties agree that any dispute arising herefrom shall be subject to the exclusive jurisdiction of courts sitting in the Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the fifth day of November, 1991. STATE STREET BANK AND TRUST COMPANY By: /s/ ILLEGIBLE -------------------------------------- Title: Sr. Vice President ----------------------------------- AIM INTERNATIONAL FUNDS, INC. By: /s/ CHARLES T. BAUER -------------------------------------- Title: President ----------------------------------- -7- 8 SCHEDULE A ==========
Data How Supplied and When Items By Whom Supplied ----- ------- -------- 1. Shareholder Transfer agent - Trade date fund share The Shareholders plus one activity Services Group via fax 2. Portfolio AIM Advisors, Inc. Trade Date transactions via fax plus one * 3. Expense AIM Advisors, Inc. Accruals will Accrual be adjusted Information as needed 4. Pricing AIM Advisors, Inc. Daily as needed Information when not available from regular pricing service
* If securities are purchased to settle same day as trade date, notification will be made to State Street on trade date. -8- EX-99.9.C.2 23 AMENDMENT NO. 1 TO ACCOUNTING SERVICES AGREEMENT 1 EXHIBIT 9(c)(2) AMENDMENT NO. 1 TO ACCOUNTING SERVICES AGREEMENT WHEREAS, AIM International Funds, Inc. (the "Fund") has retained State Street Bank and Trust Company ("State Street") to perform certain accounting and recordkeeping duties on behalf of the Fund's AIM International Equity Fund series pursuant to an Accounting Services Agreement dated November 5, 1991 (the "Agreement"); and WHEREAS, the Fund and State Street desire to amend the Agreement to apply to three newly created portfolios of the Fund; NOW, THEREFORE, the parties agree to amend the Agreement such that State Street shall be retained by the Fund to perform certain accounting and recordkeeping duties on behalf of each of the Fund's AIM Global Aggressive Growth Fund series, AIM Global Growth Fund series and AIM Global Income Fund series on the same terms and under the same conditions as are currently applicable to AIM International Equity Fund series. IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of July 1, 1994 Attest: AIM INTERNATIONAL FUNDS, INC. By: /s/ CAROL F. RELIHAN By: /s/ ROBERT H. GRAHAM --------------------- ---------------------- Title: Assistant Secretary Title: President Attest: STATE STREET BANK AND TRUST COMPANY By: /s/ A. CONNELLY By: /s/ N. GRADY --------------------- ---------------------- Title: Assistant Secretary Title: Vice President EX-99.9.D.1 24 SHAREHOLDER SUB-ACCOUNTING SERVICES AGREEMENT 1 EXHIBIT 9(d)(1) [LOGO APPEARS HERE] AIM Funds Services, Inc. Client Services 1-800-959-4246 March 18, 1994 Mr. Thomas J. Karol, Counsel The Shareholder Services Group 53 State Street Boston, MA 02109-2873 Dear Mr. Karol: Pursuant to your letter dated February 4, 1994 to Stephen Winer, one of our attorneys, The Shareholder Services Group, Inc. declined to execute an acknowledgment of that certain Shareholder Sub-Accounting Services Agreement, dated as of October 1, 1993 (the "Agreement"). You, however, indicated that you would be happy to comply with the terms and conditions of the Agreement upon receipt of instructions from AIM to do so. Therefore, you are hereby instructed to comply with the terms and conditions of the Agreement. A copy of AGreement was previously supplied to you. However, for your convenience, another executed copy is attached hereto. If you have qny questions, please contact me. Very truly yours, /s/ JOHN CALDWELL John Caldwell President Enclosures (This letter serves as TSSG's signature/and willingness to comply with cc: Colleen Daly (w/o enclosures) the Shareholder Sub-Accounting Services Agreement (10-1-93)) 2 SHAREHOLDER SUB-ACCOUNTING SERVICES AGREEMENT AGREEMENT made as of the 1st day of October, 1993 by and between (i) until and including October 14, 1993, the investment companies listed on Schedule A hereto and, after October 14, 1993, the investment companies listed on Schedule B hereto as such Schedule may be amended from time to time (the "AIM Funds"); (ii) The Shareholders Services Group, Inc. ("The Shareholders Services Group"); (iii) Financial Data Services, Inc. ("FDS") a New Jersey corporation; and (iv) Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a Delaware corporation. WITNESSETH: WHEREAS, the AIM Funds are investment companies registered under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, The Shareholders Services Group is the transfer agent, dividend disbursing agent and shareholder servicing agent for the AIM Funds; and WHEREAS, each of the AIM Funds and The Shareholders Services Group have entered into a separate agreement pursuant to which The Shareholders Services Group agreed to arrange for the performance of certain administrative services for shareholders of the AIM Funds who maintain shares of such Funds in a brokerage account with MLPF&S, a broker-dealer affiliated with FDS; and WHEREAS, FDS, a transfer agent registered under the Securities Exchange Act of 1934, has presented to The Shareholders Services Group the various administrative services that may be performed by MLPF&S; WHEREAS, each of the parties hereto which executed that certain shareholder Sub-Accounting Services Agreement, dated as of July 1, 1990, among certain of the AIM Funds, The Shareholder Services Group, FDS and MLPF&S, desire to replace such agreement with a new agreement; and WHEREAS, The Shareholders Services Group desires to retain MLPF&S to perform such services and MLPF&S is willing and able to furnish such services on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter contained, each party hereto severally agrees, as follows: 1. MLPF&S agrees to perform the administrative services and functions specified in Exhibit A hereto (the "Services") for the benefit of the shareholders of the AIM Funds who maintain shares of any of such Funds in brokerage accounts with MLPF&S and whose shares are included in the master account referred to in paragraph 1 of Exhibit A (collectively, the "MLPF&S customers"). 2. MLPF&S agrees that it will maintain and preserve all records as required by law to be maintained and preserved in connection with providing the services, and will 3 otherwise comply with all laws, rules and regulations applicable to the services. Upon the request of The Shareholders Services Group, MLPF&S shall provide copies of all the historical records relating to transactions involving the AIM Funds and MLPF&S customers, written communication regarding that Fund to or from such customers and other materials, in each case as may reasonably be requested to enable the Fund or its representatives, including without limitation its auditors, investment advisor, The Shareholders Services Group or successor transfer agent or distributor, to monitor and review the Services, or to comply with any request of the board of directors, trustees or general partners (collectively, the "Directors") of the AIM Funds or of a governmental body, self-regulatory organization or a shareholder. MLPF&S agrees that it will permit The Shareholders Services Group and the AIM Funds or their representatives to have reasonable access to its personnel and records in order to facilitate the monitoring of the quality of the services. It is understood that notwithstanding anything herein to the contrary, neither FDS nor MLPF&S shall be required to provide the names and addresses of MLPF&S customers to The Shareholder Services Group, the AIM Funds or their representatives, unless applicable laws or regulations otherwise require. 3. MLPF&S may contract with or establish relationships with FDS or other parties for the provision of services or activities of MLPF&S required by the Agreement. 4. Each of MLPF&S and FDS hereby agrees to notify promptly The Shareholders Services Group if for any reason either of them is unable to perform fully and promptly any of its obligations under this Agreement. 5. Each of MLPF&S and FDS hereby represent that neither of them now owns or holds with power to vote any shares of the AIM Funds which are registered in the name of the MLPF&S or the name of its nominee and which are maintained in MLPF&S brokerage accounts. 6. The provisions of the Agreement shall in no may limit the authority of The Shareholders Services Group or any of the AIM Funds to take such action as it may deem appropriate or advisable in connection with all matters relating to the operations of such Fund and/or sale of its shares. 7. In consideration of the performance of the Services by MLPF&S and FDS, each of the Funds severally agrees to compensate FDS at the rate of $11.00 annually per each MLPF&S customer account holding shares of a Fund which shares were subject to an up-front sales load or no sales load, and $14.00 annually per MLPF&S customer account holding shares of a Fund that are subject to contingent deferred sales charge ("CDSC"); provided, however, if all shares in an MLPF&S customer account have been held for the requisite time period such that the shares are no longer subject to a CDSC, then FDS will be compensated at the rate of $11.00 annually for such MLPF&S customer account. It is agreed by the parties hereto that these rates are effective as of October 1, 1993. These rates are the current standard rates for the services provided by FDS and MLPF&S hereunder. Payment shall be made monthly based upon the number of -2- 4 shareholders of a Fund in a MLPF&S brokerage account for any part of the subject month. This number shall be certified each year by independent public accountants of MLPF&S as of a month selected by The Shareholders Services Group, such certification to be at the expense of MLPF&S. MLPF&S agrees that notwithstanding anything herein to the contrary, it will not request any increase in its compensation hereunder to be effective prior to September 30, 1996. In the event MLPF&S or FDS as its agent were to mail any such Funds' proxy materials, reports, prospectuses and other information to shareholders of the AIM Funds who are Merrill Lynch customers pursuant to paragraph 4 of Exhibit A, the AIM Funds agree to reimburse MLPF&S or FDS, as the case may be, for postage, handling fees and reasonable costs of supplies used by it in such mailings in an amount to be determined in accordance with the rates set forth in Rule 451.90 of the New York Stock Exchange, Inc. 8. FDS shall indemnify and hold harmless each of the AIM Funds and The Shareholders Services Group from and against any and all losses or liabilities that any one or more of them may incur, including without limitation reasonable attorneys' fees, expenses and cost, arising out of or related to the performance or non-performance of MLPF&S or FDS of its responsibilities under this Agreement, excluding, however, any such claims, suits, loss, damage or cost caused by, materially contributed to or arising from any non-compliance by The Shareholders Services Group or an AIM Fund with its obligations under this Agreement, as to which The Shareholders Services Group and each of the AIM Funds shall indemnify, hold harmless and defend FDS and MLPF&S on the same basis as set forth above. 9. This Agreement may be terminated at any time by each of The Shareholder Services Group, MLPF&S and FDS or by any AIM Fund as to itself or by The Shareholders Services Group as to itself, upon 30 days' written notice to FDS. This Agreement may also be terminated as to any or all AIM Funds at any time without penalty upon 30 days written notice to FDS that the agreement(s) between the AIM Fund(s) and The Shareholders Services Group pertaining to the services hereunder have been terminated. The provisions of paragraph 2 shall continue in full force and effect after termination of this Agreement. Notwithstanding the foregoing, this Agreement shall not require MLPF&S to preserve any records relating to this Agreement beyond the time periods otherwise required by the laws to which MLPF&S is subject. 10. Any other AIM Fund for which The Shareholders Services Group serves as transfer agent may become a party to this Agreement by giving written notice to The Shareholder Services Group and MLPF&S or FDS that it has elected to become a party hereto and by having this Agreement executed on its behalf. -3- 5 11. Each of MLPF&S and FDS understand and agree that the obligation of each AIM Fund under this Agreement is not binding upon any shareholder of the Fund personally, but bind only each Fund and each Fund's property; each of MLPF&S and FDS represents that it has notice of the provisions of the Declaration of Trust, if applicable, of each AIM Fund disclaiming shareholder liability for acts or obligations of the Funds. 12. It is understood and agreed that in performing the services under this Agreement, neither MLPF&S nor FDS shall be acting as an agent for any AIM Fund. 13. This Agreement, including any Exhibits and Schedules attached hereto, constitutes the entire agreement between the parties with respect to the matters dealt with herein, and supercedes any previous agreements and documents with respect to such matters. IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. MERRILL LYNCH, PIERCE, FINANCIAL DATA SERVICES INC. FENNER & SMITH INC. By: /s/ HARRY P. ALLEX By: /s/ ROBERT C. DOAN ------------------------------- -------------------------------- Harry P. Allex Robert C. Doan - ----------------------------------- -------------------------------------- Print Name Print Name Senior Vice President President - ----------------------------------- -------------------------------------- Title Title THE SHAREHOLDERS SERVICES GROUP, INC. By: ------------------------------- - ----------------------------------- Print Name - ----------------------------------- Title -4- 6 SCHEDULE A AIM CONVERTIBLE SECURITIES, INC. AIM FUNDS GROUP ON BEHALF OF ITS AIM MONEY MARKET FUND(C), AIM GOVERNMENT SECURITIES FUND, AIM INCOME FUND, AIM INTERNATIONAL GROWTH By: /s/ ROBERT H. GRAHAM FUND(C), AIM MUNICIPAL BOND FUND, AIM HIGH ------------------------------- YIELD FUND(C), AIM UTILITIES FUND, AIM VALUE FUND, AIM GROWTH FUND, AIM AGGRESSIVE GROWTH FUND, AIM CASH FUND, AIM TAX-EXEMPT CASH FUND, Robert H. Graham AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM - ----------------------------------- TAX-EXEMPT CASH FUND OF CONNECTICUT Print Name Executive Vice President By: /s/ ROBERT H. GRAHAM - ----------------------------------- ------------------------------- Title Robert H. Graham ----------------------------------- AIM EQUITY FUNDS, INC. ON BEHALF OF THE Print Name RETAIL CLASSES OF ITS AIM CHARTER FUND, AIM CONSTELLATION FUND, AND WEINGARTEN FUND Executive Vice President ----------------------------------- Title By: /s/ ROBERT H. GRAHAM ------------------------------- AIM HIGH YIELD SECURITIES, INC. Robert H. Graham - ----------------------------------- Print Name By: /s/ ROBERT H. GRAHAM ------------------------------- Executive Vice President - ----------------------------------- Title Robert H. Graham ----------------------------------- Print Name Executive Vice President ----------------------------------- Title
-5- 7 SHORT-TERM INVESTMENTS CO. AIM INTERNATIONAL FUNDS, INC. ON BEHALF OF ITS AIM LIMITED MATURITY TREASURY ON BEHALF OF ITS AIM INTERNATIONAL EQUITY FUND SHARES AND AIM MONEY MARKET FUND By: /s/ ROBERT H. GRAHAM By: /s/ ROBERT H. GRAHAM ------------------------------- ------------------------------- Robert H. Graham Robert H. Graham - ----------------------------------- ----------------------------------- Print Name Print Name Executive Vice President Executive Vice President - ----------------------------------- ----------------------------------- Title Title AIM INVESTMENT SECURITIES FUNDS, INC. TAX-FREE INVESTMENTS CO. ON BEHALF OF ITS AIM ADJUSTABLE RATE ON BEHALF OF ITS AIM TAX-FREE INTERMEDIATE GOVERNMENT FUND SHARES By: /s/ ROBERT H. GRAHAM By: /s/ ROBERT H. GRAHAM ------------------------------- ------------------------------- Robert H. Graham Robert H. Graham - ----------------------------------- ----------------------------------- Print Name Print Name Executive Vice President Executive Vice President - ----------------------------------- ----------------------------------- Title Title
-6- 8 AIM VARIABLE INSURANCE FUNDS, INC. ON BEHALF OF ITS AIM V.I. CAPITAL APPRECIATION FUND, AIM V.I. DIVERSIFIED INCOME FUND, AIM V.I. GOVERNMENT SECURITIES FUND, AIM V.I. GROWTH FUND, AIM V.I. INTERNATIONAL EQUITY FUND, AIM V.I. MONEY MARKET FUND AND AIM V.I. VALUE FUND By: /s/ ROBERT H. GRAHAM ------------------------------- Robert H. Graham - ----------------------------------- Print Name Executive Vice President - ----------------------------------- Title -7- 9 SCHEDULE B AIM TAX-EXEMPT FUNDS, INC. ON BEHALF OF ITS AIM TAX-EXEMPT CASH FUND, AIM TAX-EXEMPT BOND AIM INTERNATIONAL FUNDS, INC. ON FUND OF CONNECTICUT, AND AIM BEHALF OF ITS AIM INTERNATIONAL EQUITY FUND TAX-FREE INTERMEDIATE SHARES By: /s/ ROBERT H. GRAHAM By: /s/ ROBERT H. GRAHAM ------------------------------- ------------------------------- Robert H. Graham Robert H. Graham - ----------------------------------- ----------------------------------- Print Name Print Name Executive Vice President Executive Vice President - ----------------------------------- ----------------------------------- Title Title AIM INVESTMENT SECURITIES FUNDS AIM EQUITY FUNDS, INC. ON BEHALF OF THE RETAIL ON BEHALF OF ITS AIM ADJUSTABLE RATE GOVERNMENT CLASSES OF ITS AIM CHARTER FUND, AIM FUND AND AIM LIMITED MATURITY TREASURY SHARES CONSTELLATION FUND, AIM WEINGARTEN FUND, AND AIM AGGRESSIVE GROWTH FUND By: /s/ ROBERT H. GRAHAM By: /s/ ROBERT H. GRAHAM ------------------------------- ------------------------------- Robert H. Graham Robert H. Graham - ----------------------------------- ----------------------------------- Print Name Print Name Executive Vice President Executive Vice President - ----------------------------------- ----------------------------------- Title Title
-8- 10 AIM FUNDS GROUP ON BEHALF OF ITS AIM GROWTH FUND, AIM UTILITIES FUND, AIM GOVERNMENT SECURITIES FUND, AIM INCOME FUND, AIM MUNICIPAL BOND FUND, AIM HIGH YIELD FUND, AIM MONEY MARKET FUND, AIM VALUE FUND, AND AIM BALANCED FUND By: /s/ ROBERT H. GRAHAM ------------------------------- Robert H. Graham - ----------------------------------- Print Name Executive Vice President - ----------------------------------- Title -9- 11 EXHIBIT A Pursuant to the Agreement by and among the parties hereto, MLPF&S shall perform the following services: 1. Maintain separate records for each shareholder of any of the AIM Funds who holds shares of a Fund in a brokerage account with MLPF&S ("MLPF&S customers"), which records shall reflect shares purchased and redeemed and share balances. MLPF&S shall maintain a single master account with the transfer agent of the Fund on behalf of MLPF&S customers and such account shall be in the name of MLPF&S or its nominee as the record owner of the shares owned by such customers. 2. Disburse or credit to MLPF&S customers all proceeds of redemptions of shares of the AIM Funds and all dividends and other distributions not reinvested in shares of the AIM Funds. 3. Prepare and transmit to MLPF&S customers periodic account statements showing the total number of shares owned by the customer as of the statement closing date, purchases and redemptions of AIM Funds shares by the customers during the period covered by the statement and the dividends and other distributions paid to the customer during the statement period (whether paid in cash or reinvested in Fund shares). 4. Transmit to MLPF&S customers proxy materials and reports and other information received by MLPF&S from the AIM Funds and required to be sent to shareholders under the federal securities laws, and, upon request of the Fund's transfer agent transmit to MLPF&S customers material fund communications deemed by the AIM Fund, through its Board of Directors or other similar governing body, to be necessary and proper for receipt by all fund beneficial shareholders. 5. Transmit to the AIM Fund's transfer agent purchase and redemption orders on behalf of Merrill Lynch customers. 6. Provide to The Shareholders Services Group or the Funds, or any of the agents designated by any of them, such periodic reports as The Shareholders Services Group shall reasonably conclude is necessary to enable The Shareholders Services Group, each AIM Fund and its distributor to comply with State Blue Sky and other legal and regulatory requirements. -10- EX-99.11.A 25 CONSENT OF BALLARD SPAHR ANDREWS & INGERSOLL 1 EXHIBIT 11(a) CONSENT OF COUNSEL AIM INTERNATIONAL FUNDS, INC. ----------------------------- We hereby consent to the use of our name and to the references to our firm under the captions "General Information -- Legal Counsel" in the Prospectus and "Miscellaneous Information -- Legal Matters" in the Statement of Additional Information forming a part of Post-Effective Amendment No. 9 to the Registration Statement under the Securities Act of 1933 (No. 33-44611) and Amendment No. 11 to the Registration Statement under the Investment Company Act of 1940 (No. 811-6463) on Form N-1A of AIM International Funds, Inc. /s/ BALLARD SPAHR ANDREWS & INGERSOLL ------------------------------------- Ballard Spahr Andrews & Ingersoll Philadelphia, Pennsylvania February 23, 1996 EX-99.11.B 26 CONSENTS OF KPMG PEAT MARWICK LLP 1 EXHIBIT 11(b) INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors AIM International Funds, Inc. We consent to the use of our report on AIM International Equity Fund (a series portfolio of AIM International Funds, Inc.) dated December 8, 1995 included herein and to the references to our firm under the headings "Financial Highlights" in the Prospectus, and "Audit Reports" in the Statement of Additional Information. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas February 20, 1996 2 INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Directors AIM International Funds, Inc. We consent to the use of our reports on AIM Global Aggressive Growth Fund, AIM Global Growth Fund, and AIM Global Income Fund (series portfolios of AIM International Funds, Inc.) dated December 8, 1995 included herein and to the references to our firm under the headings "Financial Highlights" in the Prospectus, and "Audit Reports" in the Statement of Additional Information. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas February 20, 1996 EX-99.13 27 AGREEMENT CONCERNING INITIAL CAPITALIZATION 1 EXHIBIT 13 July 1, 1994 Board of Directors AIM International Funds, Inc. 11 Greenway Plaza, Suite 1919 Houston, TX 77046-1173 RE: Initial Capital Investment in AIM International Funds, Inc. (the "Fund") Gentlemen: We are purchasing shares of the Fund for the purpose of providing initial investment for the three new investment portfolios of the Fund. The purpose of this letter is to set out our understanding of the conditions of and our promises and representations concerning this investment. 1. We hereby agree to purchase shares equal to the following dollar amount for each portfolio: AIM Global Aggressive Growth Fund $ 1,000,000 AIM Global Growth Fund 1,000,000 AIM Global Income Fund 2,000,000 2. We understand that the initial net asset value per share for each of the portfolios named above will be $10.00. 3. We hereby represent that we are purchasing these shares solely for our own account and solely for investment purposes without any intent of distributing or reselling said shares. We further represent that disposition of said shares will only be by direct redemption to or repurchase by the Fund. We further agree to provide the applicable Fund with at least 10 days' advance written notice of any intended redemption and agree that we will work with the Fund with respect to the amount of such redemption so as not to place a burden on the Fund and to facilitate normal portfolio management of the Fund. Sincerely yours, A I M ADVISORS, INC. /s/ ROBERT H. GRAHAM EX-99.16.A 28 SCHEDULE OF PERFORMANCE QUOTATIONS 1 Exhibit 16(a) AIM INTERNATIONAL EQUITY FUND SCHEDULE OF PERFORMANCE QUOTATIONS (1) Average Annual Total Returns Pursuant to SEC Standardized Formula SEC Formula: P(1 + T)power of n = ERV where: P = initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of 1, 5 or 10 year periods at the end of such periods (for purposes of the following calculations, the maximum sales load has been deducted from the initial investment in order to compute ERV) Average Annual Total Return for the period 4/7/92 - 10/31/92 P(1 + T)power of n = ERV P = $1,000 n = 207/365 ERV = $960.61 T = (6.84)% (2) Aggregate or Cumulative Total Return Pursuant to Non-Standardized Formula ATR = ERV-P ----- P where: P = $1,000 (initial investment) ERV = ending redeemable value of a hypothetical investment of $1,000 made at the beginning of a specified period at the end of such period ATR = aggregate total return of the investment over the specified period 2 CASE I Aggregate Total Return for the period 4/7/92 (effective date of registration statement) through 10/31/92, assuming deduction of the maximum sales charge for the purpose of calculating ERV ATR = ERV-P ----- P P = $1,000 ERV = $960.61 ATR = (3.94)% CASE II Aggregate Total Return for the period 4/7/92 (effective date of registration statement) through 10/31/92, assuming the maximum sales charge has not been deducted for the purpose of calculating ERV ATR = ERV-P ----- P P = $1,000 ERV = $1,016.52 ATR = 1.65% EX-99.16.B 29 SCHEDULE OF PERFORMANCE QUOTATIONS 1 EXHIBIT 16(b) AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND SCHEDULE OF PERFORMANCE QUOTATIONS (1) Average Annual Total Returns Pursuant to SEC Standardized Formula SEC Formula: P(1 + T)power of n = ERV where: P = initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of 1, 5 or 10 year periods at the end of such periods (for purposes of the following calculations, the maximum sales load has been deducted from the initial investment in order to compute ERV) (2) Aggregate or Cumulative Total Return Pursuant to Non-Standardized Formula ATR = ERV-P ------- P where: P = $1,000 (initial investment) ERV = ending redeemable value of a hypothetical investment of $1,000 made at the beginning of a specified period at the end of such period ATR = aggregate total return of the investment over the specified period AIM GLOBAL INCOME FUND (1) Yield Quotation Based on a 30-day Period YIELD = 2[((a-b)/(c x d) + 1)power of six-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. EX-27.1 30 AIM INTERNATIONAL EQUITY FUND - CLASS A SHARES
6 This schdeule contains summary financial information from the AIM International Equity Fund Class A shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 001 AIM INTERNATIONAL EQUITY FUND CLASS A SHARES 12-MOS OCT-31-1995 OCT-31-1995 552,096,213 648,230,838 26,094,659 76,774 45,335,748 719,738,019 8,959,475 0 4,051,075 13,010,550 0 590,886,286 51,789,496 52,802,157 237,171 0 19,504,994 0 96,099,018 706,727,469 10,074,533 1,527,686 0 11,133,283 468,936 19,301,818 8,812,756 28,583,510 0 (2,185,471) (23,380,117) 0 23,705,710 (26,073,209) 1,354,838 (6,264,763) 1,368,300 24,808,427 0 0 6,303,437 0 11,210,955 634,518,409 13.5 0.01 0.62 (0.04) (0.44) 0 13.65 1.67 0 0
EX-27.2 31 AIM INTERNATIONAL EQUITY FUND - CLASS B SHARES
6 This schedule contains summary financial information from the AIM International Equity Fund Class B shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 002 AIM INTERNATIONAL EQUITY FUND CLASS B SHARES 12-MOS OCT-31-1995 OCT-31-1995 552,096,213 648,230,838 26,094,659 76,774 45,335,748 719,738,019 8,959,475 0 4,051,075 13,010,550 0 590,886,286 51,789,496 52,802,157 237,171 0 19,504,994 0 96,099,018 706,727,469 10,074,533 1,527,626 0 11,133,283 468,936 19,301,818 8,812,756 28,583,510 0 (2,185,471) (23,380,117) 0 23,705,710 (26,073,209) 1,354,838 (6,264,763) 1,368,300 24,808,427 0 0 6,303,437 0 11,210,955 20,825,255 13.49 (0.09) 0.61 (0.03) (0.44) 0 13.54 2.55 0 0
EX-27.3 32 AIM GLOBAL AGRESSIVE GROWTH FUND - CLASS A SHARES
6 This schedule contains summary financial information from the AIM Global Aggressive Growth Fund Class A shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 003 AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS A SHARES 12-MOS OCT-31-1995 OCT-31-1995 260,822,054 291,038,810 14,528,581 29,687 8,033,065 313,630,143 8,454,571 0 947,630 9,402,201 0 272,738,461 23,288,229 2,409,345 0 0 1,232,761 0 30,256,720 304,227,942 1,071,004 550,062 0 2,806,946 (1,185,880) 2,414,201 29,786,715 31,015,036 0 0 0 0 22,859,373 1,980,489 0 279,617,005 2,281 (45,494) 0 0 1,106,197 0 2,806,946 80,557,274 10.22 (0.09) 2.96 0 0 0 13.09 2.11 0 0
EX-27.4 33 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS B SHARES
6 This schedule contains summary financial information from the AIM Global Aggressive Growth Fund Class B shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 004 AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS B SHARES 12-MOS OCT-31-1995 OCT-31-1995 260,822,054 291,038,810 14,528,581 29,687 8,033,065 313,630,143 8,454,571 0 947,630 9,402,201 0 272,738,461 23,288,229 2,409,345 0 0 1,232,761 0 30,256,720 304,227,942 1,071,004 550,062 0 2,806,946 (1,185,880) 2,414,201 29,786,715 31,015,036 0 0 0 0 22,859,383 1,980,489 0 279,617,005 2,281 (45,494) 0 0 1,106,197 0 2,806,946 42,353,541 10.21 (0.14) 2.95 0 0 0 13.02 2.62 0 0
EX-27.5 34 AIM GLOBAL GROWTH FUND - CLASS A SHARES
6 This schedule contains summary financial information from the AIM Global Growth Fund Class A shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 005 AIM GLOBAL GROWTH FUND CLASS A SHARES 12-MOS OCT-31-1995 OCT-31-1995 35,799,747 38,782,239 1,699,446 11,331 1,593,974 42,086,990 1,065,207 0 110,691 1,175,898 0 37,047,643 3,327,578 427,280 0 0 874,201 0 2,989,248 40,911,092 204,632 109,444 0 397,845 (83,769) 945,395 2,866,448 3,728,074 0 (2,116) 0 0 3,239,821 (339,694) 171 36,541,348 (173) (14,581) 0 0 164,439 0 535,753 10,051,749 10.23 (0.02) 2.11 0 (0.004) 0 12.32 2.12 0 0
EX-27.6 35 AIM GLOBAL GROWTH FUND - CLASS B SHARES
6 This schedule contains summary financial information from the AIM Global Growth Fund Class B shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 006 AIM GLOBAL GROWTH FUND CLASS B SHARES 12-MOS OCT-31-1995 OCT-31-1995 35,799,747 38,782,239 1,699,446 11,331 1,593,974 42,086,990 1,065,207 0 110,691 1,175,898 0 37,047,643 3,327,578 427,280 0 0 874,201 0 2,989,248 40,911,092 204,632 109,444 0 397,845 (83,769) 945,395 2,866,448 3,728,074 0 (2,116) 0 0 3,239,821 (339,694) 171 36,541,348 (173) (14,581) 0 0 164,439 0 535,753 6,993,129 10.22 (0.04) 2.08 0 0 0 12.26 2.64 0 0
EX-27.7 36 AIM GLOBAL INCOME FUND - CLASS A SHARES
6 This schedule contains summary financial information from the AIM Global Income Fund Class A shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 007 AIM GLOBAL INCOME FUND CLASS A SHARES 12-MOS OCT-31-1995 OCT-31-1995 15,090,239 15,526,089 1,185,975 9,179 48 16,721,291 1,690,132 0 819,953 2,510,085 0 13,511,536 1,323,672 301,641 85,635 0 178,787 0 435,248 14,211,206 0 678,528 0 107,834 570,694 263,982 430,541 1,265,217 0 (600,739) 0 0 1,148,689 (162,536) 35,878 11,188,216 1,871 (680) 0 0 55,087 0 249,021 5,923,634 10.02 0.79 0.75 (0.82) 0 0 10.74 1.25 0 0
EX-27.8 37 AIM GLOBAL INCOME FUND - CLASS B SHARES
6 This schedule contains summary financial information from AIM Global Income Fund Class B shares October 31, 1995 annual report. 0000880859 AIM INTERNATIONAL FUNDS, INC. 008 AIM GLOBAL INCOME FUND CLASS B SHARES 12-MOS OCT-31-1995 OCT-31-1995 15,090,239 15,526,089 1,185,975 9,179 48 16,721,291 1,690,132 0 819,953 2,510,085 0 13,511,536 1,323,672 301,641 85,635 0 178,787 0 435,248 14,211,206 0 678,528 0 107,834 570,694 263,982 430,541 1,265,217 0 (600,739) 0 0 1,148,689 (162,536) 35,878 11,188,216 1,871 (680) 0 0 55,087 0 249,021 1,945,925 10.01 0.74 0.75 (0.77) 0 0 10.73 1.74 0 0
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